2019 has been a big year for plant-based meat substitutes. Spurred on by consumer perceptions of healthiness and a global megatrend toward conscious consumption, sales of plant-based meat grew by almost 40% compared with 2017. In three months after going public, plant-based burger maker Beyond Meat’s share price surged 500% while rival Impossible Foods secured an additional $300 million in funding. The global plant-based meat market is expected to reach $27 billion by 2030, according to a recent IDTechEx report. For the more immediate future, the research firm expects to see three trends.
The industry will keep growing, spurred on by fast food and conscious consumption.
Plant-based meat is finally shaking off its reputation as a poor imitation of the real thing. Rather than just targeting vegetarians, plant-based analog producers like Beyond Meat and Impossible Foods are targeting the 95% of consumers who eat meat. Meat consumers are less likely than vegetarians to compromise on quality for ethical reasons. The current R&D focus on product quality and the exact replication of meat is more focused than in previous generations. This has helped contribute to the explosion in sales of plant-based meat products and will likely continue through 2020.
Plant-based meat products are viewed as healthy alternatives to their meat counterparts, enabling consumers to enjoy burgers and nuggets guilt-free. However, this could be seriously problematic for the plant-based meat industry — products often contain just as much fat and salt as the non-plant meat products they replace. Over the last few years, improving the taste and texture of plant-based meat has been the main R&D focus. Moving into 2020 and beyond, the focus will shift toward making these products healthier.
Another major factor in the surge of interest in plant-based meat has been the partnership with fast-food providers. Products like Burger King’s Impossible Whopper gave consumers the ability to try plant-based meat without having to commit to buying a full pack in a store. Consumers often love customization in fast food and plant-based products are viewed as a healthy alternative.
Major food companies will release competing plant-based meat products.
The major food and meat companies are not ignoring the rapid rise of plant-based meat. At the Good Food Conference 2019, meat giants JBS, Tyson Foods and Perdue Farms spoke about rebranding themselves as “protein companies”. JBS conceptualized a new plant-based meat brand in Brazil and the UK while Perdue Farms has launched Chicken Plus, a selection of breaded chicken products blended with vegetable proteins. In 2020, we are likely to see many established food companies launch their own plant-based meat products, which could begin the commoditization of plant-based meat.
This is unlikely to be good news for Beyond Meat and Impossible Foods. Many have questioned whether Beyond Meat’s meteoric rise in share price is sustainable — the company’s nine billion dollar valuation means that investors are paying $50 for every burger Beyond Meat sells. Beyond Meat’s products are expensive: Its hamburgers cost two to three times that of a normal hamburger. As the industry becomes more competitive, Beyond Meat is expected to struggle. Major food companies such as Tyson Foods and Kroger have more money and better distribution than Beyond Meat and will also charge less for their products. This will force Beyond Meat to either cut prices or lose market share, both of which will be bad for investors and could likely result in a crash in its share price.
The labeling argument will get more intense.
As plant-based substitutes for animal products get more popular and capture more market share, parts of the meat and dairy industries are fighting back. Lobbying for labeling restrictions on terms such as “burger”, “meat”, and “milk” claim that using them in reference to plant-based products causes confusion for customers. Earlier this year, the state of Missouri passed a law banning the term “burger” from being used in relation to plant-based meat.
A similar controversy is taking place in Europe, where EU regulations are being passed, restricting the use of certain terms. In 2017, the EU passed laws stating that “milk”, “cheese”, and “yogurt” can only be used for products derived from animals, although there are multiple exceptions for traditional terms like “coconut milk” and “nut butter”.
These rulings have been extremely controversial, with opponents claiming consumers are unlikely to confuse plant-based meat with conventional meat and labeling restrictions are an anti-competitive move designed to protect the meat industry.
The Good Food Institute recently filed a lawsuit against the state of Missouri arguing that the labeling law infringes on the First Amendment. As the rest of the year unfolds, these arguments are set to get more intense as both the plant-based and conventional meat industries face threats to their sales.