All hopes of a rebound in plant-based meat sales this year have been dashed amid mounting consumer pressure from inflation. The sector was hit hard.

New figures show UK plant-based meat sales were just 2.5% in the 36 weeks to early September after surging in the past two years, according to market research firm Kantar. Sales increased by 40% in 2020 and by 14% last year.

Meanwhile, in the United States, the difficult economic environment is weighing on a market that began to struggle last year. After falling 0.5% last year, sales fell 0.4% in the 32 weeks to early August, according to data provider Spins. Sales in 2020 increased by 46%.

Jeff Crumpton, senior manager at Spins, said that “flexitarians” (people who eat only moderate amounts of meat) are facing increased pressure on their incomes as a result of rising food prices. “They have tough budget decisions to make,” he said.

Industry analysts say plant-based meat is particularly vulnerable to consumer pressure because it typically sells for a higher price than real meat.

In the U.S., plant-based Beyond, which was all the rage in New York in 2019, had a pound of his meat product in June where he was $8.35, while actual ground beef was almost half that, at $4.90. .

Even before inflation and recession fears mounted this year, the plant-based meat market had lost some momentum as initial consumer euphoria with the product wore off.

Canadian meat group Maple Leaf Foods is one of the companies to warn that hopes of a rapid sales recovery are fading. The Canadian processed meats group, which has expanded into plant-based alternatives, said last month it had scaled back its plant-based business by 25% and cut spending on advertising and promotions.

Michael McCain, chief executive, told analysts last month that while the company had built a business model for plant-based meat assuming a radical shift in consumer behaviour, “this transformational outcome did not materialise”.

Beyond Meat, whose shares have tumbled to less than a tenth of their 2019 high, has scaled back its revenue projections. Last month the group said it was cutting about 4% of its 1,400-strong workforce and trimmed its forecast for capital expenditure to $80mn from $136mn in 2021.

“We are now seeing plant-based meat manufacturers, including Beyond Meat, adjust their cost structure to preserve cash and withstand this weak macro period,” said Arun Sundaram, analyst at investment research firm CFRA. “This includes reductions to the workforce and intentional delays in capital projects.”

Carlotte Lucas, corporate engagement manager at the Good Food Institute Europe, a lobby group for the alternative protein industry, said that while shoppers were continuing to demand more sustainable options.

“It takes investment to make it attractive and affordable for consumers,” she added.

Maple Leaf expects the plant-based meat market to grow 10-15% annually once inflation eases.

McKinsey’s London-based senior her partner Jessica Moulton says there are reasons to be optimistic about the long-term outlook for the market.  “Grocery is normally a very stable place . . . what we’ve seen in the past couple of years with this tremendous rise of plant-based, which is very unusual,”

“Although the rate of change is decreasing, there is a fundamental fundamental shift in diet that we consider sticky.”

Follow us on LinkedIn, Twitter & Facebook.

Source: FT

Ads Blocker Image Powered by Code Help Pro

Ads Blocker Detected!!!

We have detected that you are using extensions to block ads. Please support us by disabling the ads blocker and whitelist the site.