Will bird flu and inflation send diners flocking to plant-based meat alternatives?
- Inflation and avian flu could make the timing right for meat alternatives to grow market share.
- Fresh beef and chicken prices were both up 9% in April, while meat alternatives were down 1.6%.
- Meat alternatives have a 1.5% share of the meat sales market, about 20% of consumers have tried them.
- By contrast, plant-based milk has reached 42% of households and has a 16% share of the market.
Consumers flipped over the notion of hamburgers made from plants instead of animals when the alternatives showed up in supermarkets and fast-food chains about five years ago.
But with prices for meat replacements high and America’s taste for real beef intact, shoppers steered away even as the plant-based meat-alternative industry slogged away with new products, better distribution and the opening of new international markets.
Now, plant-based product makers could be poised to get their sizzle back. Inflation is raising prices of beef and other meats faster than for plant-based alternatives. Plus, price hikes related to an avian flu outbreak that has spread to flocks in 34 states could tempt more consumers to try the newfangled meat and poultry replacements.
If those inducements aren’t enough, there are the more traditional selling points: The new protein alternatives are more ecological because growing plants isn’t as rough on the environment as raising farm animals. The substitutes are healthier since plant-based foods lack artery-clogging cholesterol.
“If we can get more people to incorporate plant-based meat into their diet, it’s a win for them, it’s a win for us, it’s a win for the planet,” said Peter McGuinness, CEO of Impossible Foods, a leading maker of plant-based meats.
The timing could be right. In April, fresh beef and chicken prices had both risen more than 9% over the previous year. By contrast, meat alternatives were down 1.6%, 210 Analytics reported.
But showing just how far they will need to go, the alternatives averaged $8.15 a pound, almost twice the average price of ground beef.
The problem: Market penetration lags
Still, there’s hope. At a Ralphs, a Kroger supermarket brand in Southern California, a four-pack of Impossible’s plant-based bratwurst was selling on promotion for $5.99 this week instead of the usual $8.99. A 12-pack of Johnsonville pork brats, however, was priced at $8.99, discounted from the normal $12.99.
Inflation is having an outsize impact on meat prices, “further narrowing that price gap to plant-based foods,” said Rachel Dreskin, CEO of the Plant Based Foods Association and Institute. “Plant-based is no longer a niche. This is a full-fledged industry, and the moment for plant-based is now."
The nationwide bird flu outbreak could continue to increase poultry prices, tempting shoppers even further. Farmers have had to kill than 25 million chickens, turkeys and other livestock fowl to try to head off an avian flu outbreak so vicious that it is felling bald eagles in the wild. Prices for poultry items are estimated to increase by at least 6% this year, according to the USDA's food price outlook.
The market holds nothing but upside for plant-based meat manufacturers. Their products make up just 1.5% of meat sales, and only about 1 in 5 consumers purchase plant-based meat at retail, reports Caroline Bushnell, a vice president for the Good Food Institute, nonprofit advancing alternative proteins. By contrast, the plant-based milk industry has reached 42% of households and has a 16% share of the liquid milk category.
Besides the price differential, Bushnell said potential consumers were put off by the fear they wouldn’t like the taste of meat substitutes. But that’s exactly where the new high-tech makers of plant-based meats think they can score if only consumers will give them a try.
Impossible and its archrival, Beyond Meat, have introduced sausages, meatballs and chicken nuggets or tenders that they believe have, because of technology, the texture, fatty taste and sizzle of real meats. Beyond has even tried jerky.
Beyond Meat, however, has been flame-broiling its investors. Its stock sank more than 20% in after-hours trading Wednesday after its missed sales estimates for the first three months of the year. It had a net loss of $100.5 million over the quarter.
Impossible is privately held. McGuinness, who took over recently as CEO after leaving yogurt maker Chobani, said in an interview that his goal was to quadruple the number of locations selling Impossible’s products to 100,000.
The solution: Innovate and cut costs
To do it, he said he’s going to direct marketing at “the masses,” not just high-end consumers who aren’t as resistant to paying more for a plant-based product. And McGuinness said the messaging will go much further.
“The value proposition isn’t just price and price alone,” he said. “Our products are better for you health-wise and…they’re tasting as good or better than animal products.”
Both Impossible and Beyond tout having made past price cuts. McGuinness said the major impediment to lowering prices further is scale – higher sales and more production could help achieve economies of scale that cut prices further.
Since he plans to grow the brand, McGuinness believes prices will fall further. The growth will be helped by the introduction of still more innovative products.
Bushnell said a rush of innovators are entering the industry, besides the ones already working to bring new products to market. Some are working on lab-based products like one that would produce animal-like fat without the animals. Another vows to make a plant-based steak akin to filet mignon.
For the moment, there seem to be myriad ways to take the moo out of the chew.
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