Last year was rough for the plant-based space.
The once fast-growing category, fueled by a range of factors, saw a major slowdown in sales throughout 2023. Many players, both big and small, either exited the space, curtailed innovation or cut jobs.
Since the sector’s boom in 2019, two alternative protein pioneers have led the industry have dominated and made themselves household names — Beyond Meat and Impossible Foods. Like the category overall though, these companies have hit bumps in the road with maintaining growth and delivering to consumers’ needs.
“It’s important to remember this industry is really just getting started,” Leslie Sims, chief marketing officer at Impossible Foods, said in a statement to Food Dive.
Both Beyond and Impossible have made operational changes in 2023 (and 2024), including layoffs, consolidating manufacturing bases, executive shifts and reprioritizing product lines.
“When your own operations are going smooth, it makes it much easier to then also have that flow through in the way you’re interacting with your customers,” Jennifer Bartashus, an analyst at Bloomberg Intelligence, said in an interview with Food Dive.
“A lot of the hard work that Beyond Meat, Impossible and others have done in the last year to improve internally is really critical to setting up the foundation for success and pulling consumers back into the brands,” said Barashus.
The need to cast a wide net
To gain momentum in the new year, Impossible Foods says it is looking to grow its consumer base. “We want to continue reaching more meat lovers and flexitarians, but we have to get the message right,” Sims said. “We want to be inclusive and not have people feel judged for loving meat, and show them they don’t have to change their lifestyle in order to help the planet or their health.”
The messaging from plant-based companies thus far has been less than inclusive, Bartashus said. “At the heart of the issue, what these companies are trying to do is spur consumer interest. And when you’re in a young and developing industry, and I still consider plant-based meat alternatives a relatively young industry, you have to cast a wide net.”
Companies need to regain focus on what their narratives are, Bartashus said. “There’s a delicate balance between not alienating people,” she said. “There are benefits to doing a line of promotions around potential health and environmental benefits, but you can’t try to do everything at once, because then it just becomes convoluted.”
Looking ahead to the new year, Impossible is focused on gaining the attention of more consumers by broadening its marketing tactics, Sims said.
“What we really have is a messaging problem more than a product problem. We have to challenge misconceptions and dispel myths, and we have to be more proactive in talking about the nutritional benefits of our products,” Sims said. “We have to play defense and offense at the same time, and there’s an art to that. This will be a major focus for us next year.”
Meati makes headway with a new message
While these household names — Beyond and Impossible — in the space look to gain more customers as they grow, up-and-coming brands, such as Meati Foods, are hoping to catch that wide net from the get.
The Boulder, Colorado-based company has taken a different approach to marketing and has never identified as simply “plant based.”
When you think about some of the “heritage players” in the alternative protein space like Beyond Meat and Impossible Foods, said Meati COO Scott Tassani, they have done a good job at getting consumers to give their products a try, but are not seeing that turnover in terms of repeat purchasers. “They have an appeal from a sustainability standpoint, but they’re not necessarily seeing a receipt of success, and it’s because of the experience they offer,” he said.
Meati doesn’t position itself as being particularly anti-meat either, whereas some players have used language to demote the use of animal products in food. This allows Meati to give consumers an experience that is not built on guilt or shame surrounding the idea of choosing to eat plant-based or not.
“There is enough polarization in the world today, we don’t need it in the food we eat, too,” Tassan said.
To better connect with more consumers in 2024, companies need to get back to the roots of why they do what they do, Bartashus added “Consumers love stories, so the further you get away from discussing your story, the harder it is to pull people in, especially when there are a lot of alternatives out there.”
Meati Foods also reduced its headcount last year to focus on growth, and the company is not immune to the headwinds of the space, but its marketing strategies appear to be working. The company is well on its way to achieving a footprint of 8,000 retail locations by the summer.
Taste still trumps sustainability
Many plant-based founders are passionate about the sustainability aspect of the space — for some, it’s the reason they started their companies — but the reality is: Passion is not shared on the consumer end.
“Sustainability, as a selling feature, has more of an appeal in markets outside the United States,” Bartashus said. “Generally speaking, sustainability is not as embedded into the daily lives of consumers in the United States as it is in Europe.”
In many foreign markets, people pay more if they see the payoff as being better for the environment — in transportation, food, and how they live in general. “Companies need to be cognizant of the fact that this is not the case everywhere,” Bartashus said.
Ultimately, taste, availability, quality, health benefits — these characteristics are the bar against which the U.S. consumer measures these products, she said.
“The actual market for plant-based foods initially was people who are following flexitarian diets and who were just trying to put more greens in their diet,” said Strong Roots CEO Sam Dennigan, an expert in developing both small and international brands. “Everyone wants to be more sustainable. Everyone wants the planet to thrive but not at the cost of taste. A lot of these alternative protein companies are focused on science and not on the nourishment of food, and I think that’s a big mistake.”
Taste was the most frequently mentioned reason for repeat consumption of plant-based foods but also remains the top barrier to trial for the industry.
For even the most seasoned companies in the space, achieving a satiating taste and texture while also keeping prices competitive, has been a major challenge as well as an impediment to profitability.
In its latest earnings report, Beyond Meat showed negative sales growth for the sixth quarter in a row and CEO Ethan Brown told investors that the company needs to rework its strategy by exiting certain U.S. markets, for example.
Beyond denied request for comment on its plans for the year ahead.
Meanwhile, Impossible Foods — still privately held — claims it is still outperforming the category at retail and has plans to grow its foodservice business CEO Peter McGuinness told AgFunder News.
The space has received pushback from consumers who want more whole, clean ingredients in alternative products instead of additives that try to mimic animal-based protein.
A report from Grandview Research cited higher demand for whole food products that are high in fiber, vitamin C, and iron, which echoes findings from a Whole Foods Market report claiming plant-based companies would have to clean up their labels to reach consumers.
However, Impossible Foods is leaning in a different direction with its innovation. It has never been a part of the company’s strategy to compete with fruits and vegetables.
“We’re for meat eaters who are looking for something better for themselves and the planet,” Sims said. “However, there’s a lot of noise out there around ‘ultra-processed’ and ‘processed’ foods that’s lacking in nuance and misleading to consumers when, in reality, processing does not make food inherently unhealthy.”
In December, the company was testing a plant-based hot dog product with New York City street vendors.
It boils down to developing a higher number of brand loyalists, Bartashus said. “You need consumers to embrace your story, share that story with their own experiences to other people, and it seems like we’ve gotten away from that in the last year and a half.”
Consumers’ expectations are higher now when it comes to innovation, ingredients quality and taste, and companies are going to have to respond in some capacity.
Not your typical plant-based
With older and more established companies having already cemented brand loyalty, the space may see product innovation by some unsuspecting players.
Long-established food companies like Kellogg Co., owner of Morningstar Farms, Maple Leaf Foods and Congara, owner of Gardein, are beginning to perform better than alternative protein startups and exclusively plant-based brands, such as Beyond and Impossible, with their own mix of plant-based offerings.
According to the Grand View Research study, these bigger companies are able to leverage their wide net of consumers and offer products at a lower cost.
Kraft Heinz launched a plant-based version of its beloved mac ‘n cheese, NotMac&Cheese, which hit shelves in November 2023. This was the company’s third innovation with NotCo, using its artificial intelligence platform to redesign traditional food products with plant-based ingredients.
Thus far, the alternative protein space has focused on recreating American favorites using plant-based ingredients. The Impossible Burger, for example, is marketed with the typical hamburger fixings — lettuce, tomato, onion and a toasted sesame bun to boot — and Beyond Meat claims its Beyond Burger “looks, cooks, and satisfies like beef,” while having “all the juicy, meaty deliciousness of a traditional burger.”
Bartashus thinks this may change in 2024, as companies will innovate with products that don’t try to replicate something else and the plant-based space evolves into something more of its own.
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