The media frequently portrays the demand for plant-based meat as having wilted, leaving the impression of an industry in decline. However, the reality is far more nuanced and intricate than these simplistic narratives suggest.
In this blog, we challenge these oversimplified notions and shed light on the true state of the plant-based meat industry by exploring the factors that have influenced the demand for meat alternatives. Additionally, we analyze the recent trends in the industry and discuss the potential for future growth.
Blossoming optimism for plant-based meat
During the COVID-19 pandemic, the plant-based meat industry garnered significant attention, with analysts foreseeing a remarkable surge in its growth. Projections from prominent organizations painted a picture of immense potential.
For example, it was gauged that plant-based meat had the potential to capture a 6% share of the overall meat market by 2030, translating to an impressive 25 million metric tons; to put that into perspective, that is equivalent to the weight of approximately 25 million adult female cows.
Numerous other projections echoed and even surpassed these expectations, such as reports that the plant-based foods market could make up to 7.7% of the global protein market by 2030, with a value of over $162 billion. There was widespread agreement among industry experts and analysts regarding plant-based meat’s bright prospects and expansive growth potential.
Several factors fueled these projections:
1. Increased consumer awareness
The pandemic served as a catalyst and brought sustainability and animal welfare sharply into focus; the awareness prompted a number of consumers to explore vegan alternatives to traditional animal meat, fuelling significant demand for plant-based products. The growing body of research showcasing the environmental benefits of plant-based diets further supported the optimism surrounding the industry.
What’s more, as a zoonotic disease, COVID-19 shone a spotlight on the food system and raised concerns about food safety. While the pandemic continued to spread, it also resulted in disruptions within the conventional meat supply chain. These circumstances created an opportune moment for plant-based meat to gain traction as a viable and more reliable alternative.
2. Change in consumer behavior
With the widespread implementation of lockdown measures, people’s lifestyles and routines were significantly altered. Restaurants, cafes, and foodservice establishments closed their doors, which meant that consumers found themselves purchasing from retail channels.
Grocery stores and online meal delivery platforms became the primary sources for obtaining food. As a result, plant-based meat products experienced a surge in popularity during the lockdowns.
3. Novelty factor
Lockdown measures provided people with more time for culinary experimentation at home with new products and dietary preferences. This newfound freedom sparked enthusiasm among consumers, who eagerly shared their plant-based meat creations and engaged with fellow enthusiasts online in what became a social media trend.
The media were quick to catch on and created a buzz to accompany the many emerging papers that highlighted the advantages of plant-based diets and the environmental consequences of food choices.
Weathering the storm
After the phenomenal growth experienced in 2020, with a year-on-year growth of approximately 46% in the U.S. retail sector (compared to 19% in animal meat), the landscape for plant-based meat underwent a notable shift. In 2021, U.S. retail sales of plant-based meat decreased by 0.5% and by 0.4% in the first 32 weeks of 2022. In contrast, conventional animal meat sales recorded a modest increase of 0.3% and 5.8% during the same periods respectively.
The slowdown in plant-based meat sales can be attributed to:
1. A return in consumer behavior
In 2021, consumer behavior returned to pre-2020 patterns, offsetting the previous year’s strong growth. As the world adjusted to the new normal and restrictions eased, the heightened concerns about health and safety stabilized. The novelty of plant-based meat products began to wear off. Moreover, the reopening of foodservice establishments led some individuals to revert to consuming animal-based meat when dining out.
2. Political and economic conditions
The decline in plant-based meat demand can be attributed to broader market trends and the prevailing political and economic conditions since 2021. These conditions have been marked by a general economic slowdown, rising inflation, increasing interest rates, climate events, and geopolitical tensions, all of which have collectively influenced consumer spending patterns.
Furthermore, the relatively higher price point of plant-based meat compared to animal-based meat has posed challenges to sustained sales growth.
Green shoots of recovery in the plant-based meat industry
While the plant-based meat industry experienced a temporary setback in demand, there are promising signs of further growth and a renewed appetite for plant-based meat options. And, unlike Norman Lamont’s infamous remark about seeing green shoots during an economic recession, this time, we’re serious about recognizing the signs of recovery in the plant-based meat market.
After a period of adjustment and consumer behavior reverting to pre-2020 patterns, the industry is regaining momentum. Experts believe that the market’s growth trajectory will persist, especially in countries where food security and resilience have become pressing concerns.
What’s more, although plant-based meat, on average, remains more expensive than its animal-based counterparts, there have been instances where plant-based products have emerged as more cost-effective and accessible options, as demonstrated in the Netherlands. This shift can be attributed to the substantial price increases experienced by conventional meat due to inflationary pressures.
Demand for plant-based meat is turning a new leaf
Looking ahead, the green shoots of recovery are becoming more apparent. The industry is witnessing a resurgence in interest. Some experts anticipate the plant-based meat market growth trajectory will continue. For some countries, an increasing preoccupation with food security and resiliency will also play a role in fueling plant-based growth.
In fact, the foodservice sales of plant-based meat have actually ramped up. A recent GFI-funded sales and consumer study revealed a rebound for plant-based proteins in the foodservice sector, with dollar sales exceeding 2019 levels and pound sales almost meeting pre-pandemic levels.
There were also many notable plant-based meat launches in major U.S. foodservice chains in 2022, including McDonald’s McPlant and Panda Express’ Beyond the Original Orange Chicken.
These green shoots signify not only the renewed demand for meat alternatives but also the potential for continued growth and technological innovation.
The Role of the APAC Region in Driving Growth
The Asia-Pacific (APAC) region holds tremendous growth potential for the plant-based meat market. As APAC’s large populations experience economic growth, their protein consumption will increase, including proteins coming from meat alternatives. This emerging market presents significant opportunities for industry expansion and investment in plant-based foods.
Nurturing the future of plant-based meat
While recent changes in the plant-based meat market, including economic conditions and shifting consumer preferences, have led to a slowdown in sales growth, the industry remains poised for future expansion.
The market may grow at a slower pace than previously anticipated, but the need for plant-based alternatives continues to drive demand. To meet this demand, significant investments in expanding plant-based meat capacity will be necessary in the coming years, particularly in regions such as APAC that exhibit strong growth potential.
Expanding plant-based meat capacity to meet demand
Bright Green Partners recently collaborated with The Good Food Institute to directly address the challenge of expanding plant-based meat capacity. Our insightful study quantifies existing global manufacturing capacity and presents viable solutions that can assist governments and companies in closing the gap to effectively meet the rising demand.
Additionally, reach out to us if you’re interested in learning more about how we support organizations in the plant-based meat industry, including business strategy, conceptual design and engineering, and techno-economic assessment.
