It was healthier. It was better for the planet. And this freed up resources to be used elsewhere. Rewind just a few years and plant-based meat was the next big boom.
With more and more people switching to vegetarianism, and with climate change worries dominating the headlines, many clever technologies are pouring into different ways to turn soybean porridge or yellow peas into something that is almost impossible to differs from a quarter pound minced beef or a strip of chicken.
And yet, right now everything is going the other way around. Kellogg’s gets rid of its unit focused on vegetable meat. Supermarkets are clearing the shelves of alternative protein sandwiches. And the shares of some of the leaders of the sector, such as Beyond Meat, collapsed.
It turns out that the market is much smaller than some of the ads.
In fact, the “vegetable bubble” is fast becoming a “vegetable collapse.” And all the big companies and investors who jumped on the van are about to be burned – and probably also fried and fried.
At one point, the noise around plant-based meat made the dotcom balloon from the turn of the century seem rational in comparison.
When Beyond Meat released its shares in New York in 2019, they jumped 160% on the first day of trading and continued to climb from there, which turned out to be the hottest IPO for this year.
Investments in “food technology”, as it is known among investors, reached a record $ 12 billion in 2021, more than half of which was for meat alternatives.
A whole series of “unicorns” have emerged, such as well-known start-ups worth more than $ 1 billion, such as Impossible Foods and Eat Just. Alternative seafood is just as popular: Current Food, which produces plant-based tuna and salmon, raised $ 18 million this month. Meat alternatives were one of the hottest technology industries in the world.
It was not difficult to understand why. Food is still one of the biggest industries (everyone has to eat). But the kinds of things we want to eat are changing all the time. In the United Kingdom alone, the number of vegans quadrupled between 2014 and 2020, and many more people are reducing the amount of meat they eat.
Add to the concerns about climate change, to which meat-growing is a major contributor, as well as health concerns, especially for red meat, and there was a huge space for plant proteins. Anyone who could offer a burger that was made from beans, but still tasted the same as the one that started in the field, looked like a winner.
Still, there are currently signs that the tide is reversing. Last week, food giant Kellogg’s said it planned to spin off and potentially sell its MorningStar farm, which produces alternative meats. There was a certain “irrational abundance” in the sector, CEO Steve Cahilon said during a conversation with investors a month earlier. Whether Kellogg’s holds the unit or sells it, this no longer seems to be a top priority.
Last week in this country, it became clear that Morrisons and Asda had abandoned their meatless sandwiches, while Tesco had reduced the number it offered by a quarter. Meanwhile, the leader in the sector Beyond Meat has seen a drop in its share price by 82% over the last year, which is hardly a sign that investors already have great faith in its future. In fact, the whole sector can be in serious trouble.
What went wrong? It turns out that despite all the technology and enthusiasm, vegetable producers face three major problems.
First, most meat and fish alternatives on the market so far are relatively expensive. At Ocado, a few Beyond Meat burgers cost £ 4.50, which, while not a fortune, especially if you’re saving the planet, is hardly a bargain. In the restaurant menu, plant-based meat is usually more expensive than the animal version. When the economy was booming, jobs were plentiful and real wages were rising, it wasn’t a big deal. Now that inflation is raging, and especially food inflation, it’s a whole different story. People want to save money from their weekly store, and going back to traditional meat is one of the easiest ways to do that.
Next, production is much more difficult than anyone imagined, especially when it has to increase for the quantities required by large supermarket and restaurant chains. Alternative meats and fish are an impressive technical achievement and their taste is almost identical to the real ones. But they are still technically very challenging. Beyond Meat has not yet made a profit, although it is a high-profile brand, and none of them has many of its competitors. This is partly because things are so expensive to produce. This is hardly a long-term recipe for success.
Finally, this did not bring any real benefits. Most vegetarians are completely happy to stop eating meat and do not need artificial burgers to soothe them. Carnivores may have tried it once or twice, but quickly lost interest, especially as it became more expensive. Meanwhile, there was no real evidence that vegetable burgers and fake chicken were healthier or had fewer calories. Apart from a vague appeal to the morality of the consumer, it is not very useful.
It is true that there will be a market for plant-based meat. It is currently estimated to have a global value of $ 35 billion, compared to $ 1.5 trillion for the global meat market. This is a significant niche. But it’s not much more than that, and it doesn’t seem to be happening anytime soon. In fact, the stock market and Big Food continue to follow fashion trends. But very few of them turn out to be durable. The “vegetable bubble” has already begun to burst – and it doesn’t look like that will change any time soon.
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