Plant-based and alternative meat sector “contracting” in North America
In North America plant-based & alternative meat sector – Q3 2022 update, a former director at Beyond Meat Inc said the Beyond Burger and Impossible Burger were “revolutionary” products – but the overall market is now contracting. It is “an expensive place to play and now you’re seeing consolidation”.
Consumers are “coming full circle”, the specialist said. Early research suggested that 85-90% of consumers buying a Beyond Meat product at a retail store were also buying animal-based protein. “Now, I think they’re not attracting that consumer.” Some vegans and vegetarians have also voiced concerns that some products are too processed. “If meat eaters aren’t coming to the category at the same velocity and your hardcore vegans and vegetarians don’t like the product because it’s too processed, I think it leaves the plant-based, meat-substitute category in a really difficult spot.” Meanwhile, foodservice is challenged because “the repeat-purchase rate is not very high, just like it’s not very high at retail”. Players are being increasingly reallocated to the frozen aisle and, traditionally, frozen velocity is “probably a third to a quarter of what fresh velocity is”.
However, the specialist said product innovation will continue to drive momentum for the category. “Whoever can crack the code and produce whole muscle, whether that’s a chicken breast, a steak, a pork chop, something that is replicating a centre-of-the-plate entrée, vs just a burger, sausage or grind, I feel like that’s where the R&D dollars need to be spent, not tweaking the burger or the sausage to make it that much better.”
Although cost pressures are impacting the industry, the specialist noted that consumers are willing to pay a premium for products that resonate with them, with health the primary factor driving consumers to plant-based products. Product assortment has changed dramatically over the past year, they added. “You saw brands on the shelf a year ago that aren’t on the shelf today, so entire brands that were discontinued.” As a result, they expect a shake out on products and a return to core offerings.
Regarding the competitive landscape, the expert said there are a number of small brands trying to break into the space, but going down the same soy or pea protein-based route as Beyond Meat and Impossible Foods. “I think where there is some traction is in the fermentation space and also in the cell-based space.” However, they noted that cell-based is more expensive and it may take a while for consumers to feel comfortable with the concept.
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The information used in compiling this document has been obtained by Third Bridge from experts participating in Forum Interviews. Third Bridge does not warrant the accuracy of the information and has not independently verified it. It should not be regarded as a trade recommendation or form the basis of any investment decision.
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