Impossible Foods took the unusual step of taking out a full-page ad in the New York Times in response to a Bloomberg Businessweek story dismissing plant-based meat as ‘another fad’ and suggesting ‘plant-based meat is turning out to be a flop’.
Responding to claims that the sector is stagnating, Impossible pointed to the fact that the global plant-based meat category has grown to a value of US$7bn over the last ten years. The company insisted it has achieved ‘record sales’ since it launched – including in 2022 – and claimed nearly half of people who try Impossible products go on to buy them again.
“We’ve never doubted that achieving our mission will be a long journey full of highs and lows, wins and setbacks, and if we do it right, continuous climate impact. The reality is that the plant-based meat category is still young and yet to be fully defined,” Impossible Foods suggested.
However, research from Rabobank that surveyed the opinions of food industry professionals suggests there is widespread concern that the plant-based meat segment will fail to deliver on lofty expectations and the initial frenzy the launch of next generation veggie burgers whipped up. “Personally, I was surprised by how often contributors used the word ‘collapse’ to describe what has been happening,” reflected Nicholas Fereday, executive director of food and consumer trends at RaboResearch. “Some claimed the collapse itself was not a surprise, but rather the speed as well as the ‘poor execution’ of some of the leading players.”
And while Impossible Foods remains a vocal critic of such unflattering assessments, reports that it is planning to cut its 700-strong workforce by one-fifth might not fill industry watchers with confidence.
Putting the cart before the horse?
The feedback Rabobank collected suggests that the oversaturation of plant-based brands – and failure to adequately educate consumers on the value proposition – has left the industry in need of a shakeout. “The category far too quickly got saturated before there was broader education and adoption. It went a mile wide but only an inch deep, far too many ‘me too’ products, many of them really terrible that turned a lot of people off.”
This has meant some companies ‘overshot the mark’ with respect to their investment strategies in the space, with some respondents suggesting plant-based innovators forgot some of the fundamentals of growing a category: the consumer and the financial viability of operating models. “Companies need to be managed as a real ‘business’ and not as a ’mission,’ meaning they need to be deliberate and prudent in their approach.”
But while alt meat obituaries might have become trendy, is it too early to write the sector off? Yes, industry veterans responded. “History shows that food substitutes evolve and gain share over time; we aren’t done with plant-based burgers yet,” one commented. “The world needs these products,” another suggested.
Significantly, commentary pointed to positive signals that the market could begin to address some of the challenges faced, with an industry player hinting they are ‘starting to see more encouraging responses to pricing’ and ‘some very positive things opening up in QSR’.
The three challenges – and opportunities - facing plant-based meat innovators
What factors do industry experts believe might be driving the downturn in plant-based meat? According to Rabobank, it comes down to three issues: price, taste and complicated ingredient lists.
Plant-based brands often retail at a price premium versus their conventional animal-based counterparts. This means that, in an inflationary environment, it is harder for brands to pass increased costs along. “Tough economic times makes it harder for people to pay more for these products,” the Rabobank research noted. Delivering economies of scale that enable plant-based meat products to reach price parity with animal alternatives could therefore broaden the appeal of the sector and make it more accessible to shoppers.
Taste is another area that experts suggested should be associated with the choppy waters plant-based meat sales are facing. “[It’s surprising] how many big food companies got into the plant-based arena with such lousy products; it is less surprising that some have now started to pull back,” one expert noted. “We know that what’s most important to consumers is that the foods they buy taste good (environmental concerns fall MUCH lower), so if the plant-based products don’t deliver on taste, I believe consumers will simply turn to something else.”
Lastly, ingredients were flagged as an opportunity for plant-based meat to leverage innovation in order to increase appeal because, currently, the ingredient label complexity is an issue for many consumers. “Whatever happened to the simplicity of the veggie burger?” one expert pondered. “Just too many ingredients and processing compared to a single-source natural protein product," another observed.
