Today, is Ash Wednesday, the beginning of Lent. During that 40-day period of prayer and sacrifice, many of the world’s 1.3 billion Catholics abstain from eating meat. You might think that this would trigger a run on alternative meat products. But not so much.
Investment in and revenues from alternative meat products have plummeted from the highs of a few years ago. As a result, some think the industry has reached its expiration date. However, it is more likely that the segment is entering a new phase of consolidation and development.
Investment Rise and Fall
Beyond Meat and Impossible Foods became the poster children of the alternative meat products industry in the mid-20-teens. Investors, such as Bill Gates, and celebrities, such as Leonardo DiCaprio and Snoop Dog plowed money into the industry.
Crunchbase reports that investments in alternative meat products increased by 1,100 percent from 2016 to 2019.
As alternative meats began arriving in restaurants and on grocery shelves, the pandemic hit. That resulted in supply-chain problems which pushed meat prices higher. Suddenly plant-based meat substitutes became an alternative to rising meat costs.
However, as the pandemic waned, consumers’ appetite for alternative meat products followed suit. The price of meat has declined and alternatives are now the higher priced option.
Beyond Meat’s stock price has dropped about 70 percent since it launched in 2019. Impossible Foods remains a private company and is not traded.
Competition Beefing Up
Perhaps the biggest problem for start-ups has been competition from large agriculture and grocery companies.
Tyson Foods has invested in Beyond Meat, Memphis Meat, and the Israeli company Future Meat Technologies.
By 2019, just ahead of Beyond Meats IPO, Tyson cashed out its investment. Soon after, it launched its Raised & Rooted brand. In addition, it offers plant-based breakfast foods under its Jimmy Dean brand.
In August 2019, Brazilian meat company Marfrig entered into an agreement to produce meat alternative burgers that would be marketed by Archer Daniels Midland. Burger King and Outback Steakhouse offer those plant-based burgers. Two years later, the joint venture acquired alternative meat producers Sol Cuisine and Hilary’s.
Other large food companies with ownership in alternative meat companies include Cargill, Hormel, Nestle, Kroger(Morning Start), Unilever, Maple Leaf Foods, Smithfield Foods, and JBS.
The Long View
Sales of alternative meat products rose 45 percent in 2020, according to the Good Food Institute, to top $1 billion. However, since then, sales have been flat.
The lack of growth may be in part due to the limits of the market for meat substitutes. Only nine percent of Americans consider themselves vegetarian or vegan, according to Statista. However, in addition to an increasing interest in healthy eating, more people are interested in trying new foods. According to a Speciality Food Association study, 76 percent of those surveyed have purchased a specialty food. That is a record.
Trying new foods bodes well for alternative meat products, according to Philippe Goldman, former CEO of Pazzi Robotics.
“Food, you have to understand, is cultural and existential,” Goldman said at last month’s RBC Investor and Treasury Services summit in Paris. “We don’t eat tech, we eat food. And these topics take a long time to implement. We don’t change our eating habits overnight. But when it happens, it lasts.”
Sampling a new type of food may not be an option for much of the world’s population.
Humanity’s need for protein will soon double to outpace current meat production capabilities, Anne-Valerie Bach told the RBC gathering. She is managing director at Capagro, a venture capital fund dedicated to agricultural and food tech.
“All the alternatives that we’re producing will just be able to bridge the gap between the long-term need and our capacity to produce today,” said Bach, “and that’s already huge.”
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Max K. Erkiletian began writing for newspapers while still in high school. He went on to become an award-winning journalist and co-founder of the print magazine Free Bird. He has written for a wide range of regional and national publications as well as many on-line publications. That has afforded him the opportunity to interview a variety of prominent figures from former Chairman of the Federal Reserve Bank Paul Volker to Blues musicians Muddy Waters and B. B. King. Max lives in Springfield, MO with his wife Karen and their cat – Pudge. He spends as much time as possible with his kids, grandchildren, and great-grandchildren.
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