Friday, March 29, 2024

Plant protein sector grappling with market disruptions

Neal Wallace
Global plant-protein manufacturers are struggling to meet sales targets due to consumer reticence, production issues and fall out from covid.
Reading Time: 3 minutes

Plant-based meat producers have seen a decline in profits, which could be attributed to the lack of ingredients transparency, dwindling consumer interest and covid disruptions.

Global plant-protein manufacturers are struggling to meet sales targets due to consumer reticence, production issues and fall out from covid.

In Beyond Meat’s largest market, the US, retail sales of its plant protein meat products fell 16% in the fiscal quarter to October, while global sales grew much slower than forecast.

It reported a loss for the quarter of $78.25 million, considerably greater than the $27.5m loss for the comparable quarter a year earlier.

Canada’s Greenleaf Foods produce plant-based applications of cheese, tempeh, hot dogs, sausages, roasts, loaves, deli slices and burgers, but sales for the third quarter of this year flattened to $54.36m compared to $58.2m a year earlier.

Production and distribution problems hit the financial performance of Swedish oat milk producer Oatly despite sales growing 55%.

For the first nine months of this year, it lost $147m compared to a loss of $11.3m in the same period last year.

Chris DuBois, senior vice president of business analyst IRI, told Food Business News the decline of global sales was significant and could force some companies to fail.

He identified three reasons: products not meeting consumers’ perception of what is clean; the absence of proof their products are more sustainable than conventional meat products; and competition.

“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,” DuBois said.

There is a lack of information available about a product’s carbon footprint.

“There is a halo there, but I can’t tell you if it’s true,” he said.

“I, personally, have not seen it measured yet.”

Beyond Meats chief executive Ethan Brown told the same news site the slide in US retail sales was due to consumers making fewer shopping trips, an unwillingness to try new products, less consumer interest, fewer in-store sampling events due to covid and labour issues affecting retail restocking.

It has lowered its sales guidance for the current quarter, a move that has proven unpopular with investors, its share price falling from $US221 a share in January to about $US100 in early November.

Maple Leaf Foods Company president and chief executive Michael H. McCain told Food Business News his greatest concern is that the category’s performance has “flatlined”.

He is “going right back to square one with the consumer to fully understand what has changed, if anything, and why”.

Its share price has fallen 60% since listing in the US in May and it fell 20% alone in the week following its sale forecasts.

Rabobank’s latest report on animal protein predicts alternative meat protein sales to grow strongly through 2022 and for the sector to continue appealing to investors.

“We expect new alternative products for chicken, for example nuggets, and seafood, but also expect products to be added in the frozen department,” the report said.

“Innovation will continue to swap out animal-based for plant-based ingredients in processed products.”

Earlier this year the Boston Consulting Group (BCG) estimated the alternative meat, eggs, dairy and seafood market would be worth $417 billion by 2035, as production grows over the next 14 years from 13 million tonnes to 97m t. 

BCG managing director Benjamin Morach says measured another way, one in 10 portions of eggs, meat, dairy and seafood eaten around the world in 2035 would be made from alternative proteins.

Morach predicts Europe and North America will reach “peak meat” by 2025 when animal protein consumption will start declining, provided alternative proteins taste and feel like animal proteins.

Allied Market Research disputes that forecast, predicting the market for animal protein will expand from $64.5b in 2019 to $86b in 2027 due to demand for nutritional and functional proteins and growth from untapped markets.

DuBois believes plant-based alternative meat sales will remain niche, peaking at 2% of retail meat sales, which will force companies to restructure.

“If they simplify the ingredient list it may be one or two percentage points higher,” DuBois said. 

“We’re going to find out which brands have built the right to be in the case.” 

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