The growth of plant-based foods

Leaders in the plant-based category like Beyond Meat and Impossible Foods have run with the strategy of creating a product that mimics the real thing. 

However their recent sales have shown that this strategy may be losing steam with consumers. Beyond Meat, for example, saw its revenue plummet by almost a third last quarter and the company said there was a “considerable gap between the strong health credentials of our products and a broader color narrative that is now a foot, and this gap appears to have widened.” 

The second ingredient listed in the El Segundo, California-based company’s popular Beyond Beef patty is expeller-pressed canola oil — which contains trans fats that have been linked to health problems. The product also contains pea protein, rice protein, natural flavors, potato starch and sunflower lecithin. The Impossible burger starts with soy protein concentrate, and has other ingredients like inflammatory sunflower oil and modified food starch. 

According to the Whole Foods report, an increasing amount of shoppers are looking for recognizable ingredients in the items they buy.

Brands like Actual Veggies and Meati sell products that align with this trend, according to the report. 

Actual Veggie’s Green Burger features ingredients like broccoli, kale, yellow onion and white bean and oats, while having a relatively high protein content. And Meati’s Carne Asada Steaks uses ingredients like mushroom root, salt and fruit juice for color. 

Even some plant-based milk brands are moving away from trying to emulate the same creamy texture of dairy milk and focusing on clean ingredients. The Whole Foods report pointed to Three Seeds almond milk, which only contains two ingredients, almonds and water. Bigger companies selling plant-based milk alternatives like Oatly have an “oat base” of oats and water with added ingredients like rapeseed oil.

Like Beyond and Impossible, Oatly is facing headwinds as they reported net losses of $75.6 million last quarter, citing supply chain issues.

An increasing amount of smaller brands in the plant-based space have popped up in recent years, many of which tout themselves as only using healthy, clean ingredients. The report listed Abbot, Atlantic Sea Farm, Smallhold, among others in offering items that fit this emerging consumer interest.

Sustainability is at the root of Impossible Foods and Beyond Meat's marketing strategy, with the plant-based meat giants claiming their products are better for the planet than traditional meat. But their proof for these claims are increasingly coming under question from investors and scientists over a lack of independent data and a failure to consider the emissions associated with sourcing soy and other commodities used in plant-based burgers.

To bolster their sustainability claims, companies often draw from self-commissioned analyses called life-cycle assessments (LCAs), which calculate the environmental impact of products and services from production to waste. However, experts have struggled to replicate the findings of Impossible and Beyond's LCAs, raising concerns about the accuracy and validity of certain claims.

It's unlikely plant-based burgers, nuggets and other products are worse for the climate than traditional meat products. Still, accurately quantifying sustainability claims is important as corporate messaging influences policy and investment decisions.

“Investors want to understand this relatively new industry, whether it's having a reduced environmental or social impact compared to animal-derived proteins,” said Abby Herd, a senior analyst with the Farm Animal Investment Risk and Return (FAIRR) Initiative, which raises awareness of ESG issues in the food industry.

Both Impossible Foods and Beyond Meat declined multiple requests for interviews.

Lacking data

Major plant-based companies lean on LCAs to determine the climate impacts of their products, a practice that is susceptible to conflicts of interest, said Ricardo San Martin, director of the Alt: Meat Lab at the University of California, Berkeley.

“Any plant-based company, really anyone in the food industry, that produces their own paid data, will always only publish whatever makes them look great,” San Martin said. “If it’s negative, why would they publish that?”

Over the years, Beyond Meat and Impossible Foods have commissioned a number of LCAs to illustrate the environmental impact of its plant-based products compared to conventional meat. One of the earliest reports came from the University of Michigan’s School for Environment and Sustainability in 2018.

The findings concluded that Beyond Meat’s burger uses 99% less water, 93% less land, generates 90% fewer greenhouse gas emissions and requires 46% less energy than a typical beef burger.

However, Hannah Ritchie, a researcher at Oxford University, tried collecting data on the claims and found them difficult to substantiate.

“I thought it would be easy to find a clear answer,” said Ritchie, deputy editor at the nonprofit Our World in Data. “But I struggled to find many comparisons based on solid data,” noting that the vast majority of studies were industry-backed.

This can lead to potentially hyperbolic or misleading claims. According to its website, Impossible Foods claims changing diets to include more plant-based foods can be more effective than “getting solar panels, driving an electric car, or avoiding plastic straws.”

“LCA communication and marketing needs to build on scientific evidence and interpret that evidence in a way that's credible,” said Alexi Ernstoff, global science lead at the sustainability consulting firm Quantis, which conducts LCAs for clients. “Saying something like ‘eating our burger is better than driving electric cars’ is not the messaging that we would like to see.”

Researchers who took part in LCAs for plant-based companies have no qualms with how firms are portraying their commissioned data. Greg Keoleian, director of the University of Michigan’s Center for Sustainable Systems, said there could be a lack of transparency in areas to avoid disclosing sensitive information.

“[Companies] may have confidential data that they do not wish to disclose publicly such as ingredient portions,” said Keoleian, who co-authored Beyond Meat’s LCA from 2018. “Life cycle analysts are given access to such data and can aggregate them in published reports so as not to disclose such proprietary information.”

Sustainable sourcing concerns

While beef is a key driver in emissions and land conversions, plant-based products contribute to the impact of deforestation in the carbon-rich tropics, including for key ingredients cacao butter, soy and coconut oil. Due to a lack of sourcing traceability within Impossible and Beyond's LCAs, the companies cannot fully account for the potential environmental and social impacts of their products.

The climate impacts of these ingredients can vary depending on where they are grown. Some may be from a certified sustainable farm, while others may be from recently deforested land in the Amazon, Africa or Southeast Asia.

However, neither Impossible Foods nor Beyond Meat specifies which farms or land areas they rely on for high-risk ingredients in tropical countries. They also have not publicly released plans to partner with major food companies or sourcing initiatives to expand their tracing efforts.

That's concerning to Sophia Carodenuto, an interdisciplinary scientist focused on forest governance at the University of Victoria in British Columbia. She worries the expansion of the plant-based food industry could be linked to deforestation in cacao farming regions.

“If you look at where plant-based meat brands are sourcing from, probably a lot is coming from the same big traders,” Carodenuto said. “So at the end of the day, it's the same thing and it'll be the same issues that [companies like] Hershey are dealing with.”

A lack of sourcing information is part of the reason experts believe the reports are merely a snapshot based on several assumptions, making them "easy to discredit, according to Ritchie.

“It shouldn’t be this way," she said. "Every claim that a brand makes should be backed up with transparent, publicly available data, and ideally, these analyses would be done by academics and independent evaluators.”

The use of science to push an agenda can go both ways. Some of the harshest criticisms of plant-based burgers and nuggets come from entities or individuals supported by the meat industry, which is also potentially misusing data.

“It’s complex. It’s not black and white,” San Martin said of corporate sustainability data. “It depends on where you’re coming from or what you care about.”

Dive Brief:

• Plant-based meat and seafood sales declined in 2023 for the second year in a row, according to the Good Food Institute's State of the Industry report. Retail plant-based food dollar sales were $8.1 billion in 2023, a slight decline from $8.2 billion in 2022, indicating that plant-based foods are still falling short on consumer expectations of taste, texture and affordability. 
• The plant-based meat and seafood sector has responded to declining demand by targeting a wider net of consumers, specifically those who follow an omnivore diet, the report said. Ninety-five percent of plant-based meat and seafood eaters also reported eating conventional meat, the report said, making up a significant chunk of market share.
• Leading plant-based companies are promoting their products as better-for-you and the environment, rather than simply as "plant-based" so as not to discourage potential customers.

Dive Insight:

When it comes to purchasing plant-based meats, consumers prioritize taste, availability, quality, and health benefits.

Familiarity, awareness, and trials of plant-based foods have grown dramatically over the last decade. But in recent years, the number of households purchasing has leveled off or declined for some plant-based categories, according to the report. 

Nearly half of U.S. households purchased plant-based milk at least one time in 2023, whereas plant-based meat and seafood were purchased by only 15 percent of households. 

The GFI State of the Industry Report is an annual pulse check on plant-based foods that looks at data from investments in the space, consumer research, commercial and foodservice sales and more.

“Consumers continue to see higher prices at the shelf, making the price gap between plant-based and their conventional counterparts a relevant challenge to plant-based brands hoping to reach a broader swath of consumers,” the report said. 

Besides affordability, however, the quality of the actual plant-based meat products has also been a deterrent to potential consumers. 

Taste parity was a major investment and top priority for researchers and manufacturers in 2023, the report said. 

“New farming techniques that optimize plant protein cultivation, innovative uses of agricultural by-products, and research to create processes and ingredients that more closely mimic the sensory attributes of conventional meat, seafood, egg, and dairy products,” were some ways the industry advanced. 

Companies have made strides to tackle the taste and texture of products. Last week, Beyond Meat launched its new burger product at retail, which uses avocado oil instead of canola and better quality plant protein sources like fava beans and lentils. 

Daring, a plant-based chicken company, has a high quality frozen product with a very short list of ingredients. 

Looking ahead to 2024, companies should continue to make changes to bring prices down, and create a product that more closely resembles the characteristics of conventional meat, according to GFI.

“Words such as “shakeout,” “normalization,” and “stabilization” were frequently used to describe the dynamics of the plant-based meat sector in 2023,” the report said, and the factors that shaped the industry last year, will likely extend into this year.

Dive Brief:

• Beyond Meat unveiled its latest product called Sun Sausage, the plant-based pioneer’s first offering that doesn’t replicate beef, pork or poultry. The company created the product as its own protein that can be incorporated into other foods. 
• The Sun Sausage has whole, clean ingredients such as spinach, bell peppers, brown rice and red lentils. It is available in three flavors: Pineapple Jalapeno, Pesto and Cajun exclusively at Sprouts Farmers Markets nationwide.
• The innovation comes as Beyond Meat continues to grapple with financial headwinds. After reporting the company’s eighth consecutive quarter of declining revenue in May, CEO Ethan Brown said he was optimistic about 2024 and how its new heart-healthy products could help the struggling company.

Dive Insight:

The development of Sun Sausage was part of Beyond Meat’s strategy to create better-for-you offerings. 

The new product will be made with avocado oil and protein sources, such as fava beans.

A Beyond Meat spokesperson told Food Dive that the company believes this product will “raise the nutrition bar” of the entire plant-based category.

The company also said Sun Sausage earned certification from the American Heart Association's Heart-Check program and the American Diabetes Association’s Better Choices for Life program, a status that its other recent innovations have achieved. 

“We’re excited for our fans to try this delicious new product as it’s unlike anything else currently available in the plant-based space,” said Diana Stavaridis, the senior culinary manager at Beyond Meat.

As part of its health-focused reformulation, the company has debuted products such as its Beyond Burger, Beyond Beef and Beyond Sausage that contain a reduced amount of saturated fat. 

“We believe that 2024 is a pivotal year for change and progress,” Brown said during the company’s latest earnings call in May. 

Despite his optimism, Beyond Meat has struggled as consumer interest in the plant-based category has waned. 

Plant-based meat and seafood sales declined in 2023 for the second year in a row, according to the Good Food Institute’s State of the Industry report. Higher prices compared to conventional meat products, along with concerns about the processed ingredients used in plant-based meat, helped fuel the downfall. 

Amid their economic struggles, the company recently engaged with a group of bondholders to initiate discussions about a balance-sheet restructuring, according to The Wall Street Journal. 

The group of bondholders has interests in the company’s $1.1 billion of convertible notes after the company has been burning cash in recent quarters. 

Dive Brief:

• Increased consumption of plant-based meats may not directly lead to a more positive sentiment higher fondness for the products, according to a new study in the international journal Appetite, which specializes in cultural influences on the selection and intake of foods and drinks. Instead, the context of how the altneratives are used could matter more. 
• The study examined how consumers prepare plant-based meats at home and whether that influences perception of these items. Around 60 participants with meat-heavy diets prepared, consumed and evaluated two plant-based meat meals a week for four weeks — one from a meal kit, one self-created. 
• Although consumer acceptance didn’t change with repeated consumption of plant-based meat, it did vary based on the recipes and cuisine styles used. The context of how plant-based foods were used mattered both for meal boxes and self-created recipes.

Dive Insight:

Consumer acceptance has been a steep hurdle for the plant-based meat industry. Creativity will be key in presenting plant-based products, including by providing recipes and catering to different cuisine types to avoid consumer “boredom”, according to the study. 

Earlier this month, plant-based meat pioneer Beyond Meat reported negative sales growth for the sixth quarter in a row and CEO Ethan Brown told investors that there are broader “health-related misconceptions” facing the category.

Another study from the National Institute of Health found that meat attachment — a term used to describe a positive bond with the consumption of meat — contributed to a low consumption of plant-based meat alternatives. The study also found that under a blindfold, meat products were strongly preferred over plant-based alternatives in terms of sensory characteristics. 

Although regular consumers of plant-based products said they will continue to be repeat purchasers, taste remained the number one barrier to trial for the industry, another study from from the Food Industry Association found.

The study measured how much participants liked the taste and texture of the plant-based meat, as well as how much they enjoyed the entire meal. And although the participants ate more plant-based products during the study, their fondness of it remained the same. 

Miyoko’s Creamery’s CEO Stuart Kronauge has said the company is going “back to the basics,” in order to win over a broader consumer base. The company plans to cut through some of the confusion within the plant-based space by educating consumers through simple messaging.

In October, Beyond Meat launched a “This Changes Everything” campaign with an aim to reinforce the health benefits of its plant-based meat products.

Even after a certification from the American Heart Association claiming its products as heart healthy foods, and backing from actor Rizwan Manji, who is best known for his part on Schitt’s Creek, the California company still struggles to overcome the steep hurdle of consumer acceptance. 

Since its founding in 2017, Meati Foods has been on a mission to raise awareness of mycelium by bringing the ingredient to consumers’ plates with products, such as Classic Steaks and Carne Asada. 

The company says that it is not within the “plant-based” space. 

“What I’m trying to get done is get mycelium as its own category, so we can grow into it, and give consumers another category to manage,” said John Bortells, Meati’s new chief commercial officer in an interview with Food Dive. 

“My goal is to make sure that customers don’t bring us down with the plant-based performance that has happened over the last few years.” 

Bortells has been in the food and beverage industry for 36 years and got his start at Pepsi. “Growing up in Pepsi really taught me how to compete against the number one player in the category, which was then Coke,” he said. “I’ve always been that number two player that is hungrier than its competition.” 

After nearly two decades at Pepsi and working his way up to VP of sales, Bortells went on to work at the Mighty Tea Leaf Company, Clover Sonoma, and finally the A2 Milk Company where he worked to create an entire new category in specialty milk. 

“People had no idea what A2 milk was, designed to help lactose-intolerant consumers enjoy dairy products, and we created that subcategory of specialty milk.” 

What makes mycelium different, he said, is it’s not a plant, it’s a fungi and the ingredient itself is a complete protein made up of iron, fiber, B vitamin and zinc.

Getting messaging right

This week, Meati Foods was named in a putative class action lawsuit alleging it falsely advertises its products as being “made with mushroom root.” 

Plaintiff Serena Caldeira, a consumer in California, alleged that “Meati products are not made from mushrooms roots, nor are they made from any part of a mushroom. Specifically, the main ingredient in Meati products is Neurosporo Crassa, a red mold that commonly grows on bread.”

Mycelium is actually a root-like structure of a fungus that resembles the shape of a mushroom under a microscope. 

Following the filing, CEO Phil Graves told Food Dive the company is “going back to our roots,” literally, and that “many years ago, mycelium was not a household name. It’s still not today, but its awareness is growing, and the category is gaining momentum with consumers.” 

“When you see our mycelium through a microscope, and you see the fruiting bodies, and there are technically tops of the mushrooms, whether it’s mushroom roots or mycelium or mycoprotein, it's a new category,” said Graves.  

In the first few months of his role, Bortells is prioritizing nailing down the messaging of the brand. “We are mycelium that is the root system underneath what grows out into the Earth. So for example, we’re not the apple, we’re the tree and the root system of the apple,” he said. “And we have to talk that way.” 

It may be intimidating for consumers to eat from an entirely new category, which is part of the challenge for Meati Foods. 

“In nature, mycelium is its own kingdom,” said Graves. “And we just have to teach people to eat from another kingdom.”

Competitors of a new category

Though the mycoprotein company does not want to be grouped into the plant-based category, Bortells said the company has that space to thank for how far Meati Foods has come. 

“I’m not here to bash the plant-based industry at all because I think they’ve really created a runway for us,” he said. “The plant-based arena’s success has allowed us to even have a conversation with customers.” 

Besides being its own category, Meati Foods said another factor that helped set itself apart from plant-based players is its clean ingredient deck. 

“We don’t have a long list of garbage ingredients that you can’t pronounce like our competitors,” said Graves. “We have products that are 95% on average, mycelium, but over time, we want to continuously improve our products and get down to the bare minimum of ingredients possible.” 

“We keep an eye on what others are doing, and plant based and fungi based and animal based, but our role is to bring this product to market and drive trial.”

Forty percent of Meati Foods’ consumers have never tried plant-based alternatives before, something the company sees as a positive sign. 

With higher prices compared to conventional meat and concern over processed ingredients, plant-based meat and seafood sales declined in 2023 for the second year in a row, according to the Good Food Institute’s State of the Industry report. 

Meati Foods sees the latter half of the issue as something that mycelium can solve. 

Next phase of growth

With Bortells’ appointment, Meati Foods is ready to step into its next phase of growth, the company said. 

“We’re in a high-growth phase, and we not only were looking for someone that has the skills to help build the brand and make Meati a global household name, but importantly, they care deeply about the mission,” said Graves. “When I got to know John, I got to know his passion for creating new categories, and he wants his next stop to be a place where he can make a lasting impact of the work that he's doing and I know it’s cliche — but where it leaves the world a better place.” 

In terms of what is next in its innovation pipeline, Graves said the company is looking to get the ingredient deck of certain products down from five, to four to three, and let the mycelium stand on its own. 

“When you have a product that is pure and simple and it tastes better than what you’re used to, that’s a sweet spot to be in from an industry standpoint.”

Less than a month on the job, Bortells said he has a few set priorities going forward. “I first plan to tell the story of the brand, then make sure the company has the right products and packaging — without confusing the consumer,” he said. “I’ll then make sure we are going into the right channels of business and spending the right kind of money. Lastly and most importantly, I’ll make sure the company has the right team of people.”

Dive Brief:

• Beyond Meat is laying off 6% of its workforce, or about 44 employees, as the company aims to reduce costs.  
• The plant-based meat company also is suspending operations in China, which will eliminate about 20 jobs (95% of its local workforce) in the country.
• The move to cut expenses and improve Beyond Meat’s financial picture comes as the plant-based meat sector has seen demand slow, forcing companies to shrink their workforce and abandon the development of some products.

Dive Insight:

Beyond Meat’s decision to reduce its staff and halt operations in China marks the latest step by a plant-based company to bring expenses in line with slumping demand. 

Plant-based foods have been plagued by high prices compared to traditional meat, as well as concerns over its use of highly processed ingredients and critiques of unsatisfying taste and texture. 

Sales of meat alternatives fell 9% to $1.1 billion in 2023, marking the category’s third straight year of declines, according to a Circana report from last September. The data firm noted that meat alternatives have lost dollar share of the total meat department every year since 2020, with the space losing buyers faster than they are gaining new consumers. At the same time, existing shoppers are purchasing less.

Beyond Meat has moved aggressively to stabilize its business to generate growth despite these conditions. 

The company has had multiple rounds of job cuts, raised capital, increased prices due to higher ingredient costs, tweaked the formula of its hamburger-like product and focused on channels and geographies where it has the greatest opportunity for success. Beyond Meat has also overhauled its innovation efforts and pulled some products from the shelf — including its beef jerky developed through a joint venture with PepsiCo.

“We intend to strengthen our balance sheet to improve liquidity and optimize our capital structure,” Ethan Brown, Beyond Meat’s CEO, said in a statement on Wednesday. The company has “considerable confidence in the long-term growth of the global plant-based meat industry and our leadership position therein,” he said. 

During its most recent quarter, Beyond Meat said net revenues in 2024 fell 4.9% to $326.5 million.  The California-based company expects revenue this year to be in the range of $320 million to $335 million. 

There are signs, however, that the company’s efforts to shore up its operations are paying off. 

Net revenues rose 4% to $76.7 million during its fourth quarter as an increase in net revenue per pound offset a drop in the volume of products sold. It was the second consecutive quarter of year-over-year net revenue growth. Beyond Meat also improved its gross margins and cut its losses to $37.8 million from $160.8 million in the same quarter a year ago. 

Analysts expressed skepticism about Beyond Meat’s future following its earnings release. 

John Baumgartner, an analyst with Mizuho, said in a note that weak sales necessitate further downsizing and that Beyond Meat’s cash burn rate “remains concerning.” 

Peter Saleh, an analyst with BTIG, also pointed to struggles by Beyond Meat to turn trials at restaurants into permanent items. He also expressed doubt that the faux meat maker will see a turnaround in retail sales growth “anytime soon.”

“We view Beyond Meat shares with a balanced outlook as strong brand awareness and consumer adoption of plant-based proteins is offset by declining sales, category weakness in the U.S., deteriorating financials and likely capital needs,” he wrote.

Dive Brief:

• Unilever is selling The Vegetarian Butcher, a plant-based offering, to Vivera for an undisclosed amount. Vivera, a plant-based food brand sold in Europe, is owned by meat processing company JBS.
• The sale comes as Unilever sharpens its portfolio to focus on long-term growth and scalability by prioritizing fewer, bigger brands such as Knorr and Hellmann’s.
• Unilever also is on track to spin off its ice cream business, which includes Ben & Jerry’s and Talenti, in 2025.

Dive Insight:

Unilever purchased The Vegetarian Butcher in 2018 from founder Jaap Korteweg. During that time, it averaged double-digit growth and expanded to more than 55 markets around the world.

Despite its success, Unilever is focusing on shrinking its portfolio under new CEO Fernando Fernandez, a 37-year veteran of the company. Unilever unexpectedly ousted its prior CEO last month amid concerns the company wasn’t moving fast enough in its turnaround efforts.

Unilever said The Vegetarian Butcher doesn’t fit at the food and personal care products company for two reasons. First, it has a distinct supply chain and sourcing model that makes it less scalable within the company’s broader food portfolio. Second, The Vegetarian Butcher also has a “unique set of technological and R&D capabilities” that differ from the rest of Unilever’s products.

“This divergence makes a sale of the brand the best option for both Unilever and The Vegetarian Butcher,” the company said in a statement.

For a company trying to do more with less, divesting a brand that doesn’t generate a lot of synergies with the rest of its portfolio is a logical place to start. The company can not only devote more of its finite resources to its higher-profile, faster-growing brands, but it can also use the money it receives from the sale to pay down debt or invest in other parts of its operations.

The sale, which is expected to close in the third quarter of this year, occurs as the plant-based food space has seen its star dim, especially in the U.S.

Consumer demand for the products is slowing, forcing manufacturers to cut spending, pull back on product development and lay off employees. Beyond Meat announced last month it was cutting 6% of its workforce and suspending operations in China.