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- The plant-based meat industry surged in 2020.
- But now, companies like Beyond and Impossible are experiencing slowing sales and layoffs.
- They can't just blame inflation — Americans might just not want their products.
Plant-based meat looked poised to change the world — but then Americans stopped buying it.
In 2020, retail sales of plant-based meat grew 45%, surpassing the $1 billion mark for the first time. Increasing awareness of companies like Beyond Meat and Impossible Foods, in addition to climate change and animal welfare concerns, nudged many Americans to give fake meat a shot.
The nature of the pandemic helped sales as well. Many consumers were facing meat shortages, had extra cash to spend, and were looking for something new to break up the day-to-day monotony.
But things have changed over the past year.
As of December, supermarket sales of refrigerated plant-based meat had fallen 14% vs. the prior year, according to the retail data company IRI. Orders of plant-based burgers at food service outlets were down 9% in November compared to 2019 levels.
The slowdown is among the reasons Beyond Meat — whose stock price has fallen nearly 75% in the last year — laid off 20% of its workforce in 2022. And after letting go of 6% of its employees last October, Impossible Foods is reportedly planning to shrink its headcount by an additional 20%.
If inflation was the only reason for the industry's struggles, there'd be less cause for concern. Plant-based meat is still two- to four-times as expensive as traditional meat, according to the Good Food Institute, so it's possible many fake meat fans have simply cut back temporarily to save money.
Some experts, however, say the industry's problems run deeper.
Questionable taste and health benefits are scaring off consumers
First, it's unclear whether the plant-based meat industry has a growing customer base.
In 2018, a Gallup poll found that 5% of Americans were vegetarians, in line with the 5% and 6% reported in 2012 and 2001. The same poll found the share of vegans increased from 2% in 2012 to 3% in 2018. Last year, the Vegetarian Resource Group found that 6% of the US population were vegan or vegetarian, though some surveys suggest the share could be higher.
Given there doesn't appear to have been a surge in vegetarians, the 2020 sales spike was likely driven by meat eaters and "flexitarians," people who eat meat but are trying to reduce their consumption. But for a variety of reasons, some of these people aren't sticking with plant-based meat.
It's a "great product for a small subset of the population," Brian Yarbrough, a consumer research analyst at Edward Jones, previously told Insider, but a "difficult sell for most consumers."
On the all-important issue of taste, many Americans say plant-based meat disappoints, and some experts think the industry's efforts to compare plant-based meat to the real thing is a losing battle.
"The mimicking of real meat introduces that comparison of authenticity," Steffen Jahn, a University of Oregon marketing professor who studies consumer food choices, told The Washington Post, adding that, "They try to mimic it and say, 'We're almost real.' But then some people will say, 'Yeah, but you're not real real.'"
Additionally, while plant-based meat has environmental benefits, growing research suggests it may not be much — if at all — healthier than traditional meat, something consumers are beginning to suspect.
"Nobody should be under the illusion that these are health foods," Michael Greger, a physician and founder of NutritionFacts.org, told Bloomberg.
Despite these obstacles, the industry could have some reasons for optimism. First, consumer awareness might simply not be quite there yet.
In January, Impossible CEO Peter McGuinness claimed that only 17% of US consumers know about Impossible's products, and said the company plans to launch new advertising campaigns in the years ahead. Over the next decade, plant-based companies might also be able to improve taste and bring down prices.
It's also possible that cultivated meat — meat grown from animal cells in a lab — will prove to be the answer, though this innovation could face some obstacles as well.