On Monday, Beyond Meat announced that its net revenue had fallen by 30.5%, which also led to its share price falling by 10%.
This comes amid reports of a steady decline, or in the words of one innovator, a ‘shakedown’, for the plant-based meat sector.
Beyond Meat and the industry
Beyond Meat is, of course, only one company. Thus, its falling revenue and share price is not necessarily synonymous with a failure in the plant-based sector in general. However, Clive Black, director at investment group Shore Capital, believes that it does say something about plant-based meat.
“Beyond Meat is a signature label of the plant-based meat industry,” he told us. “One where too many participants and investors have overestimated demand and oversupplied the market with corresponding business failures. The complexity of alternative proteins, their price and in many cases rather poor eating quality all add up to major problems.”
Jasmijn de Boo, CEO of ProVeg International - a 'food awareness' charity that aims to halve global consumption of animals by 2040 - takes a different view. She believes that, in the long term, the market will grow thanks to increasing concerns about the environmental impact of animal-based meat.
“The plant-based meat industry is expected to grow substantially up to 2030,” she told FoodNavigator, “reflecting the demand for the products, their improving taste and the greater awareness of the need to reduce meat consumption for environmental reasons.
“It’s an important investment too. Plant-based foods emit half the amount of greenhouse gases compared to animal-based foods and there is a growing consensus among the climate science community that a transition to plant-based diets is necessary to bring down carbon emissions and avoid ecosystem collapse.
“Notably, the UN’s Intergovernmental Panel on Climate Change (IPCC) encourages a transition to plant-based diets as part of a measure to bring down greenhouse gas emissions.”
Building a new market
While plant-based meat has been on the market for a number of years now, it is still, of course, very new compared to animal agriculture, which has been around for thousands of years. Meat, on the other hand, predates the dawn of humanity.
“We must remember that the plant-based industry is young,” ProVeg’s de Boo told us, “whereas animal agriculture has been around for centuries. It really does take time to build the infrastructure, scalability, investor confidence, and financial instruments to ensure new businesses like plant-based ones can weather economic storms as well as long-established industries.”
Because plant-based meat is so new, sector dominance is still up for grabs, meaning that there’s an overabundance of new players saturating the market. This, Shore Capital’s Black told us, creates market oversaturation, especially for a niche product such as plant-based meat.
“Too much capacity and too many labels chasing too few customers is an unfavourable economic recipe.”
Reasons for consumer rejection
The reasons for Beyond Meat’s recent hardships are multi-faceted. The cost-of-living crisis, which remains a lead weight on the spending habits of many consumers, is likely a factor according to both de Boo and Black, especially for a premium product like Beyond Meat.
“The cost-of-living crisis affects all products, be they food or general household products,” ProVeg’s de Boo told us. “A share price fall for a specific food company is likely due to a number of factors, including the cost-of-living crisis.”
However, she believes that price parity with conventional meat is possible. “Price parity of plant-based foods is already being achieved, for example in the Netherlands where half of plant-based alternatives have been found to be either the same price or cheaper than their meat counterparts. However, ProVeg has outlined the ways in which the plant-based industry can reduce costs.”
These ways include reducing ingredient price, lowering margins and boosting turnover with long-term discounts.
Shore Capital’s Black also viewed the cost-of-living crisis as a factor, describing it as ‘unhelpful’. “Trying to sell a premium product, higher priced than conventional lines when the consumer economy becomes tougher” is a bad idea, he suggested.
However, he went on to say “it is not the sole or even key factor behind (Beyond Meat’s) woes.”
Another factor is the complexity of many plant-based products in terms of ingredients, and their levels of processing. Beyond Meat, like most plant-based versions of burgers and sausages, would be considered highly processed on the NOVA scale. It should be noted that conventional meat burgers and sausages would be too, albeit containing fewer ingredients.
“A lot of folks are starting to look at the complexity of such products and revert to conventional meat and/or more simple non-meat foods,” Black told us. “A lot of folks do not want to eat fake sausages and burgers as vegans do.”
However, de Boo does not think it is that simple, as processing is ubiquitous in food in general. “As we know, both animal and plant-based products are subject to processing,” she told us, “so there is rather more a need for education around what type of processed products are healthy.
“Bread, for example, is highly processed but the ingredients in bread products may largely be healthy ones.”
However, she agrees that consumers care about ingredients in plant-based food. “Consumers are increasingly interested in knowing more about food ingredients – especially in the plant-based space.
“A recent survey found that 62% of people are paying more attention to ingredient lists now than they did five years ago. Plus, nearly two-thirds (63%) of adults say the ingredients in a food or beverage have at least a moderate influence on whether they buy it.”
Future of the European market
Beyond Meat’s troubles do, to a certain extent, reflect on the plant-based sector in western markets, including in Europe. But de Boo is optimistic about the European market. “The plant-based sector in Europe continues to grow and present exciting opportunities for food manufacturers,” she told us.
“According to recent Nielsen data, the European plant-based meat segment reached over €2 billion in sales value in 2022. Last year, it was found that most Germans were following a flexitarian diet whereby they were consciously replacing a meat dish with a plant-based one during the week.”
The recent troubles of Beyond Meat, she predicts, are a temporary blip in a sector driven not only by ordinary market forces but by the necessity of cutting down on greenhouse gas emissions due to climate change.
“Whilst there may be fluctuations in the health of food companies, the general trend is moving towards more plant-based diets which is essential to bring down carbon emissions."
“Whilst there may be fluctuations in the health of food companies, the general trend is moving towards more plant-based diets which is essential to bring down carbon emissions. A study published last year by the University of Bonn found that wealthy countries need to reduce their meat intake by at least 75% to avoid ecosystem collapse.”
Black, however, believes that there is little unique about the European market, in the sense that like the plant-based sector as a whole, it is destined for decline. “A lot of start-ups, a lot of failures, including in the UK in recent times. Again, capacity needs to balance demand before any hope of a satisfactory economic return can ensue.”
He predicts a contraction in plant-based meat overall “until it is in balance with the addressable market.”