Massive misunderstanding? Nestle China responds to plant-based investment concerns

By Pearly Neo

- Last updated on GMT

Nestle China has responded to criticism from the plant-based industry about its recent CNY730m (CHF100m/US$98.9m) investment and plant-based facility, amid concerns over the lack of detail and sustainability focus. ©Getty Images
Nestle China has responded to criticism from the plant-based industry about its recent CNY730m (CHF100m/US$98.9m) investment and plant-based facility, amid concerns over the lack of detail and sustainability focus. ©Getty Images

Related tags Nestlé plant-based

Nestle China has responded to criticism from the plant-based industry about its recent CNY730m (CHF100m/US$98.9m) investment and plant-based facility, amid concerns over the lack of detail and sustainability focus.

According to the firm’s initial statement, the investment would go towards strengthening its footprint in China, enhancing its product portfolio with ‘innovative and premium products’, ​and the company’s first production facility in Asia for plant-based products.

Other projects under this investment include an upgrade of its existing Chengzhen Wafer line, a new Quality Assurance Centre, and capacity expansion for its existing pet food plant in Tianjin via new production lines.

“In recent years, the food sector has undergone a quiet revolution as people are choosing more and more healthy, nutritious, and environmentally friendly foods. To meet this demand, Nestlé has decided to step up its focus on the plant-based category and invest in a new production facility at Tianjin Economic Development Zone (TEDA),”​ said the firm of the plant-based facility in particular.

“By investing more in latest technologies to create products using plant, Nestlé will help to reduce carbon emissions.”

Although this announcement caused a buzz initially, since then the plant-based industry has voiced criticisms about the lack of detail provided, in addition to sustainability concerns revolving around the new plans.

“The part focusing on the plant-based category lacks any detail: No specific product lines were mentioned, [it is] not clear if [the production line] refers to plant protein or other products. No sizes or timeline were given,”​ Asia Pacific-focused plant-based angel investor, advisor and entrepreneur Michal Klar told FoodNavigator-Asia​.

“Media outlets, not just plant-based focused, seemed to be misled by the announcement​. Some have reported it as if the entire [investment value] is directed towards the plant-based facility, and others just over-emphasised the plant-based part, by including it in the headline etc.

“[Although] several media have [since] taken down the articles and one industry insider made a public correction - but mostly the articles are still online.”

In response to criticisms about a lack of details, Nestle China told FoodNavigator-Asia​ via an email statement that these were not yet available as: Our current priority is to complete the production capability – [but] please stay tuned for more details.”

The firm did however attempt to shed more light on its reasons for the new facility, saying that this as based on consumer demand and research.

“[Such] foods are gaining an increasingly large share of the market. According to statistics in The Research Report on Meat Consumption in China, a total of 56.1% of the respondents indicated they are eating less meat,”​ said Nestle China.

“Nestle’s new facility in TEDA will be our first [in the] plant-based category production line in Asia. Given that vegetarian meat has always been a conventional food in China, we are confident that it will be much easier for local consumers to accept the concept of plant-based foods, with greater prospects in China than in other countries.”

Sustainability concerns

Another area of concern within the plant-based community was that Nestle’s statement mentioned the facility’s environmental benefits, but at the same time its other parallel projects appeared to be moving in another direction.

“The new plant-based facility is framed as a way to ‘reduce carbon emissions’. But by expanding animal protein-based pet food product and dairy-based confectionery products Nestle is in fact further growing its environmental impact, as meat and dairy are significant sources of greenhouse gas emissions in China and globally,”​ said Klar.

The dairy-based confectionary product mentioned above is the Chengzhen Wafer, which was launched in China 2019 to become a hit with local consumers, popularised via its ‘good cow’ animated advertisement.

“Chengzhen Wafer is a dairy-based product advertised by Nestle in Chinese TV/online in a way that is misrepresenting the factory farm reality of dairy production,”​ said Klar.

“Intensification [of a dairy product] would inevitably have to lead to increased emissions.”

To this, Nestle China declined to comment on specifics regarding dairy or meat usage, but did reiterate its general environment and sustainability goals, and its hopes that offering plant-based food to the masses would help to accelerate these.

“In 2019, Nestle announced the goal of achieve zero net greenhouse gas emissions by 2050 - Plant-based products generally have a lower environmental impact, including lower CO2​ emissions, land use and water use,”​ said the firm.

“By offering people more plant-based foods, Nestlé can help to reduce carbon emissions.”

In general, China is known to be an increasingly strong proponent of the dairy industry, with major industry associations even drawing up guidelines for locals’ dairy and dairy product consumption​, and the average Chinese consumer consuming some 30kg of dairy or dairy products a year.

Nestle China does also support the local dairy industry - our sister publication NutraIngredients-Asiareported last year​ on how the firm established the Dairy Farming Institute in China in 2014.

Another plant-based industry concern is that China as a whole also wants to triple its milk consumption over the next few years, which could have ‘major global consequences’​, according to academics.

“[Even] if the efficiency of the dairy industry in China is drastically increased, global emissions of greenhouse gases and nitrogen produced by this sector will still rise by 20 to 25%,”​ said Wageningen Environmental Research’s Gerard Velthof.

Plant-based in China

Either way, Klar is optimistic that ‘new-generation’ plant-based products as a whole are finding their feet in the Chinese market, replacing the older ‘mock meats’ that targeted a more religious vegetarian audience.

China’s plant-based market is still very nascent, but this year we’re seeing signs of acceleration [such as] Beyond Meat’s launches with Starbucks, KFC and Pizza Hut and Omnipork rolling out new products,”​ he said.

“While there are many challenges ahead, I believe we are at the brink of that ‘perfect storm’ in the new protein sector in China.

“More local entrepreneurs and international players will launch ventures inspired by recent developments in China and the growth abroad, investors will be excited enough to pump millions and billions required to scale these projects and consumers will happily choose products that are certainly an improvement over the what the current food system offers."

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