Plant-based meat substitutes are the biggest failure in the food industry’s history

Plant-based meat substitutes had a lot of space in the media (and on supermarket shelves) these last few years, but consumers do not like them.

According to the New Nutrition Business report, “Failures – and what you can learn from them“, published by food industry expert Julian Mellentin, despite the echo chamber created by media and the huge investments, these hyper-processed products represent probably the biggest failure in food industry history. We have spoken about the strategic mistakes made by the food industry in following this hype with Mr Mellentin himself.

Why has there been such a buzz around plant-based products for some years?

The plant-based meat substitutes business benefited from the biggest PR campaign in food industry history, backed by money from not-for-profits, which made PR and even directly paid newspapers to write pro-substitutes and attacking animal agriculture articles. The best-known example is the Guardian in the UK.

Many food industry executives have been misled by the media, consultants and deep-pocketed investors into thinking that plant-based meat substitutes were on a path of inevitable linear sales growth that would see them ‘disrupt’ the meat business. But they are now learning that it is set to remain, for a long time to come, niche business with limited consumer appeal. But the massive PR campaign from the investors helped create a media echo chamber, which successfully built a narrative of “the plant-based meat revolution” and “the protein transition”.

Consumers – the kings and queens of the food and beverage industry – have now helped us by exposing how the Emperors of investment have no clothes.

Among the many evidence-free claims made for the future of plant-based meats and which have misled so many executives, here is one good example: Rethink X, a ‘disruptive technology’ Silicon Valley think tank with links to investors, wrote back in 2019 that: “Modern foods have already started disrupting the ground meat market, but once cost parity is reached, we believe in 2021-23, adoption will tip and accelerate exponentially.”

Why are plant-based meat substitutes not having the expected success among consumers?

Because most meat substitute makers have failed to understand them. And because of these points:

Failure to meet consumer expectations of taste and texture. Canadian plant meat maker Maple Leaf Foods told stock analysts in 2022 that consumer trial rates “were super high, penetrating 60% of US households. However, consumers’ unmet needs did not repeat purchases. As a result, the category did not reach expected levels of habituation, had very high lapse rates and very low buy rates.” For good technical reasons, plant-based cannot match the taste and texture of beef or lamb. Not now, not any time in the next decade. This was always known, but the investors chose to ignore technological reality.

Flexitarianism is losing momentum. New Nutrition Business’s most recent 5-country consumer survey found that 24% of people say they are trying to consume less meat. The figure was 23% back in 2020. Growth in the numbers of meat reducers was dramatic from about 2014-2020 but has now slowed dramatically. This makes sense because consumers’ beliefs about food & health are fragmented, and assuming ever-upward growth is dangerous.

Food culture. Culture is more powerful than technology or strategy, and in most countries, the ultra-processed burger contradicts food culture, particularly in southern Europe and the UK. Meat substitutes are a graveyard of technical and commercial ambition, a good way to burn millions of dollars for nothing.

So, what has happened in the plant-based meat sector is almost the opposite of what many people forecast…

It’s even worse than we thought (we who believed the sector had low-growth, niche potential). The category is stalling, even falling. The US market, the world’s biggest, stalled at 1.4% market share in 2021 and fell by 0.5% in 2022, according to SPINS data.

In a conference call in August 2022, Philip Hardin, the chief financial officer of Beyond Meat, said: “The second quarter of 2022 saw a contraction in US household penetration of plant-based meat for the first time in over four years.” Citing Nielsen data, he added that meat alternative sales worldwide deceleration was bigger than anticipated. In Europe, he said, the category went from a growth of 7% in 2021 to shrink by 14% in the first half of 2022.

According to 210 Analytics, which uses IRI supermarket data, sales of plant-based meat in July 2022 increased by just $1 million while volume declined. Sales of conventional meat, by contrast, grew by $300 million.

Kellogg’s is getting out of the plant-based meat substitutes business, planning to move its market-leading (and profitable) Morningstar brand into a separate company. Its competitor, Beyond Meat, the company whose CEO once boasted of his intention to make people switch away from consuming meat, has reported calamitous financial results. Looking at the first six months of 2022, it’s clear that the picture has no positives:

  • Beyond Meat’s operating loss was up by 333%.
  • Every dollar of product Beyond sells costs $1.72 to produce.
  • Beyond’s US foodservice strategy has failed, highlighted by McDonald’s terminating its McPlant test. The company’s international sales fell by 7.2% to $44.79 million, a modest number after years of pushing into 11 different countries.

Besides Beyond Meat, which brands have you analysed?

New Nutrition Business researched the financials of a sample of 100 plant-based meat brands in Europe, the US, Canada, Australia & New Zealand. No one showed any sign of making a profit, even after five or more years in business. And those with the fastest-growing sales also had the fastest-growing losses.

Hundred of companies have focused on trying to copy sausages and burgers, only to discover that their products fail to match the taste and texture of meat-based products. The technical challenge of creating a direct comparison with meat was much bigger than they anticipated. Their products have no hero ingredient that is easy to understand, no ingredient health halo, and no back story of traditional culinary usage.

So the price is not the only answer

Some executives have grown a myth that plant-based meats would pull ahead once they established price parity with meat. Almost no way would a product assembled in a factory out of 15-20 speciality ingredients achieve price competitiveness with a single-ingredient, minimally processed product.

The current surging cost of raw materials and energy means that the dream of price parity will not be realised in the next 3-5 years, possibly even longer. People focused on lower prices as ‘the answer’ to growth should remember that the Quorn brand, based on mycoprotein, is the biggest meat substitute brand in the UK. Since 1990, it has done everything right, focusing on taste, texture and versatile products. It is also price comparable with chicken. And yet, it remains a ‘big niche’ business. Food culture is more powerful than price.

What do you think about the so-called “Meat sounding”, the use of meat designations such as “Burger”, “Ham”, etc., to indicate plant-based products?

I cannot take the fruit I grow and label and sell it as “chocolate”. That would mislead the consumer – even if I crushed the fruit, dried it, and made it into the shape of a chocolate bar. This would be illegal. The plant-meat makers are misleading consumers with labelling that would not be permitted in any other category.

There are many attempts in Europe and the US to let the public accept lab-grown meat. Do you think European consumers can accept this fake meat more than plant-based ones?

Most Europeans will reject lab-grown meat, particularly in the south, for the same reasons they object to GMOs – people do not eat technology. Again, that food culture aspect is more powerful than the investors realise. They ignore it and say, “when it is cheaper, people will buy it”, but that is to ignore humans’ complex relationship with food.

Lab meat will become a niche business (maybe 1% market share) in the US, UK and Germany, but even in those countries, there is a growing number of consumers who prefer ‘real food’.

Some CEOs or executives of plant-based/lab-grown fake meat producers want to “put the animal agriculture industry out of business”. What do you think about that? Will they succeed?

The CEOs who want to destroy animal agriculture display total ignorance of business strategy, the food business, economics and food culture. They will (at best) only get disappointed investors.

One day – perhaps a hundred years from now – a historian will write a book that will explain why in the 21st century, so many upper-middle-class West coast Americans – and Californians in particular – believed that they had a messianic right to ‘disrupt’ and overturn the beliefs, habits and businesses of the rest of the planet. A mission that they were thinking of being able to force onto their fellow citizens of planet Earth by easy access to more money than most humans can ever dream of.

Have these products only failed with taste and sales, or have they also failed in the environmental aspect? In other words, is there any proof that these plant-based products are more sustainable than meat?

These products failed to demonstrate their sustainability. Britain’s advertising regulator banned six adverts for Tesco’s plant-based products, saying the supermarket group’s claims regarding their positive benefits to the planet had not been scientifically substantiated and were likely to mislead. The Advertising Standards Authority (ASA) expected to see evidence that switching to products in the Plant Chef range would positively affect the environment, as the ads claimed, based on the full lifecycle of the Plant Chef burger in comparison with a meat burger. Tesco made baseless environmental claims for its plant-based meat substitutes, not holding any evidence about the full lifecycle of any of the veg burgers in the Plant Chef range featured in the ads. In its report, ASA noted that some plant-based products might contain a combination of ingredients, which may have been subject to complex production processes having a similar or even greater negative environmental impact than a meat-based alternative.

Everybody has a supply chain with a carbon footprint behind that chain. But neither the plant-based giants such as Beyond Meat nor Impossible Foods disclosed the total amount of greenhouse gas emissions across all of its operations, supply chains or consumer waste. They also do not disclose the effects of all of their operations on forests or how much water they use. So, even if the dominant narrative from the plant-based industry and the venture capitalists supporting it is that these companies are better for the environment and health, it is a black box since so much of what is in these products is undisclosed.

Journalist specialized in sustainability, climate change and environmental issues, he writes for various newspapers, magazines and websites. He worked in 2007 at the Center on Sustainable Consumption and Production, born from the collaboration between UNEP and Wuppertal Institut. Graduated in sociology, for years he has been focusing his work on the impacts of food production, starting from those related to animal husbandry and animal production. At the end of 2018 he has published the book “In difesa della carne” (“In defense of meat"), published by Lindau.