Alternative proteins are likely to become a major competitor to some of New Zealand's red meat products and the sector must respond with a clear strategy, according to research commissioned by Beef and Lamb NZ.
The report found that although alternative proteins are currently manufactured in small volumes, large-scale production of burger patties and mince is likely to be a reality within five years.
The study has concluded a number of forces are coming together that are driving governments, investors and consumers to looks for alternatives to red meat.
These include environmental concerns relating to climate change and the ability to feed the growing world population in a sustainable way, the use of animals in food production and the place of meat in a modern diet.
Alternative proteins, such as plant-based protein, cultured meats and edible insects, provide a substantial amount of protein but require less natural resources to produce than the most common protein sources, meat and fish, the report says.
Despite these challenges, the research demonstrates there is still a strong future for the New Zealand red meat sector.
The report reveals an untapped demand for naturally raised, grass-fed, hormone-free and antibiotic-free red meat, for which consumers are prepared to pay a premium.
Beef and Lamb NZ chief executive Sam McIvor said the farmer-funded organisation commissioned the research to better understand the shifts in food, food production technology and consumer trends and distinguish the hype from reality.
"The technology to produce a consumer-ready alternative protein burger is here and is pushing for commercial scale," he said.
"We have seen an increase in the mainstream availability of alternative protein products in grocery aisles and quick service restaurants."
The research also clearly articulates the opportunities and prospects for the New Zealand sheep and beef sector.
"That's because the same forces driving the significant investment and demand for manufacturing alternative proteins, including concerns about industrial farming, health and the environment, offer us a chance to differentiate New Zealand red meat internationally."
Free-range natural sheep and beef farming in New Zealand is a world away from intensive factory farming practices (feedlots) and "big food", which has tarnished the reputation of red meat, he said.
In the US alone, retail sales of labelled fresh grass-fed beef including domestic and imports reached US$272 million in 2016, up from US$17 million in 2012. Sales are doubling every year.
According to the study, New Zealand's beef exports face the greatest challenge from alternative proteins, particularly to the United States.
The US takes 50 per cent of New Zealand's beef exports and a large proportion of this goes into burgers.