If the plant-based food movement is a baseball game, industry leaders said last week, it's only the first inning.
Alan Hahn, CEO and co-founder of mushroom-based ingredient company MycoTechnology, said at a session at the virtual New Food Invest conference that while the plant-based sector is growing, there are still people today who are asking why there should be plant-based alternatives and discovering what they are.
"I think we'll be in the fourth or fifth inning when that question flips," Hahn said. "When people say, well, wait a minute. If it costs less, if it's environmentally better, nutritionally better, tastes either at least at parity or better, then the question flips to, 'Why do we need to make that whole animal-based economy?'"
If the analogy is made to a baseball game, Hahn and the two other panelists from the conference session have been in the plant-based food business since the first day of the draft. He shared the virtual stage with Miyoko Schinner, founder and CEO of plant-based cheese company Miyoko's Creamery. She has been writing vegan cookbooks and making plant-based cheese since the 2000s. And Seth Goldman, the third panelist, is founder and calls himself chief change officer at plant-based snack brand Eat the Change. He's also the co-founder of plant-based restaurant chain PLNT Burger and chairman of the board for Beyond Meat.
Even though plant-based eating is taking off, with plant-based meat, milk and cheese all posting market increases in 2020, Goldman said that growth is slowed because of the incumbent animal-based food industry. They've spent years marketing meat as the best source of protein, especially for building muscle. Generations of that message makes it difficult for plant-based products to break through and be seen in the same way.
Part of what may get it there, Goldman said, is plant-based products reaching price parity with their animal-based equivalents. Companies are striving to get there, but the only plant-based burgers that are consistently close now are Before the Butcher's Mainstream frozen patties. Last summer, Beyond Meat sold a Cookout Classic 10-pack of burgers, which was also close to the cost of ground beef burgers. And Impossible Foods recently cut the price of its CPG product 20%, which puts it within striking range of beef.
"If you think about animal agriculture, they are getting government subsidies, which keeps their prices artificially low. This industry is not getting a handout from the government. We are not getting grants or subsidies that will lower our price. So we actually have to charge the true price. If you take away the animal. If you take away the subsidies for a glass of milk, you're going to pay something that the average American cannot afford."
Founder and CEO, Miyoko's Creamery
While Schinner said that scale has helped her reduce prices of her plant-based cheese, butter and spreads, plant-based food is still at a competitive disadvantage.
"If you think about animal agriculture, they are getting government subsidies, which keeps their prices artificially low," she said. "This industry is not getting a handout from the government. We are not getting grants or subsidies that will lower our price. So we actually have to charge the true price. If you take away the animal. If you take away the subsidies for a glass of milk, you're going to pay something that the average American cannot afford."
At Beyond Meat, Goldman said it is just a matter of time before the company can undercut the cost of meat. In fact, he said, last year they committed to do that for at least one product by 2025. Inputs at Beyond Meat are much less than the traditional meat industry — Goldman said they use 99% less water and 93% less land — so they will eventually get there.
Schinner pointed out that as precision fermentation technology improves, prices of alternatives will go way down. MycoTechnology transforms mushroom mycelium into a wide range of ingredients through fermentation, and Hahn said its biggest cost so far has been the inputs. But this is changing.
"We now have had two major breakthroughs and have developed a way to take food waste streams — so say fruits and vegetables that would have gone to waste — and upcycle those and use those as growth media, and we're able to reduce our inputs by cost by 90%," Hahn said. "So this is a big game changer."
But the entire plant-based food industry also could use a bit of a shift, panelists said. Currently, consumers have preconceived ideas about how to eat food from plants, like beans and vegetables, Schinner said. Food manufacturers look at plant proteins more or less like building blocks, taking them apart and recombining them in different ways, instead of working to improve the eating experience of the plant they come from, she said.
Hahn said the future of plant-based food should be moving away from meat and dairy analogs.
"I think we need to use plants to their best form: deliver the best nutritional profile without trying to copy what an animal protein or animal food looks like," Hahn said. "That's when we've really made it. When we stop doing analogs and going, 'Hey, this plant, fermented this way, produces this type of food and it's great for you. It tastes great, and it doesn't look like anything you've got from an animal.'"
Consumers also need to see that plant-based food is not inferior to what comes from animals, Goldman said. He works with celebrity chef Spike Mendelsohn on both PLNT Burger and Eat the Change, which recently launched a mushroom jerky product. Goldman said Mendelsohn sees working on these brands as a challenge similar to those on TV reality show "Top Chef," where there is a limited array of ingredients, but the end result is something that tastes good.
"That's when we've really made it. When we stop doing analogs and going, 'Hey, this plant, fermented this way, produces this type of food and it's great for you. It tastes great, and it doesn't look like anything you've got from an animal.'"
CEO and co-founder, MycoTechnology
"I don't think anyone is going to be sacrificing taste to make the shift," Goldman said. "In a sense, it's freeing."
Funding for plant-based food is at an all-time high — plant-based meat, dairy and egg companies received a record-setting $2.1 billion in investments in 2020, according to the Good Food Institute. Hahn said the sector is undercapitalized compared to tech — a sentiment that has been shared by food and ag tech investors. However, Hahn said a change among big Silicon Valley investors has brought more dollars to the food space. When he started trying to raise money eight years ago, he said investors were more interested in putting their money into something like software, which is developed once and sold millions of times over. Now, they are getting more interested in putting money to support technology to make food, which is constantly developed and manufactured.
And while few plant-based brands have gone forward with an initial public offering to date — including through special purpose acquisition companies — Goldman said it's more likely to become the norm as the segment matures. After Beyond Meat had its IPO in 2019, it became one of the hottest stocks and propelled plant-based business into the limelight. Goldman said it was an important move for the company, both in terms of funding and independence. While Beyond Meat could have put itself up for sale, he said, they knew there was no company that would invest that much in plant-based meat.
"If we had sold, it would have been sort of folded into somebody's R&D department and marginalized," Goldman said. "When you can stand alone with that vision, you have a much better chance of driving the science and the consumer even further."