Leveling off sales or failing customer interest? The hidden market opportunity behind recent trends in the plant-based meat industry.
Optimism about the growth of the plant-based meat market continues to heighten. By some estimates it is expected to reach $13B globally in just over four years. Yet November started with troubling signals from Maple Leaf Foods when it declared a reprioritization of its plant-based meat products after two quarters of falling sales. This was followed by alarming headlines from CNBC:
“Beyond Meat shares crater as losses mount…”
Whispers of a crack in the plant-based meat market emerged.
What is the Market Really Signaling?
While Beyond Meat missed its sales goals, quarterly sales of $106M are still a win given the extraordinary headwinds of the third quarter supply chain constraints and labor shortages. Meanwhile, Impossible Foods is singing a different tune, and with strong investor support, raised $500M to support rapidly expanding markets and new products backed by claims to be the fastest growing plant-based meat company in the world, according to IRI.
The whiplash from these competing market signals could prompt anyone to reach for a crystal ball and steer clear of a market analyst. But perhaps the most sobering out-of-the-blue prediction comes from IRI stating that with just 1.5 percent of the meat sales, plant-based meat is still small and they set
“…the ceiling for plant-based meat alternative sales at 2% of retail meat sales.”
Of course, there is a lot of speculation about what’s going on here. Blame it on supply chain slow downs, extreme labor shortages, bad weather, pandemic-bemused consumer buying patterns or genuine waning interest in plant-based meat… at least for some companies’ products, but certainly not the whole of the plant-based meat market. Food Business News concludes:
The Key to the Next Phase of Growth: Price
So what are those consumer expectations that are not being met now? Some say it’s a desire for a clean label, but if that was the case then Impossible would be slowing hard with the rest of the flock. The truth is plant-based meat costs too much and, in some cases, way too much for the average consumer to choose it over animal meat again and again. DuBois may be right: there’s likely just 2% of consumers willing to reproducibly pay a premium for plant-based meat in favor of a low-cost burger or chicken nuggets year after year. And who can blame them?
It’s clear consumers still want plant-based meat — of every shape and flavor — but their price limit is being tested in their search for products for that Tuesday night dinner for the whole family. This forced choice between plant-based products and price means missed usage cases and sales left on the table.
To date, our industry’s most popular blunt instrument is a rallying cry that simply “scaling” plant-based meat production will solve consumer price woes. And with inflation hitting suppliers harder than even consumers, this approach to making plant-based meat prices more accessible will be challenged. What producers (and consumers) need are out-of-the-box thinkers with better industrialize-able solutions to bring down the cost of plant-based meat — solutions that can be implemented today and that don’t depend on market tradewinds to work well.
With current production equipment, plant-based meat requires more steps, more labor time, more cooling considerations, and more equipment to match the volumes of animal meat and at about three times the cost of manufacturing. Companies are using the wrong equipment for longer production cycles with limited quality control tools to effectively make plant-based meat in volume. We’ve got the wrong equipment in the wrong types of factories while largely depending on the ever decreasing labor market for manufacturing jobs. It’s no wonder that plant-based meat costs have never effectively decreased in ten years of intensive production scale up! Again, the opportunity has been left on the table.
At Rebellyous Foods, we’ve been unapologetically tackling these fundamental costs of manufacturing problems head-on for three years. We’ve designed and built novel plant-based meat production equipment and systems that are ready to reduce labor by 50 percent on the production line, reduce overhead costs by 10 percent, and increase production volume and quality at a scale currently unachievable with conventional equipment. Furthermore, our production system greatly decreases worker injury risks by eliminating risks of lifting, cold-room injury and blade handling. We’ve built equipment that lays the foundation for plant-based meat sales to reach the soaring heights intended by Impossible’s and Beyond’s ambitious fundraising goals, and that allows every meat consumer to afford plant-based meat.
There’s an obvious and tremendous opportunity for plant-based meat to make a difference in the world, and an even larger one when we crack the price point for consumers. The reality is if we want to change the way people eat, we have to change the way we produce plant-based meat — to make it accessible and affordable for all.
Christie Lagally is the founder and CEO of Rebellyous Foods, a plant-based meat manufacturing and production technology company based in Seattle, Wash.
