Plant-based meat loses its sizzle in US as sales fall

Plant-based meat is losing its sizzle, with falling US sales casting a shadow over expectations that the nascent category would take a chunk out of the real animal meat market.

In the four weeks to October 3, sales of plant-based meat alternatives fell 1.8 per cent compared to the year before, taking declines for 2021 to 0.6 per cent, according to the US retail data group SPINS.

A surge in plant-based meat sales at the start of the pandemic in 2020 set a high hurdle for growth this year, but demand was also affected by consumers eating at home less as restrictions were lifted, while supply chain problems made some products unavailable in stores, said SPINS. Elsewhere, a wave of new products was overwhelming consumers, it added.

The US is the largest market for “new” plant-based meats that simulate real meat in taste and texture. The sales decline comes after weak revenue figures over the past few weeks from Beyond Meat and Maple Leaf Foods, the Canadian meat group that owns the plant-based protein specialist Green Leaf.

“In the past six months, unexpectedly, there has been a rapid deceleration in the category growth rates of plant-based protein,” Michael McCain, Maple Leaf’s chief executive, told analysts earlier this month.

McCain blamed a 6.6 per cent fall in the company’s plant-based protein sales on declines across the category from refrigerated food to retail and food service. The group was reviewing the causes, he said, to try to understand the shifts in the market.

Maple Leaf beat revenue expectations with a 13.4 per cent sales rise in its real meat division. Analysts at BMO said it expected the review of the plant-based protein market to lead to a reduction in capital and marketing spending, which should improve results next year.

Beyond Meat’s shares have plummeted since it reported $106m in third-quarter sales, after downgrading its earlier guidance of $120m-$140m last month.

Ethan Brown, chief executive, blamed consumers making fewer shopping trips and being less open to trying new products, as well as being less interested in healthy options. He also mentioned reduced opportunities for sampling products as the Delta variant spread limited consumer exposure.

Line chart of Beyond Meat and Maple Leaf Foods shares rebased showing Tale of two plant-protein companies

The sales downturn comes at a time when more start-ups and food companies are offering new plant-based meat products. The latest entrants are offering realistic “cuts” of meat using techniques such as 3D printing.

Bahige El-Rayes at the consultancy Bain said that with plant-based meat alternatives still 30-40 per cent more expensive than real meat and improvements in taste and texture required, an increase in production capacity to cut costs and more research and development were essential for the category to continue growing.

Concerns about the environmental impact of livestock, animal cruelty and health have spurred investments in alternative proteins over the past few years.

In 2020 alternative protein start-ups raised a record $3.1bn in capital, of which plant-based meat, dairy and eggs took in $2.1bn. Investors seem bullish on the category as ever with Impossible Foods announcing this month that it closed a $500m funding round, raising almost $2bn since it was founded in 2011.

Some executives believe the falling sales are temporary. Steven Cahillane, chief executive of Kellogg, which owns the MorningStar Farms brand of plant-based products, said the company’s consumer research showed “there’s still a lot of enthusiasm and excitement” for plant-based alternatives to meat.

Most Related Links :
Business News Governmental News Finance News

Need Your Help Today. Your $1 can change life.

[charitable_donation_form campaign_id=57167]

Source link

Back to top button