Richard Mitchell | Jul 05, 2023
Shopper concerns about health and cost are slowing demand but growth opportunities
The once widespread interest in plant-based meats is rapidly contracting.
More and more shoppers are becoming disenchanted with the products due to concerns about health, taste, and prices, which often are several dollars a pound higher than for equivalent animal-based meats, analysts say.
Plant-based meat sales peaked in the second quarter of 2021 as consumers were eager to try “the greatly hyped” offerings, but fewer than 50% purchased products a second time, said Anne-Marie Roerink, president of 210 Analytics LLC, a San Antonio-based market research and marketing strategies firm.
Volume sales for meat alternatives was down 19.6% for the 52 weeks ending May 21, 2023, with an average price per pound of $8.35, up 2.1% from the year-earlier period, reports Circana, a Chicago-based market research firm. Volume sales for frozen meat alternatives declined 7.5% at an average price of $7.69 a pound, a 10% increase over the year before.
“Plant-based meats are highly processed with ungodly long ingredient statements,” said Jim Wisner, president of Wisner Marketing LLC, a Gurnee, Ill.-based retail consultancy. “People say, ‘I don’t know if I want to eat that,’ as they know what they are consuming with beef and chicken. There also are issues with flavor and texture and not all products are palatable to the majority of consumers.”
Shoppers who initially sought plant-based meats because they perceived the selections to be healthier options later “expressed some doubts relative to the actual healthfulness of the products,” Roerink added. “Manufacturers of plant-based meat alternatives are very much aware that there is room for improvement.”
The category also is “over-SKUed,” with many stores carrying more plant-based meat products than the sales would warrant, she said.
Yet, that is likely to change as more suppliers are destined to leave the sector, Wisner said. “There will be some fallout from the brands that got in early,” he said. “The market isn’t growing fast enough to absorb the number of new companies becoming engaged with it.”
Despite the downturn in activity, the plant-based meat sector will become more appealing as prices likely will decline as suppliers achieve greater economies of scale and are better able to minimize supply chain and freight expenses, Wisner said.
“It’s well past the fad stage and plant-based meats are going to be a long-time and important category for retailers,” he stated. “The sector is attractive to supermarkets as many buyers are from higher income households. We will see many new products and technologies being employed as it is now a real playground for food scientists.”
Retailers that base product options in accordance with the unique characteristics of shoppers in each neighborhood also will be positioned to grow sales and reduce shrink, Roerink said.
“While overall household penetration of plant-based meats has fallen to about one-in-10 shoppers, there is a higher uptake in urban areas and among younger consumers who have a greater preference for protein variety as well as a higher occurrence of eating vegetarian and vegan dishes,” she stated.
The most popular plant-based meat items include ones that are convenient to prepare and typically mimic center-of-the-plate offerings, said Shannon Weis, lead consultant, insights account manager, for 84.51°, a Cincinnati-based research and insights firm and a unit of The Kroger Co.
“Plant-based meat consumers tend to look for products that mimic animal-based products,” she added, noting that plant-based ground meats, frozen meatless poultry, and frozen meatless burgers are the strongest performers.
Many shoppers, meanwhile, still cite health as the top reason for purchasing plant-based offerings, 84.51° reports. While taste and texture also are important to Millennials, products with lower sodium and fewer processed ingredients strongly resonate with older shoppers, Weis said.
Future developments will likely include the replacement of highly processed selections with healthier alternatives; a better alignment in the size and assortment of plant-based meats in supermarkets; more options in urban, younger-focused stores; and fewer selections in areas where demand is lagging, Roerink said.
Yet, because plant-based meat is still an emerging category, supermarkets should err on the side of over-serving it, Wisner stated.
“You don’t want to make the mistake of pulling the wrong item or one that is not substitutable in the consumer’s eyes,” he noted.
More products containing newer varieties of natural ingredients are also set to hit the sector, said Alan Lewis, vice president of advocacy and governmental affairs for Natural Grocers, a Lakewood, Colo.-based operator.
“Selections for a long time were all soy- or gluten-based, but now we’re getting into such items as pea proteins and beans, which are forming satisfying and nutritious whole foods meals,” he said. “That is important because more people will buy and enjoy such products on a whim rather than just eating the foods” for health and other reasons.
While Natural Grocers is “carefully adding” more plant-based SKUs, Lewis said its selections in stores make up less than 5% of the available products on the market.
The retailer bases its options on factors like sales history as well as products that meet the company’s high ingredient
standards, Lewis said.
Richard Mitchell | Jul 05, 2023