The Vegetarian Butcher is a Dutch meat-alternative-producing company which was acquired by Unilever in an effort to take advantage of the trend towards plant-based diets.
It was started by a 9th generation farmer, Jaap Korteweg, who in 2010 opened up the meat replacements business with the vision of competing with meat producers.
This is a really interesting and rapidly growing market, with many opportunities and challenges. Let’s take a look in more detail…
PESTLE Analysis for The Vegetarian Butcher
The Vegetarian Butcher is focussed on ethical approaches to developing their brand and marketplace. They are based mainly around political and environmental developments, which in turn create socio-cultural movements and changes.
Due to the nature of the product, and the low price, economic factors are likely to have a limited impact on the firm’s operation within the Dutch market.
Major factors include:
According to a major report by Neslen in 2018, Europe’s animal farming sector has exceeded safe bounds for greenhouse gas emissions, nutrient flows and biodiversity loss, and urgently needs to be scaled back. This is likely to create dynamic movements within the industry and thus space for TVB to grow.
The Single-Use Plastics Directive will ban products for which alternatives exist on the market, such as single-use plastic cutlery, plates, and items made of oxo-degradable plastics, by the year 2021. Although not currently 100% plastic-free, TVB have made movements in the past and strive towards this.
4 out of 10 Dutch people expect to be eating less meat over the next 5 years. 21% percent of the population indicated that they believe eating meat will eventually become the exception rather than the rule. This indicates growth of the market and potential for TVB to increase their sales volume.
A great amount of Soy, the main ingredient for most meat replacements, comes from South America. The farming of this ingredient has caused many problems in this part of the world, including forests being cut down, soil becoming exhausted, and water being increasingly polluted.
In more detail…
- Europe’s animal farming sector is under pressure to scale back
- Focus on health, wellbeing and sustainability
- Political pressure to develop policies scaling back greenhouse emissions
- Single-Use Plastic directive requires packaging to be overhauled thus impacting production costs
- Meat replacements currently make up 1% of the total market share world-wide, a study by Barclays shows this is likely to have risen to 10% by 2029.
- Expected increase in market capacity
- Economic difficulty may result in consumers going for cheaper food options
- Good trade relationships with US and EU, the latter seeing Dutch as “neutral” traders for Europe
- 21% of population believe eating meat will become the exception not the rule
- Higher desire for sustainability
- Increase in vegetarian and vegan diets
- Increase in use of technology to establish relationship with a brand
- Population in Netherlands increasing over 65 who are more likely to eat meat
- Over 65 less likely to be on technology channels
- Increased use of social media in the Netherlands
- Usage of home delivery services has increased
- Spending on ordering food online went up by a quarter in the Netherlands in just half a year in 2019.
- Technology enabling people to get access to food without cooking
- More restaurants can go online via channels like Deliveroo
- Restaurants wish to offer personalised menus, so selling direct to restaurants may be a way to take advantage of this trend
- TBV are exposed to multiple laws around food safety standards
- Employment law locally and internationally impacts them
- Farming of Soy has caused many problems such as forests being cut down, soil becoming exhausted, and water pollution
- Meat alternatives are increasingly seen as the more environmentally friendly option
Five Forces Analysis for The Vegetarian Butcher
Due to the fairly recent nature of the industry, we are not yet near saturation. However there are increasingly new entries into this market and an already evenly balanced competitive landscape, meaning this young industry is more competitive than you'd expect.
Low product differentiation also factors in to this, as most brands are taking similar approaches. TVB does differentiate itself very effectively by creating a brand that positions itself as a Butcher, and a producer of meat, but not on the actual product contents itself.
In more detail…
Industry Rivalry: Low to Medium
- Industry has seen increasingly high levels of growth
- New competition entering market
- Similar approaches being taken by all companies
- Brand differentiation used
Threat of New Entry: High
- Low cost of entry
- Meat replacements can be relatively cheap to produce
- More direct attempts to recreate meat taste/texture requires higher R&D spend
- Channels of distribution are very varied; supermarkets, specialty stores, restaurants and fast-food restaurants can all be considered options
- Differentiation within the market is limited
Threat of Substitutes: High
- Lots of potential options
- Eating meat
- Vegetable only diet
- Take away or restaurant food
- Food delivery boxes with meal kits
Power of Suppliers: Medium
- High demand but a low number of suppliers for Soy
- Suppliers of Lupin are less concentrated thus have less bargaining power
- Suppliers of packaging have little power
Power of Buyers: High
- Easy for buyers to switch to alternatives
- Lots of choice
- Requires education to move people on to the diet
SWOT for The Vegetarian Butcher
- Founder experience as a farmer
- Brand of being a Butcher
- Distribution assets and capabilities
- Sales and growth
- International brand awareness increasing
- Not easily accessible via delivery services or trade
- Promotions are limited
- Needs to educate the consumer to try their product
- Industry growth will continue
- New meat like products
- Social media brand development for awareness
- Overseas growth
- Changes to policies around packaging
- Population increasingly older so less likely to try meat alternatives
- Competitor from overseas (such as Beyond Meat) entering market
- Increased scrutiny on sustainability of fake meat products
Example Strategic Objectives
Meat replacements currently make up 3% of the total market with a view from Korteweg that, when it reaches 20%, fake meat will be a competitor to cheap meat for meat eating consumers.
Considering the market analysis, the following objectives are appropriate:
- Increase brand awareness by within the Netherlands so that consumers identify TVB as one of the main sustainable food brands
- Increase market share by overtaking main competitor Unox and becoming the market leader for meat replacements
- Increase total sales of the TVB burger range through all available distribution channels and enabling food to be sold via restaurants
Yum! Given the above, partnerships are going to be strategically important to TVB. Developing relationships with other businesses, such as Burger King, to reach other corners of the market will help TVB grow brand awareness and revenue.
Once this is established, they will have access to a section of the home delivery market and thus be able to increase sales and market share.
Partnerships shouldn’t be restricted just to companies. The “quick win” target market for TVB is the under 40 demographics, so TVB should exploit influencers on social media to reach new consumers. This links up the social media trend, their target market, and the need for brand awareness.
It’s going to be an interesting few years for meat replacement markets, with new entrants, consumer education and continued innovation around brand and product. The Vegetarian Butcher is well placed to take advantage of this market, with a strong brand and heritage, so with some strategic work they should continue to nicely grow.
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