From disillusion to innovation: plant-based meat in transition

The plant-based meat alternative (PBMA) market is coming to terms with a more realistic growth perspective. European meat alternative manufacturers and food retailers are rationalizing both production capacity and their offering to the consumer. That does not mean we should write the category off, but players will need to go back to the drawing board, according to Rabobank.

Growth expectations for meat alternatives have been very optimistic over the past years. Often unrealistically optimistic. Changing consumer behavior with regard to food and beverages takes decades, not years – and that is when products meet consumers’ expectations on taste, price, and healthiness. All of which one cannot really say about the current generation of plant-based meat alternatives, also called PBMAs. 

Plant-based meat alternatives throughout Europe have been experiencing serious backlash in terms of volume growth and consumer perception over the past 18 months.  The good news is that there is a pathway out. Rabobank identified five considerations that could help revive the PBMA category again. The bad news is that not everyone will make it out. Further consolidation in brands, SKUs, and production capacity is likely. Inflation is taking its toll on the pockets of consumers, who are also increasingly questioning meat alternatives’ nutritional advantages.

Back to the Drawing Board

Rabobank continues to believe the main drivers behind plant-based products remain strong. The bank expects growing attention on food as a health driver coupled with perceived sustainability and animal welfare benefits, increasing concerns about the level of processing of food, and a refreshed appeal for convenience-at-home will gradually boost the choice for plant-based products. Rabobank laid out five thoughts on how PMBA players can revive the category by more closely aligning product development and promotion strategies with evolving consumer preferences:

#1: Where Is the Plant in Plant-based?
The current generation of plant-based meat alternatives aren’t exactly plants, but ultraprocessed products. And consumers are increasingly starting to realize this.

#2: PBMAs Haven’t Focused Much on Plants’ Nutritional Benefits
Growing attention for dietary fiber, gut health, and pre/pro/post-biotics could benefit plants in all their forms: vegetables, whole grains, fruits, roots, nuts, and leaves. Plant-based players will benefit from talking more about the positive attributes of plants and bringing more of that to their final products.

#3: Sustainability Won’t Do the Job Alone
Plant-based meat alternatives benefit from science-based evidence and public perception that plant proteins consume fewer resources and release fewer greenhouse gases in their life cycle than animal proteins. But sustainability alone will not persuade consumers. Taste, price, clean labels, healthiness, and versatility are also required.

#4: The Fallacy of Price Parity
One of the core assumptions behind the inflated forecasts for meat alternatives was that volumes would be boosted and the belief was that this would bring down costs and spur further growth. But if a product is not up to par on taste and quality, price alone cannot win consumers over. Replacing ground meat in a frozen lasagna or ready meal with plant-based alternatives seems an easier task than trying to disrupt the burger or steak experience. This may garner better returns on investments.

#5: A Deeper Look at the Plant-based Chain
Ultraprocessing is not only undesired by consumers. It also adds complexity and costs to the manufacturing process. Improvements early in the chain could generate savings, boost R&D outcomes, reduce the need for additional chemical ingredients and overall processing, and increase the sustainability profile of PBMAs even further. Looking along the chain, there are three areas where improvements can be made:

Seed Selection & Farming: Seed breeding may increase plants’ protein content and positively impact final products’ sensory attributes like smell and mouthfeel. This could help producers avoid the crushing process, ingredients needed to mask undesired smells or tastes, and ultimately costs.

Crushing and Ingredient Processing: Why go for concentrates and isolates when you can use more of the plant itself, taking advantage of plants’ additional nutritional benefits, an optimalized manufacturing process, and less upfront capex investment.

Food Manufacturing and Distribution: Distributors could benefit from some rationalization and optimalization, starting with establishing the best shelf for products: fresh or frozen? Near fruit and vegetables or near meat products? 

Consolidation Seems Inevitable

On the back of overly optimistic market growth expectations, much has been invested in setting up new production capacity, launching new brands, and expanding shelf meterage in supermarkets. In retrospect, perhaps too much. Some meat processors that set up dedicated PBMA production facilities earlier have brought these production lines back in-house and are rationalizing their offering. Pure play plant-based companies like Meatless Farm and Plant & Bean did not have the luxury of an adjacent cash cow business and had to wind down operations in recent weeks.

Not Everything Is Lost, but Some Rethinking Is Necessary

Looking back over the past ten years, plant-based meat alternatives have successfully established a base for further growth. The current market conditions should be viewed as a wakeup call for players to reevaluate their strategies. Changing consumer behavior takes time and a lot of effort. Purely mimicking meat to lure flexitarians to meat alternatives has failed to take into account many other consumer requirements, not in the least taste.

In principal, the ‘task’ for PBMA producers hasn’t changed: offering consumers tasty products, made from ‘clean’ ingredients, that are convenient, flexible to use in different recipes, reasonably priced, and have the additional benefit of being good for the planet and animals. This will require investments in innovation, new products, ingredients, and manufacturing processes. And it will take time and money. Not all PBMA players will have this time, let alone the money. It is going to be a bumpy ride.

rabobank.nl