Disruption Denied
America’s wicked, widespread drought has made this an unusually difficult year for ranchers. But 2022 hasn’t been kind to pioneers in fake meat business either. Indeed, the alternative meat industry some believed could disrupt traditional meat is struggling with some of America’s high-profile brands apparently rethinking their menus. Disruption appears denied by demand for the real stuff.
McDonald’s, for instance, quietly ended its 600-unit test of the McPlant burger earlier this year without a commitment to Beyond Meat, its plant-based supplier. Beyond Meat was a darling of investors just three years ago when its stock was first offered publicly. But since showing triple-digit-percentage growth in its early days on Wall Street, the company is looking at deep cost cuts in 2022, including a 4% reduction in its workforce.
Beyond’s stock had declined by 52% by mid-August, while the broader S&P 500 index had declined 13%. The company reported a net loss of $97 million during the second quarter of this year on net revenue of $147 million.
Projections for the alternative-meat industry to reach up to $50 billion in sales by the end of the decade have gone up in flames as sales decline year-over-year. Prior to the COVID-19 pandemic, the plant-based market was growing at a modest clip. The pandemic, with its stay-at-home directives, seemed to turbocharge retail plant-based sales by 50% to 60%. Market analysts say Beyond Meat greatly benefitted from widening distribution since its IPO while the launch of competitor Impossible Foods helped send the category into hypergrowth mode.
Whether 2022’s slump in demand for alternative protein is a speed bump due to growing pains or an indication of bigger problems for the category remains to be seen. What’s not in doubt (if it ever was) is the blusterous claim by Impossible Food’s founder Ethan Brown that fake meat would “completely replace animal-based products within 15 years.”
That’s because demand for real meats – despite pandemic-induced supply chain challenges – continues to grow, with beef demand leading the way! A new report by Grand View Research, Inc., suggests the global beef market size is expected to reach $712.5 billion by 2030. The study says the market is expected to expand at a compound annual growth rate of 4.8% from 2022 to 2030.
Such growth, the authors say, is driven by “increasing demand for animal-based food, protein-rich diets and functional meat products” which is expected to “provide lucrative growth opportunities for stakeholders in the meat market.”
America’s beef industry has several challenges, but disruption from the struggling alternative protein category appears a remote possibility.
