A new-found positivity is emerging over the future growth profile of plant-based meat but the category has still not fully overcome the impediments it faces on price and taste.
Inroads have been made with the use of new technologies and inputs to improve production techniques. And, most importantly, there have been developments in the quality and appearance of the products that have hit retail shelves and quick-service restaurant counters of late.
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The plant-based meat category still faces criticisms, however, some of which are entrenched, and perhaps naturally so when it comes to opposition from the real meat fraternity. Health credentials and overly processed undercurrents also need to be addressed, albeit progress is being made in some quarters.
Critically, and to be explored here, is whether products can ever reach price parity with real meat or even undercut it, when demand and adoption have slowed, arguably denying manufacturers the ability to scale significantly and compete effectively.
Some headway on price has been achieved, nonetheless. Non-profit The Good Food Institute says the gap with animal meat is already shrinking at some German food retailers, while, in the Netherlands, prices have been matched by some supermarket own-label products.
ProVeg International agrees, suggesting prices in Belgium and Germany are “converging”, and in some cases are “reaching or crossing parity”, while plant-based meat alternatives in the Netherlands are actually “cheaper” than real meat.
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By GlobalDataEven so, Dr. Joanna Trewern, the director of partnerships and institutional engagement at the advocacy group, references the not-so-equal playing field when it comes to the government subsidy advantages that animal-meat suppliers currently enjoy.
“Animal-based products are artificially cheap, which prevents consumers from adopting healthier and more sustainable plant-based alternatives,” Trewern argues, as she calls on stockists to help address the issue.
“Retailers can advocate for their consumers and combat climate change at the same time by advocating for reform of the subsidy system. Bringing margins for plant-based products in line with animal-based products will increase consumer adoption and drive higher overall revenue.”
Price versus growth
What was noticeable in researching this article was the more upbeat language used by market watchers in addressing the future for the plant-based meat category, which has endured a tumultuous few years marked by consolidation but more from a raft of companies going out of business rather than M&A.
The price differential is coming down but that hasn’t led to a massive increase in sales
Cyrille Filott, Rabobank
What is clear, however, is that price competitiveness alone is not going to suddenly rev up demand – price and taste go hand-in-hand.
“The price differential is coming down and pricing is becoming fairly attractive compared to real meat but that hasn’t led to a massive increase in sales,” says Cyrille Filott, a global strategist for consumer foods, packaging and logistics at Dutch investment bank Rabobank.
“I think the demand potentially is there but I’m not sure whether the consumer at this stage is willing to switch because of the taste, flavour and texture issues. It’s still a different product. It’s not a one-on-one substitution.”
Filott acknowledges that progress has been made on the taste of plant-based meat but provides an enlightening anecdote based on his offspring. “My kids are happier trying these products now than they were three years ago, but, ‘have I convinced them’? I’m not sure,” he says.
“I do believe the category has turned a corner a bit with some encouraging numbers coming out but we’re looking at single-digit volume growth, which is good but not what was expected.”
Technology curve
John Baumgartner, a managing director at Japanese investment bank Mizuho Securities, suggests meat alternatives are still going through “growing pains”, taste being one, but that is likely to be fixed with ongoing developments in production technologies.
“It's going to take more time,” Baumgartner says as he bats down the suggestion that consumers may have to accept a premium-priced proposition.
What you see on the shelf is probably not going to look anything like the product in five to ten years
John Baumgartner, Mizuho Securities
“As you have more investment in the space, more R&D, more technology coming in, you're going to see new processes that don't really exist or haven't scaled yet. They’re going to lower that price conversion and improve the quality and the experience of the product,” he contends.
“It’s a natural technology curve, and more efficiencies will lower the cost of production over time. What you see on the shelf today is probably not going to look anything like the product in five to ten years in terms of different ingredients, the plant sources being used and the processing method.”
For now, the taste challenge remains and the bigger future test is luring consumers back to the category who may have been put off after trying plant-based meat.
Price parity or not, brands are not going to get repeat purchases from the initial trial if taste disappoints, Baumgartner says.
“Early adopters have to have a good experience and you need them to go and talk up the product to their friends to try it and be the evangelist to grow the category,” he suggests.
“Part of the categories growing pains, at least in the US, is these early adopters – people that are so critical to developing the category – they probably had a bad experience, they're not coming back and so you stunted the growth at the beginning of the curve.”
Cracking the code
Planted in Switzerland and US-based Meati Foods are convinced they have cracked the taste code.
Both use a fermentation process. Planted is a self-proclaimed clean-label food tech, producing “bio structured proteins” such as chicken and ‘pulled pork’ alternatives, and counts its “whole muscle steak” as its signature product.
Meati produces cutlets, steaks and breakfast-style “patties” made up of 94-98% mycelium – threads of fungi filaments – as the protein source, which CEO Phil Graves suggests gives the products an “unmatched nutritional profile”.
Planted’s co-founder Pascal Bieri agrees with Baumgartner’s forward-looking proposition on the premium-price angle.
We see a point not too far in the future where we will undercut the cost of animal beef
Pascal Bieri, Planted
“We will be much cheaper than animal meat and we can see that already by scaling up certain technologies – the chicken technology on the one side and the fermentation tech that we build around the steak,” Bieri says.
“We see a point not too far in the future, where we will undercut the cost of animal beef, for example. This is then probably going to be a game changer. I don't believe that price does it all, but it's going to be an important step.”
Bieri sets the scene for a more “diverse category” led by advances in technology and ingredients – fermentation, high-moisture extrusion, tempeh, tofu and fungi, for example.
It’s “exciting times” for the category he says, with a reference to the consolidation that has taken place.
“What’s good is that it shook a bit. But, going forward, I see a lot of progress on price parity, even beyond price parity.”
The challenges of reformulation and price
Meati’s Graves, meanwhile, speaks to the challenges facing meat alternatives on changing recipes to improve taste and nutritional profiles, while still offering a competitive price with animal meat to ensure repeat rates.
“Cutting prices while improving quality is undoubtedly a steep challenge for many manufacturers in the alternative-protein space, especially when trying to address the valid concerns about ultra-processed foods,” he argues.
“Reformulation often comes with significant costs and for companies relying on heavily processed ingredients, achieving parity with real meat – while meeting consumer demands for clean, sustainable and nutritious products – can feel like an insurmountable task.
“Mycelium gives us a unique advantage: This eliminates the need for extensive processing or long ingredient lists, helping us avoid many of the pitfalls that other manufacturers face.”
Both executives from Planted and Meati suggest more needs to be done to resolve the category’s challenges on prices and taste – which is ultimately inherent in the quality aspect – vis a vis the messaging around health and sustainability.
“What we need to do on the plant-based side, is tell a story about health and taste, and then drive the facts with low price,” Bieri says.
“What I'd hope is that we as producers come together to have somewhat of a gentleman's agreement, or an official standard, where we say ‘these are the quality of proteins that we're putting into our products to deliver on health’ and, if we ignore that, we're not doing right for the category in the long run.”
Earning trust
Graves, meanwhile, calls for a higher level of participation from government authorities and industry bodies to play a role on costs, while still enabling manufacturers to stay loyal to their overarching objectives.
Governments and industry stakeholders can play a role by supporting innovation and incentivising sustainable practices
Phil Graves, Meati
“Governments and industry stakeholders can play a role by supporting innovation and incentivising sustainable practices, which can help reduce production costs and make these products more accessible,” he says.
“Simply expecting consumers to pay more because a product is marketed as ‘better for you’ or ‘better for the planet’ won’t work if the product doesn’t deliver on those promises in a meaningful way.
“The path forward isn’t about convincing consumers to pay a premium. It’s about earning their trust by creating truly differentiated products that do not require the customer to compromise. Products need to offer superior nutrition, taste and sustainability.”
Mizuho’s Baumgartner contends a natural progression in the demand-price equation for plant-based meat is likely to ensue as the US government and others are in the future likely to play a more active role in promoting alternative proteins – on school lunch menus for example – to help address global warming and the stretch on land resources from a growing world population.
“That's where you can potentially really accelerate the demand curve,” he says, adding that third-party endorsements for some of the newer product innovations, from the likes of the American Heart Association and the American Diabetes Association, are a “huge advance for the industry”.
All in all, price matters, particularly in the slipstream of the inflation-linked struggles of the past two years. But it’s not enough as a singular consideration to breathe new life into the future of plant-based meat without a corresponding uptick in the quality and taste profile to entice consumers.
“While many people appreciate the health and environmental reasons for eating more plant-based foods, survey after survey find taste and price remain the biggest barriers for most consumers and, for these foods to meet their potential, they need to meet consumer expectations on both these metrics,” says Helen Breewood, a research and resource manager at The Good Food Institute's European office.
“With a combination of product improvements and price reductions, plant-based meat can emulate the success of other categories, such as plant-based milk and drinks.”
