After exploding onto the scene as the next big thing in food, the plant-based meat trend has come to earth lately as consumers and investors discover that, behind all that sizzle, there’s not much steak.
The poster child for the trend is Beyond Meat, the meat-alternative company whose much-vaunted 2019 IPO more than doubled in value on its first day.
The business case was simple: for economic, environmental, and health reasons, people around the world would soon decide to eat less meat and consume plant-based protein instead.
Beyond Meat had developed a pea protein-based burger patty that tasted like real meat, and it was flying off the shelves. Other products designed to mimic chicken and pork soon followed, and investors piled into a company that looked set to hit hundreds of billions of dollars in sales.
But it didn’t really work out that way. According to analyst Jennifer Bartashus of Bloomberg Intelligence, after increasing 13% in 2019 and almost 40% in 2020, sales of meat substitutes at the five largest North American producers fell 4% on the year. last.
It’s a group of companies that includes Maple Leaf Foods of Canada, which jumped on the trend with both feet in 2019 when it committed $310 million to build a massive new factory in Indiana produce meat substitutes.
While the company’s herbal products that sell under the Lightlife, Field Roast and other brands saw sales of nearly $45 million in the first quarter of this year, they “don’t expect more at the category’s spectacular growth rates,” he told investors during the financial announcement. results last month. “We see the plant category growing, but at a steady pace,” which is why the company plans to reallocate some of its plant-based factory space to manufacture meat products again.
The company still believes its plant-based meat business is on track to generate up to $10 billion in sales over the decade. But that’s less than half of what he previously anticipated.
Industry-wide, the slowdown in sales is partly caused by the same inflation and supply chain issues facing the entire food sector. And consumers are less inclined to swallow higher prices.
Anyone who’s been to a grocery store recently knows that food prices are rising rapidly, and meat in particular.
Statistics Canada data showed meat prices rose more than 10% in the year to April. But meat alternatives haven’t been able to take advantage of the growing consumer trend to save money on food, as they are also on the rise.
Sylvain Charlebois, director of the Agrifood Analysis Laboratory at Dalhousie University in Halifax, calculated in a recent report that plant-based meat is, on average, 38% more expensive at retail than its meat-based alternative.
The gap is greatest for things like chicken nuggets and burger patties, but even relatively cheaper items like bacon and hot dogs are priced higher for plant-based versions.
“With very high inflation, a lot of people are looking for bargains. But if you’re really looking for herbal products, that’s not what you get,” he said in an interview. . “These products may be good for the environment and good for your health, but they’re definitely not good for your budget.”
Despite these cost considerations, Bloomberg’s Bartashus still thinks there’s plenty of room for future growth and predicts that sales of all plant-based meat products will grow by around $30 billion today. today to nearly $170 billion by 2031.
This would represent about 10% of what the world spends on protein each year, and one of the main reasons for his optimism is the environmental argument.
“Concerns about sustainably feeding a growing population are driving interest in plant-based products that can replace conventional protein,” Bartashus said in a recent report to customers.
“We expect growth in plant-based meat and dairy substitutes to outpace conventional products, supported by innovation, increased production capacity, lower prices, wider distribution gains and acceptance. consumers.”
Others aren’t convinced that plant-based eating is anything more than a fad that may have run its course. “Three years ago we were seeing these big sales…to a huge number of consumers who were very curious and wanted to try it,” said Simon Somogyi, a professor who studies food business at the University of Guelph. “But the real market is showing up now.”
While vegetarianism is a steady and growing force in the food industry, Somogyi says most people interested in plant-based eating are happy to eat more fruits and vegetables and conventional proteins like beans and beans. lentils, as opposed to factory-made vegetable products that masquerade as meat.
“They were all the rage and consumers were curious to try them, but now they’ve tried them and that fad has kind of faded,” he said.