KANSAS CITY — Retail sales of fresh and frozen plant-based meat alternatives are decelerating. After two years of category sales growth, with 2020 buoyed by the COVID-19 pandemic, sales have slowed.
“We’ve seen a big deceleration,” said Chris DuBois, senior vice president of IRI’s protein practice. “Plant-based meats don’t make up 50% of the market or 25%. Despite all of the noise, it’s 1.5% of meat sales. It’s still relatively small.”
Three reasons for the fall in sales may be the products don’t meet the consumer’s perception of clean, companies in the category have not proven their products are more sustainable than conventional meat products, and competition, according to Mr. DuBois.
Both Maple Leaf Foods, Inc., Toronto, and Beyond Meat, El Segundo, Calif., commented on the sales deceleration when discussing their most recent quarterly results.
“In the past six months, unexpectedly, there has been a rapid deceleration in the category growth rates of plant-based protein,” said Michael H. McCain, president and chief executive officer of Maple Leaf Foods, during a Nov. 4 conference call with securities analysts. “Of course, our performance has suffered in the middle of this, but the more concerning set of facts are rooted in category performance, which (has) basically flatlined.”
Maple Leaf Foods operates its plant-based protein business through Greenleaf Foods, SPC, Chicago. The business owns two primary brands — Field Roast and Lightlife. Plant-based applications manufactured include cheese, tempeh and such alternative meat products as hot dogs, sausages, roasts, loaves, deli slices and burgers.
During the third quarter of fiscal 2021, Greenleaf’s sales fell to C$48 million ($38.5 million) from C$51.4 million ($41.3 million) during the same period of the year before.
“To be clear, there is a fair amount of COVID noise in the market now, and we can't discount that,” Mr. McCain said. “However, it isn’t only COVID noise, and we’re going right back to square one with the consumer to fully understand what has changed, if anything, and why.”
Beyond Meat, Inc. missed its third-quarter guidance of between $120 million to $140 million in sales and reported $106 million in revenues during the period. Ethan Brown, president and chief executive officer, ticked off six reasons for the sales decline during a Nov. 10 conference call.
“One, consumers reported fewer and less frequent trips to the store; two, consumers reported being less open to trialing new products; three, consumers reported less interest in healthy options,” he said. “Four, the cancellation or reduced scope of our sampling programs as a Delta variant spread, limited new consumer exposure to our brands and category; five, to a much lesser extent than in foodservice, they’re still relevant, labor issues created complexity and possibly impacted demand due to delay in shelf resets and less frequent restocking; (and) six, with increased competition over the past two years, we're seeing, as expected, some impact on our market share.”
But Mr. DuBois pointed to more fundamental reasons for the sales deceleration, including the fact many plant-based meat alternatives do not meet the consumer’s definition of clean label.
“There are a lot of different oils and complicated ingredients used in meat substitutes,” he said. “When you look at the ingredient list of a McDonald's burger, like a Quarter Pounder or Big Mac, it's phenomenally simpler; it reads a lot simpler than traditional plant-based meats.”
Sustainability also may be an issue.
“Plant-based meats have a nice halo when it comes to sustainability, but I have yet to see a carbon footprint on a package,” Mr. DuBois said. “There is a halo there, but I can't tell you if it's true. I, personally, have not seen it measured yet.”
Mr. DuBois set the ceiling for plant-based meat alternative sales at 2% of retail meat sales.
“If they simplify the ingredient list it may be one or two percentage points higher,” he said. “Meat alternatives are going to be niche products for a long time.”
That means there is going to be a shakeout among competitors in the category.“We're going to find out which brands have built the right to be in the case,” Mr. DuBois said. “The market is sizable with $1.4 billion in sales in the US between fresh and frozen, but there are a lot of brands. Some brands will live beyond this, but not all of them are going to live.”