Many companies across numerous sectors are struggling to maintain the shine they were sporting before markets turned sour. That said, the plant-based meat category stands out as a particularly stunning fall to earth. Investor darling Beyond Meat just recently slashed nearly -20% of its workforce, while meat giant JBS has pulled the plug entirely on its plant-based meat division, Planterra. While inflation and supply chain disruptions are partially to blame for sinking outlooks, a bigger problem may be that the plant-based meat market has already reached a saturation point.
Recent market data from Deloitte shows that after years of double-digit growth, sales of plant-based alternative meat (PBA meat) has flatlined. Recently, there are even signs of outright decline. Retail sales of refrigerated meat alternatives fell almost -11% in the 12 months ended Oct. 2 from the previous period, IRI data show.
Even as sales have stagnated, investments in plant-based protein from global venture capital and major consumer brands has continued over the past year, though at a slower pace. Last year was the first year there was a decrease in investment in plant-based startups. The sector raised $2.1 billion in 2020, according to the Good Food Institute, and $1.9 billion in 2021. Some analysts say too much investment may be part of the problem though, with too many products chasing fewer consumers than the industry and investors alike had hoped. There are over 100 plant-based chicken-nugget companies alone, many of them with nearly identical products.
According to Deloitte’s “Future of Fresh” survey, there are three key reasons behind the current lackluster performance in the PBA meat sector:
PBA Meat Market May Be More Limited Than Thought: Dramatically improved taste in recent years unlocked new interest in PBA meat. But the portion of the US population open to trying (and repeat buying) it may already have reached a saturation point. The number of consumers who sometimes buy PBA meat for themselves or a household member did not grow in 2022). The half (53%) who aren’t buying it may not be easily reachable, partly due to cultural resistance to a product some view as “woke.”Others, many of whom say they want to reduce their red meat consumption, still aren’t interested in PBA meat.
Fewer People Willing to Pay Premium Price: Amid skyrocketing food inflation overall, Deloitte says that while asking consumers to pay a premium price is a big ask. Willingness to pay a premium for PBA meat dropped -9 percentage points from last year and remained well below the number of people who say they would pay a premium for the best traditional fresh food. PBA meat producers believe they are on the path to achieving cost parity with animal meat, partly because animal meat prices are rising. But until they get there, price will likely continue to be a PBA headwind—especially for consumers who are less passionate about the product.
More Consumers Questioning Health Benefits: Even buyers of PBA meat are changing their views on some of its attributes. The biggest change is in health perceptions. Many early adopters believed that the health benefits of plants would apply to all food products made from plants. Last year, almost seven in 10 consumers (68%) who had purchased PBA meat believed it was healthier than animal meat. But some of these consumers are changing their minds, as this year, the number dropped by -8 percentage points. A similar but smaller drop occurred with environmental sustainability, down -5 percentage points. (Sources: Deloitte, Forbes, AgFunder)