Have you seen the price of meat lately?
It’s not pretty. The average price of a pound of ground beef in the United States has jumped over 20% in the past year and seems to just keep going up.
Meanwhile, the cost of a 12-ounce package of Impossible ground has continued to drop and is showing up at under $6 at some retail establishments, about the same price of a pound of extra lean ground beef.
Not quite price parity…yet. But as Impossible and other plant-based meat providers continue to ramp up volume, it’s worth asking: when meat alternatives reach price parity and, eventually, sell at a discount to animal meat, could customers start reaching for plant-based meat to save a buck?
Meat Prices Likely to Stay High
While meat prices may crest eventually as COVID-related disequilibrium sorts itself out of the system, much of the inputs to create a pound of meat – chemical fertilizers for feed, rising labor prices for processors and distribution, etc. – may not be coming down anytime soon in an economy where inflation is at levels not seen since the 80s.
And then there’s the demand side of the equation. The appetite for meat continues to grow worldwide, and American farmers are one of the primary beneficiaries as exports of U.S. grown beef grew over 20% in the last year. If demand continues to grow at double-digit percentages every year, prices could still go up even as labor and other price inputs plateau.
Plant-Based Meat Still a Premium Product
For now, though, plant-based meat is still more expensive. Consumers are still asked to pay a plant-based meat “tax” when substituting an alt-meat patty at many fast food joints. While found for $5.99 at some stores, a package of Impossible or Beyond Meat ground is still priced significantly higher at premium grocers.
But that all may eventually change. Back at CES 2019, Pat Brown made it clear his goal was to drive the price of his company’s product down to where it was cheaper than the price of animal meat. While he’s not quite there three-plus years later, he and others are making progress on closing the difference.
So when the two meat types reach price parity and plant-based prices possibly drop even lower than conventional meat, it will be interesting to see what happens to the demand for alternatives. One could imagine consumers reaching for plant-based as a lower-cost alternative in one scenario. But, on the other hand, there’s also a chance some will continue to prefer animal meat and be willing to pay a price premium for what they see as “the real thing.”
However it shakes out, there’s a good chance we’ll see how big a factor pricing plays in the consumer calculus in the next couple of years as the two types of meat continue on their current cost trajectories.
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