More and more people opt for cutting their meat intake for various reasons such as personal health issues and the impact of livestock farming on the environment. The artificial meat industry continues to grow without showing any signs of slowdown: with the advent of Beyond Meat, a US producer of plant-based meat substitutes, artificial meat has a good chance of emerging into an industry, not just a market segment. The meat substitutes business is growing around the world: total sales of vegetarian burgers, tofu and similar products were estimated at about $4.5 bln in 2018, and are projected to surge by almost 50% by 2022, reaching a significant share of the meat market, which exceeds $200 bln a year in the United States alone. CEO of Pizza Hut Russia Alexander Nigmatullin spoke about vegetable meat pizza in an interview with Invest Foresight.
Food innovation
— Pizza Hut is not a vegetarian food chain, so why should you even experiment with strange foods? Is this a fashion statement or a conscious attempt to support innovation in the industry?
— Our guests are ready for innovations, and even more so – they are expecting them. Over the years, one of the most successful Pizza Hut strategies in Russia has been to offer non-standard forms and tastes. Over the past year alone, we have released hot dog pizza with sausages on the side, black dough pizza, heart-shaped pizza for Valentine’s Day, and much more. We like to experiment surprising our guests with unusual combinations, trying something new.
— Are these experiments commercially viable or is it just a marketing trick to get free media and social media coverage?
— Of course, any experiment is part of our brand marketing. For us it is also a development strategy. We spend a lot of resources on creating interesting and safe products throughout the year. This expands our customer base and attracts new guests who await new pizzas on the menu.
— There are two global food trends: conservatism and commitment to good old cuisine, and innovation and quest to try more new products. Is Pizza Hut pursuing both trends? What is the ratio of conventional and new, in percent, on the menu of an average restaurant in Russia?
— Pizza Hut has a long history not only in the world but in Russia as well – specifically, 25 years in the Russian market. But as a rule, experimental pizzas account for up to 10% of the regular menu in a Russian Pizza Hut restaurant.
— Clearly, a more expensive product means lower marginality. How does this affect sales in general?
— We understand that pizza with plant-based meat is a special product which will be chosen by customers as a new experience or as part of responsible consumption. We consider it a good result if every 20th pizza sold in our restaurant would be with Beyond Meat. It is not a large number in terms of the total trade volume. As for our plans for this product, we believe that with a good marketing support the sales of pizza with plant-based meat could be comparable with regular pizzas.
Plant-based meat
— People usually want to know what they are eating. And if in the case with regular meat we know what it is, with plant-based meat it is a bit more difficult. What meat substitute do you use and how can we learn about its contents?
— The plant-based meat that we use in our pizzas comes from the famous brand Beyond Meat. It is an innovative product based on pea protein. The product resembles natural meat a lot; it even has a similar red juice, only it comes from beetroot.
— A patty made of plant-based meat costs three or four times more than a regular beef patty. Who is it marketed to?
— The cost of a product directly depends on ultimate demand conditions, which will clearly be different for each operator. The high price of Beyond Meat products is easily explained by the investments made in the project. Plant-based meat patties will not cost lower than natural meat until restaurant operators begin to widely use the product. Unless a product is affordable, it will not be highly demanded by restaurant market players.
— The sales of meat substitutes in major Russian retail stores have shown that customers are totally indifferent to this product. Why does Pizza Hut think it will succeed in selling meat substitutes?
— Pizza with plant-based meat is a unique product. First, interest in the products manufactured by Beyond Meat is only gaining momentum in Russia. Second, our company offers an excellent product at a very affordable price: a pizza with plant-based meat costs about the same as a classic pepperoni pizza.
— Do Beyond Meat products sold in Russia have different ingredients? Why is it necessary to localize the product?
— The ingredients for Beyond Meat patties are identical at all markets worldwide. All ingredients are thoroughly selected by the manufacturer, and the finished product is supplied to restaurants via an official distributor. In Russia, our partner is Alyata.
Responsible consumption
— Principles of responsible consumption are declared by the UN as a global goal. What is your understanding of them? Do you think Russian consumers are ready to follow these principles?
— The conceptof responsible consumption is definitely our future, and this future is closer than it often appears to be. Importantly, today we can start a dialogue on conscious consumption. As a brand, we are committed to ethical consumption of natural resources such as water and electricity.
By Christina Firsova