Global agribusiness giant Archer Daniels Midland (ADM) is reconsidering its plan to invest US$300 million in expanding production of alternative proteins, due to the growing lack of interest in plant-based foods, the company's CEO Juan Luciano revealed. according to Food Dive.
ADM “reformulated” its investment project “to better adapt to the demand environment with lower expected growth,” Luciano said during the earnings call on October 24.
The company noted a reduction in market inventories due to decreased consumer demand, and expects these headwinds to persist into next year, as highlighted in the October 25 report.
Profit from ADM's nutrition unit totaled US$ 138 million in the third quarter, representing a decline of 22% from last year's US$ 177 million.
Growth driven by demand for ethanol and nutrition sectors
However, the company's overall profits surpassed analysts' expectations, driven by increased demand for ethanol and growth in some areas of the nutrition and oilseed businesses, as reported by Food Dive.
Despite continued consumer interest in the alternative protein category, higher prices compared to traditional meats have decreased the number of repeat customers and reduced sales, as indicated in a CoBank report.
In addition to cost factors, current perceptions about taste, value and versatility continue to be obstacles for the category, according to the report.
Last year, ADM revealed plans. They aimed to expand alternative protein production in Decatur. The objective was to meet the significant growth in demand at the time. The information was released by Food Dive.
However, slowing sales indicated that the plant-based meat market could be reaching a tipping point, according to the report.
To offset slowing demand, the company was focusing its portfolio on “harder categories,” including specialty nutrition and dairy.
ADM seeks resilience in specific segments after sales slowdown
The transition was partially interrupted. An explosion occurred at the company's processing complex in Decatur, injuring eight workers, according to the report.
“We will work aggressively to restart operational capabilities at Decatur East and minimize impact in 2024,” Luciano added.
In the third quarter, ADM had a net profit of US$ 821 million, marking a reduction of 20% compared to the previous year. Last quarter, the grain trader saw a decline in global soybean crushing margins. Furthermore, there was an unfavorable change in export demand for Brazil.
Strong demand for biofuels boosted profits, as indicated in the report, and this trend is expected to continue next year.
Source: Oils & Fats International
