burger
Source: Shutterstock / Moving Moment

There’s no stopping the rise of plant-based meat – A look at the reported decline in refrigerated meat alternatives

(1 min read)

Introduction

Several recent reports have speculated that setbacks in the plant-based sector are a sign that the appetite for plant-based food has reached its peak. Market data released by data technology company SPINS towards the end of 2021 suggested the plant-based meat market had fallen by 1.8% year-on-year in the four-week period ending 3 October 2021. The number has been cited by a host of articles proclaiming that this signifies the wider decline of the plant-based industry.[1]

At ProVeg International, we believe that this is not the case. Although plant-based refrigerated meat sales may have seen a slowdown in 2021, this is in no way indicative of a decline in the industry as a whole, and media coverage suggesting as such is misleading – and perhaps intentionally so.

News articles picking out premium brands who are struggling in a downturn and then extrapolating it to the whole sector is like seeing that Apple is underperforming in their projections and then writing an article advertising the death of the mobile phone.”[2]

David Pannell

Co-Founder of Vegan Business Tribe

 Is this the end for plant-based burgers?

Plant based vegetarian burger patties being cooked on flat black iron grill.
Source: Adobe / Moving Moment

In this article, we explore the sources of this misleading reporting and look at whether plant-based-meat sales have dropped overall. There are three key explanations for this perceived slump in sales:

  1. Statistics which tell only half the story
  2. The inevitable post-pandemic shift
  3. The novelty curve

This, of course, is not an exhaustive list. It is simply three of the central explanations for what might be driving this reported downturn in plant-based sales. Since it is so important for plant-based businesses to stay up-to-date with developments within the sector, we will do our best to always provide a context for these kinds of reports in the media.

What is the data missing?

The frequently cited SPINS data from 2021 recorded a 1.8% drop in sales for the plant-based meat market and a 15% year-on-year drop in the plant-based category as a whole in April of that year in the US. Data released by business-intelligence firm IRI also reflected a 16.1% decline in plant-based refrigerated meat alternatives in the US.[3]

Sources such as Food Dive and The Spoon have also cited a press release by Maple Leaf Foods, a Canadian packaged-meats company, which states that their Plant Protein Group sales declined by 1.2% in the third quarter of 2021.[4] At the same time, Beyond Meat’s stock prices fell by about 50% due to missed earning targets and changes in consumer behaviour.[5] These figures are of concern to investors and businesses hoping to expand their plant-based ranges.

So what’s missing here? Regarding the Beyond Meat situation, talks of failures or slumps cannot be mentioned without acknowledging the supply-chain issues the company faced in 2021 due to extreme weather events and inability to keep up with staggering demand. According to ingredients-company Roquette Freres, Canada suffered from a 45% decrease in pea production in 2021 due to a drought during the summer, impacting the production of pea protein for plant-based businesses.[6] For Beyond Meat, this led to an inability to fulfil orders, and, in turn, affected their stock price. It was not simply a case of no one wanting the burgers.

Business woman and farmer signing papers in corn field
Source: Adobe / Budimir Jevtic

Extreme weather events will affect all of us – it’s time to start working together with farmers to mitigate their effects.

As the climate crisis continues to develop, these seemingly isolated climate events will become more frequent, suggesting that farmers and manufacturers will need to work together to mitigate these effects.

Amplifying farmers’ voices: farming perspectives on alternative proteins and a just transition

If you are interested in learning more about all the ways in which farmers can drive change and help to mitigate and adapt to the climate crisis, click here to read ProVeg International’s report, ‘Amplifying farmers’ voices: farming perspectives on alternative proteins and a just transition’.

The current data moreover only largely reflects the North American markets, meaning that a huge chunk of the global story is left out. For example, while Beyond Meat’s stock price and US performance have suffered in the past year, their expansion into Europe and China signals that the company is still growing strongly and extending their consumer reach. [7] According to the Good Food Institute, Western Europe experienced a 19% growth in plant-based meat retail dollar sales in 2021, while Eastern Europe showed an even more impressive 34% growth rate.[8]

Many experts in the field are certain that there are still areas of untapped demand and opportunities for growth, specifically in the Asia Pacific market. Research into the level of consumer interest in plant-based meats in India and China found that 62.8% and 62.4% of consumers respectively were very or extremely likely to purchase plant-based meat, compared to only 32.9% of US consumers.[9] By keeping a close eye on plant-based developments and consumer interest across the globe, we can gain a more comprehensive understanding of where the industry is really headed in the coming years.

Meanwhile, those in the cultured-meat space are especially certain that the still-embryonic sector will reap positive returns. According to Allyson Fish, President of Global Plant and Alternative Proteins at ingredients company ADM, cell-based meat represents a huge opportunity, “Maybe it won’t have those 40% CAGRs that some people came out with,” she says, “but it’s still going to be very healthy ​[growth]”.[10] Once regulations catch up with the advances being made in the cell-based meat space, the entire meat industry is likely to be shaken up.

new age meat sausages
Source: New Age Meats

The cultured meat sector is still inspiring many stakeholders globally, certain it will see success

Ultimately, focusing on the decline in plant-based meat sales in North America does not provide us with a useful metric by which to measure the success of the plant-based industry as a whole. We only have to look at the success of plant-based categories in other areas of the market to see this. SPINS released another set of data in 2022, in partnership with the Good Food Institute and the Plant Based Foods Association, which shows that retail sales of plant-based foods in the US grew by 6.2% in 2021. At the same time, German brand Rügenwalder Mühle saw their meat sales fall by 1.9% in 2021 while their vegetarian and vegan products increased by a whopping 41.6%.[11] Clearly, the situation is not as cut and dried as has been reported in certain publications.

The post-pandemic landscape and the cost-of-living crisis

We are only now starting to see how the market for plant-based products is shaping up in the aftermath of the pandemic, which had a drastic impact on people’s eating habits around the world. Given that eating at home was the only option at the time, it’s unsurprising that so many supermarket brands experienced unprecedented growth in sales.

However, as more of us are now able to venture back into society and restaurants, cafes, and bars are open again, supermarket purchases will naturally be going down, while dining out and ordering takeout will be going up. According to data from the NPD Group, consumer spending at restaurants in the US increased by 16% in 2021 after having declined by 12% in 2020.[12]

friends enjoying food
Source: Shutterstock / Jacob Lund

 As we’ve returned to eating out, our retail purchases have naturally decreased.

Many of the statistics citing a decline in plant-based sales in supermarkets do not account for this shift towards dining out and the growth in plant-based options available in foodservice restaurants. A study conducted by Tastewise found that US food-service menus saw a 1,320% increase in vegan meat substitutes compared to pre-pandemic figures. Clearly, the plant-based sector of the food-service industry is still seeing substantial growth, even if some products on supermarket shelves are experiencing a slowdown.[13]

Similarly, geopolitical events such as the war in Ukraine are contributing to a huge hike in the cost of living, limiting the amount of money that families have to spend on food. It is widely acknowledged that plant-based products are often priced at a premium compared to their animal-based counterparts. According to Jon Copestake, Senior Consumer Analyst at EY, “consumers don’t want to pay for sustainability”, with only 17% willing to pay a plant-based premium.[14]

If plant-based brands want to remain relevant and continue to increase their sales, they need to focus on achieving price parity with animal-based products as soon as possible. When it comes to paying a higher price for plant-based meat alternatives, research has found that only 25% of flexitarians are very likely or extremely likely to pay a higher price than that of animal-based meat.[15] If you combine this figure with the cost-of-living crisis and the accompanying contraction in consumer demand, it means that many flexitarians will be more likely to revert to the cheaper, animal-based alternative unless plant-based products move in the direction of price parity. 

According to Corey Chafin, Associate Partner at consulting firm Kearney, price parity between plant-based and animal-based products would increase the market share of plant-based retail packaged-meat sales in the US from 2.7% (its 2020 figure) to 20%.[16] If you would like to find out how your business’s plant-based offerings can achieve price parity with animal-based products, take a look at the New Food Hub article, ‘3 ways to achieve price parity and drive sales’.

woman looking at product's packaging
Source: Adobe Stock/ eldarnurkovic

Consumers are price-conscious, and, in a period of increased budgeting, will choose the cheaper option.

The cost-of-living crisis has also accelerated consumer preference for cheaper, private-label ranges, in contrast to pandemic-era behaviour when consumers opted for more well-known and trusted brands. According to data by IRI, private labels now account for a whopping 35% of total fast-moving consumer goods sales value in Europe.[17] Significantly, the data that suggests a slump in plant-based sales does not include sales of private-label products since this sales data is often not widely available.[18] This is particularly relevant since sales of private label products in the US have been outpacing their branded competitors, growing in dollar sales by 6.5% in Q1 of 2022 compared to 5.2% for national brands.[19] Moreover, plant-based private labels are constantly expanding and improving their product offerings in the plant-based space. For example, US brands Walmart and Trader Joe’s both released private label plant-based meat patties in the past two years, tapping into this increasing demand. In the UK, Aldi also saw their plant-based sales increase by 500% in January 2022 compared to January 2021, with their plant-based private-label products including a meat alternative burger that is 60% cheaper than Beyond Meat’s branded version.[20] Because the sales of such ranges are not included in sector-sales figures, the view of the plant-based sector as a whole remains obscured.

The plant-based sector is just getting going

There is one key factor that we’ve yet to acknowledge, which is that the plant-based industry is still in its infancy. Compared to the traditional meat and dairy industries, the sector has had barely any time to really show what it can (and can’t) do. If numbers in certain segments are stuttering now, it has little bearing on what the market might look like in another ten or twenty years. In the words of Gary Stibel, founder and CEO of The New England Consulting Group: “It was just a matter of predicting the novelty curve.”[21]

As with any new product or burgeoning market, there will often be an initial high level of excitement that cannot possibly last forever – leading to initial rates of growth that are unsustainable. The likes of Beyond Meat, for example, have seen astronomical, record-breaking levels of interest and growth in the past few years.[22] It’s not surprising to see this company experience bumps in the road – some of which have been due to unavoidable factors  – but it does not herald the slowdown of the sector as a whole.

Others argue that it is far too simplistic to view “plant-based” as a monolith – and we can see this in the data. While the sales of refrigerated plant-based burgers in the US might be slumping, frozen sales are still increasing. Businesses should take a closer look at which specific segments of the plant-based industry are still on the up. The plant-based sector includes not only meat alternatives, but also seafood alternatives, dairy products, confectionery, and more. This begs the question: does a downturn in burgers really have anything to do with the performance of, say, dairy-free milk? With the plant-based milk segment accounting for 16% of all retail milk sales in the US, we would in fact argue otherwise.[23]

plant based milk options
Source: Shutterstock / Julia Metkalova

Many plant-based milks are still on the up.

Because it’s a young industry and because there’s a lot of volatility, you’re going to have times that go up and down. But when you look at the long-term, I think there’s been a fundamental shift in how people think about their health.”[24]

Jennifer Bartashus

Senior Equity Research Analyst at Bloomberg Intelligence

What can the plant-based industry learn from this?

Looking broadly at the plant-based industry, it’s clear that most sectors are still seeing healthy growth, even if the numbers aren’t quite as high as they were during the onset of the pandemic. However, areas which are suffering – for example, plant-based burgers – can be taken as a lesson. If the plant-based industry really wants to take on traditional meat and dairy firms, there’s still a lot of work to do in terms of convincing more consumers to make the shift towards plant-based.

Aside from price parity, there are a number of other factors to contend with. For example, consumers are increasingly looking for clean-label products in their quest to consume healthier food. Almost two-thirds of US adults agree that whole plant foods are healthier than processed meat alternatives that have long and confusing ingredients lists.[25] Businesses that are looking to increase sales of plant-based meat alternatives should try to focus on this element of their product during the R&D phase, or risk driving flexitarians and first-time triers away.

grains and beans
Source: Shutterstock / Andrii Horulko

 Consumers are increasingly turning towards clean label products and are prioritising whole foods

So, rather than witnessing the beginning of the end for the plant-based sector, we’re watching the end of the beginning. Plant-based is moving out of its infancy stage, and we are seeing both plant-based brands and technological innovators expanding globally. In the coming years, we may no longer see the kind of exponential growth that Beyond Meat experienced towards the end of the 2010s. Instead, as the sector begins to mature, it will shift towards more sustainable patterns of growth.

Above all, we must remember that context is everything. Current global events – from droughts, to the pandemic, to the war in Ukraine – have all had an effect on plant-based production and consumer demand. What’s important for companies is to keep on top of the developments, and to roll with the punches. Expanding into any young market comes with high risk and often unpredictable conditions. But with it comes the potential for high reward and the opportunity for your business to be a forerunner in a food-systems revolution.

If you would like to find out more about how your company can promote plant-based products while reducing risk and driving profits, make sure to check out ProVeg International’s New Food Hub, where you can find a host of useful articles, case studies, tips and tricks.

References

References
1 Wolf, M. (2021): What The Heck is Causing The Plant-Based Meat Slowdown? The Spoon. Available at: https://thespoon.tech/whats-the-heck-is-behind-the-plant-based-meat-slowdown/ Accessed 2022-05-30
2 Pannell, D. qtd. on LinkedIn (2022). Available at: https://www.linkedin.com/feed/update/urn:li:activity:6949417045889343488?commentUrn=urn%3Ali%3Acomment%3A%28activity%3A6949417045889343488%2C6949739737624551425%29 Accessed 2022-07-05
3 Watson, E. (2022): Is the party over for meat alternatives? It’s just getting started, says ADM. Food Navigator. Available at: https://www.foodnavigator-usa.com/Article/2022/06/17/Is-the-party-over-for-meat-alternatives-It-s-just-getting-started-says-ADM Accessed 2022-06-17
4 Maple Leaf Foods (2021): Maple Leaf Foods Reports Third Quarter 2021 Financial Results. Available at: https://www.mapleleaffoods.com/wp-content/uploads/2021/11/Maple-Leaf-Foods-Q3-2021-Press-Release-c.pdf Accessed 2022-05-25
5, 7, 18 Poinski, M. (2021): What’s behind the slowdown in plant-based meat sales? Food Dive. Available at: https://www.fooddive.com/news/plant-based-meat-sales-slowdown/610268/ Accessed 2022-05-25
6 Roquette Freres (2021): Roquette tackles soaring pea prices. Available at: https://www.roquette.com/media-center/press-center/2021-09-27-roquette-tackle-soaring-pea-prices Accessed 2022-07-04
8 Good Food Institute (2022): 2021 State of the Industry Report: Plant-based meat, seafood, eggs, and dairy. Available at: https://gfieurope.org/wp-content/uploads/2022/04/2021-Plant-Based-State-of-the-Industry-Report.pdf Accessed 2022-07-20
9 Bryant, C., Szejda, K., Parekh, N., Deshpande, V., & Tse, B. (2019): A Survey of Consumer Perceptions of Plant-Based and Clean Meat in the USA, India, and China. Frontiers in Sustainable Food Systems (27). Available at: https://doi.org/10.3389/fsufs.2019.00011 Accessed 2022-07-20
10  Fish qtd. in Watson, E. (2022): Is the party over for meat alternatives? It’s just getting started, says ADM. Food Navigator. Available at: https://www.foodnavigator-usa.com/Article/2022/06/17/Is-the-party-over-for-meat-alternatives-It-s-just-getting-started-says-ADM Accessed 2022-06-17
11 Best, D. (2022): Germany’s Rügenwalder Mühle eyes further vegetarian-foods expansion. Just Food. Available at: https://www.just-food.com/news/germanys-rugenwalder-muhle-eyes-further-vegetarian-foods-expansion/ Accessed 2022-05-30
12 The NPD Group (2022): 2021 Was a Bumpy Road to Recovery for US Restaurant Industry, But It Ended the Year Better Off Than It Began. Available at: https://www.npd.com/news/press-releases/2022/2021-was-a-bumpy-road-to-recovery-for-us-restaurant-industry-but-it-ended-the-year-better-off-than-it-began/ Accessed 2022-07-06
13 Tastewise (2021): Q3 Market Report: Alternative Proteins. Available at: https://reports.tastewise.io/hubfs/Q3%20Market%20Report%20Alternative%20Proteins.pdf Accessed 2022-07-06
14 Copestake qtd. in Morrison, O. (2022): Why the metaverse will matter to the food industry in 2022 and other megatrends to watch. Food Navigator. Available at: https://www.foodnavigator.com/Article/2022/01/07/Why-the-metaverse-will-matter-to-the-food-industry-in-2022-and-other-megatrends-to-watch Accessed 2022-05-26
15 Smart Protein Project (2021): What consumers want: A survey on European consumer attitudes towards plant-based foods. Country specific insights. European Union’s Horizon 2020 research and innovation programme (No 862957). Available at: https://smartproteinproject.eu/consumer-attitudes-plant-based-food-report/ Accessed 2021-12-16
16  Poinski, M. (2021): What’s behind the slowdown in plant-based meat sales? Food Dive. Available at: https://www.fooddive.com/news/plant-based-meat-sales-slowdown/610268/ Accessed 2022-05-25
17 Morrison, O. (2022): Private labels to stay ‘formidable competitors​’ to the brands, believes IRI. Food Navigator. Available at: https://www.foodnavigator.com/Article/2022/05/11/private-labels-to-stay-formidable-competitors-to-the-brands-believes-iri Accessed 2022-07-06
19 Shoup, M. E. (2022): Private label returns to solid single-digit growth while outpacing national brands, reports PLMA. Food Navigator. Available at: https://www.foodnavigator-usa.com/Article/2022/04/08/private-label-returns-to-solid-single-digit-growth-while-outpacing-national-brands-reports-plma Accessed 2022-07-27
20 Vegconomist (2022): Aldi UK’s Plant-Based Sales Rise by 500% in Veganuary. Available at: https://vegconomist.com/food-and-beverage/aldi-uks-plant-based-sales/ Accessed 2022-07-20
21 Stibel qtd. in Poinski, M. (2021): What’s behind the slowdown in plant-based meat sales? Food Dive. Available at: https://www.fooddive.com/news/plant-based-meat-sales-slowdown/610268/ Accessed 2022-05-25
22 Figueiras, S. (2019): Vegan Burger Maker Beyond Meat Goes Public & Breaks World Records, Biggest Popping IPO Since 2000. Green Queen. Available at: https://www.greenqueen.com.hk/vegan-burger-maker-beyond-meat-goes-public-breaks-world-records-biggest-popping-ipo-since-2000/ Accessed 2022-07-06
23 SPINS (2022): U.S. plant-based food retail sales hit $7.4 billion, outpacing total retail sales, despite supply chain interruptions and pandemic restrictions creating widespread volatility in the food industry. Available at: https://www.spins.com/spins-plant-based-retail-sales-outpacing-total-retail-sales/ Accessed 2022-05-30
24 Torrella, K. (2022): The future looked like it could be meat-free. Then the pandemic hit. Vox. Available at: https://www.vox.com/future-perfect/22876919/plant-based-food-pandemic-covid-vegan-vegetarian-meat-milk-eggs Accessed 2022-05-30
25 Mintel (2020): Clean Label: Shifting consumer perceptions. Available: https://cleanlabel.globalfoodforums.com/wp-content/uploads/sites/3/2020/08/Clean-Label_Shifting-Consumer-Perceptions-Lynn-Dornblaser-Mintel.pdf Accessed 2022-07-06

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