The ups and downs of the plant meat market.
Plant protein is having a great time in early 2021. The popularity of plant-based foods has soared globally during the pandemic as consumers scramble to buy foods they believe are healthier. However, the rate at which sales have soared has begun to slow, and some even say the plant-based food bubble has burst. But the market economy for plant-based foods is not a bubble, according to Kearney’s report.
Recent SPINS data concluded that while sales of plant-based meat products stagnated slightly, overall U.S. plant-based food growth rose 6.2%, with the U.S. plant-based food market reaching a record $7.4 billion valuation. Its data shows that 57% of U.S. households will buy plant-based meat in 2021. According to the Kearney study, the key to getting the remaining 43% into the plant-based market is price. In its report, the company revealed that more than half of consumers (53%) claim that high costs prevent them from planning to buy plant-based meat.
Same price as animal meat
Plant-meat companies also seem to realize that pricing still leaves potential consumers unsatisfactory. Some companies in the plant-meat track have been working to lower their suggested retail prices. In 2021, Impossible Foods is reducing its recommended prices by a fifth – supporting food service partners it works with by reducing wholesale prices by 15% between 2020 and 2021. Impossible cited increased sales, mass production and cost-effective manufacturing as key drivers of lower retail prices. Company president Dennis Woodside calls it a “virtuous circle” that benefits everyone and the planet.
The Kearney study pointed out that industry giants such as Impossible and Beyond aggressively seek to reduce costs will lead to the loss of large market share of traditional animal protein products. Additionally, it predicts that plant-based meat could take a 10% share of the conventional animal beef market, and overall, a 22% share of conventional meat could fall into the pockets of plant-based alternatives.
Changes in consumer demand
As the price of conventional meat rises with rising inflation, supply shortages and labor issues, and options for plant-based products, consumers may be actively switching protein sources out of necessity and household budgets. A recent study by Ingredient Communications shows that consumers accept up to 50.6% higher meat costs before they stop buying meat. According to reports, the price of ground beef is already 21% higher than in February 2021, indicating that time is running out.