No two ways about it: Plant-based meat has hit a sales slump.
According to recent data from market watcher SPINS, sales in the overall plant-based meat market dropped 1.8% year over year for the four-week period ending October 3rd. This follows an even bigger drop in the category earlier in 2021 starting around April, when the plant-based category dropped over 15% year over year.
The drop in overall plant-based meat sales jibes with what some industry bellwethers are seeing. According to Michael McCain, the CEO of Maple Leaf Foods, his plant-based meat sales dropped in every channel the company sells into in the third quarter of this year. McCain was perplexed as to the reason and said the company is reevaluating their “investment thesis”.
Maple Leaf wasn’t the only one. Beyond, where company CEO Ethan Brown came out and said the plant-based meat company had seen its sales drop 13.9% year over year and forecast a potentially bumpy road ahead.
So what’s going on here? Fast-growing nascent markets are supposed to go up, not down and down some more.
While there’s no way to know for certain without more data. it’s worth taking a stab at potential causes for the drop in plant-based meat. Here are a few ideas:
Consumers Satiated Their First-Taste Curiosity.
Let’s face it, most of us were curious to sink our teeth into our first Impossible or Beyond burger to see what all the fuss about. Yet, a year or two later, that early curiosity has been satiated, and only some of us are regular plant-based meat-eaters.
Which brings us to…
Not Enough Consumers Have Switched to Plant-Based
While many of us have tried our first plant-based meat, most of us aren’t buying it on a regular basis. According to a recent survey by the Food Information Council, two-thirds of Americans surveyed have tried plant-based meat over the past year, while only 40% of Americans are eating plant-based meat with any regularity. Of those that consume plant-based meat on a regular basis, only about half eat it once a week or so.
Meat Industry Counter-Messaging May Be Working.
I recently suggested that Beyond’s troubles might be a sign that the animal-based meat industry’s negative counter-messaging might be taking hold, and this latest news could be an additional confirmation of that.
While it may be true that while products like Beyond and Impossible are plant-based, the reality is they are also highly processed food with pretty science-forward ingredients. This reliance on a future-forward ingredient list provides an opening for criticism from the legacy meat business, which uses negative messaging to suggest their animal products are the natural and healthier alternative compared to the high-tech competitors.
Looking at survey data, the incumbents are smart to beat this drum as there are concerns among consumers about what is in these new alternatives. According to a recent study by Menu Matters of 1,025 US households, about half (47.9%) of consumers suggest they want more information about plant-based meat before trying them, and 43.1% want complete transparency of ingredients before they try them.
At this point, it’s hard to tell how much of the concerns about plant-based meat’s ingredient list is driven by top-down talking points or if the message-crafters of the legacy meat business are only echoing what they hear among the meat-eating hoi polloi. It could be a little of both, but no matter where it’s coming from, the plant-based meat industry is seeing the rise of a more skeptical consumer.
Less of Us Ate at Home In The Second Half of 2021
As many Americans got their vaccinations in the first half of this year and governments lifted rules against convening indoors in the spring and summer, people started to eat out more. Early data suggests many people eat most of their plant-based alternatives at home, meaning that more meal occasions outside the house could translate to less plant-based meat consumed overall.
Some Are Down, While Others May Be Up
Last week, Impossible raised a $500 million round while claiming “record growth.” While the release itself focused more on expanding Impossible into new markets, if Impossible’s growth also came on the top line, it would provide a counter-narrative to what we have heard from Beyond, Maple Foods, and SPINS.
As I wrote in early November, the reality is unlike animal-based meat, plant-based meat is not a commoditized product category where one can be easily interchanged with another. Instead, plant-based meat products are more akin to something like cola, where some may prefer Coke while others prefer Pepsi.
In other words, some companies may be seeing sales growth, while others are seeing market share decline.
At this point, we don’t have enough data to say with certainty which factor or factors are contributing to the plant-based meat slump. What we do know is some companies are beginning to at least reevaluate their original assumptions about the market. I have to wonder if this reevaluation of the plant-based market might result, at least in the near term, a slow down seemingly unrelenting flow of venture investment into this category.
Leave a Reply