Conventional wisdom insists that consumers desperately want alternative meat products.
Investors seem to buy the hype since they funneled $5 billion into the industry in 2021, according to the Good Food Institute, an alternative protein advocacy nonprofit. That investment is a 61% leap over 2020. The fact all that money poured into the business during a pandemic probably raises more questions than answers.
And while some truth might be hiding behind those numbers, the reality – as always – is a little messier.
Plant-based Meat Market Stalls
Beyond Meat’s latest earnings report revealed the company lost more than $80 million over the last three months of 2021 – losses three times worse than the same period in 2020. In addition, fourth-quarter revenue tumbled 1.3% to $100.7 million.
“In 2021, we saw strong growth in our international channel net revenues, as well as sporadic yet promising signs of a resumption of growth in U.S. foodservice channel net revenues as COVID-19 variants peaked and declined,” President and CEO Ethan Brown explained. “These gains, however, were dampened by what we believe to be a temporary disruption in U.S. retail growth for our brand and the broader category.”
Analysts don’t expect things to improve in 2022. Beyond Meat forecast revenues short of estimates, predicting total sales of $560 million to $620 million for 2022, far below analysts’ original estimate of $637 million.
Maple Leaf Foods’ plant-based meat division, Greenleaf Foods, suffered a similar setback, reporting a sales drop of 13.4% in the fourth quarter, slightly worse than the total 2021 sales decline of 12.7%.
After years of unprecedented growth – and a record 2020 –plant-based meat sales stalled across the board. In the United States, overall sales dipped 0.5% in 2021. Plant-based meat sales experienced a similar regression in the United Kingdom.
Hope Sprouts Eternal
Despite these setbacks, stakeholders remain bullish on plant-based meat products, even in the face of growing competition. Part of the optimism rests on the conviction that plant-based products will reach price parity with traditional meat offerings within the next two years.
“Two of the biggest factors limiting the adoption of plant-based meat are taste and texture and price,” Brian Holland, managing director, and senior research analyst at Cowen, told Food Dive. “Taste and texture, that will continue to evolve with innovation over time, but dealing with the price in the here and now — they can’t take [premium] price and still expect to grow adoption.”
In the meantime, alternative protein manufacturers must rethink their approach to the market, whether it’s reformulating their products, ramping up SKUs, or taking a new approach to their marketing messaging.