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Back to the drawing board for plant-based meat, says Rabobank strategist

Plant-based meat alternatives have suffered a drop in sales in recent years. Cyrille Filott, global strategist at RaboResearch, identifies five areas that brands must tackle to get sales back on track.

At the FI Europe 2023 Conference, Filott gave a presentation titled “Plant-based meat alternatives: Back to the drawing board”, in which he shared insights about why plant-based meat alternatives (PBMAs) have stalled and what needs to be done to get things back on track.

Filott is part of a 90-strong team of analysts forming the market intelligence division of Rabobank, which provides insights for the food and agriculture businesses. The team covers the entire value chain, from farm to fork, and has given particular attention to plant-based foods in recent years.

In the presentation Filott touched on how expectations were running high for PBMAs several years ago, but consumer perception of taste and the nutritional profile of the products has led to a drop in sales. Digging deeper, he looked at strategies to turn the current situation around with the cooperation of the entire supply chain.

The transitional period to PBMAs

“What is really driving interest in plant-based foods right now is a desire for other sources of protein that are not from animal sources,” said Filott. “So, what we are seeing is a transitional period, as consumers gradually shift away from animal sources of protein to embrace other plant-based and non-animal sources of protein.”

There has been a lot of hype and marketing to drive interest and growth in the category, with Filott pointing to the fact that big players like Beyond Meat and Impossible Foods have been spending hundreds of millions of dollars to promote their products, while UK player Meatless Farm spent €4 to 5 million a year sponsoring football team Real Madrid.

Initially, that hype resulted in fast sales growth. Consumer curiosity about meatless foods was piqued by a desire to lead a more sustainable lifestyle, as well as concerns over animal welfare.

Sales have taken a hit in the past year

To underscore what is happening in the PBMA category, Filott drew on Rabobank research highlighting how US sales of PBMAs spiked significantly in 2020, to reach annual sales of $1.207 billion in 2020, plateaued in 2021 and then fell by 1% year-on-year in 2022 to reach $1.199 billion.

However, Filott underlined that the US sales figures are actually worse than they seem, as inflation pushed up retail sales while sales volumes have continued to slide since 2020.

Answering the question about what has caused this decline, Filott believes that there are two main reasons coming into play that food manufactures and ingredient suppliers should carefully consider if things are to be turned around.

Customer loyalty is not happening

“Part of the reason is because of the consumer trying these products and not sticking with them. Recurring sales of PBMAs is in the 30s percentile, so around one in three consumers are buying the same products,” said Filott.  “This is very low compared to other food categories where recurring sales can be in the 60s percentile, or even higher. People have tried the products and basically discovered that they were not good enough.”

The other reason is retailers. Filott pointed out that declining sales volumes has led many grocery retailers to stock fewer PBMA brands, underlining UK supermarket chain Tesco, which has reduced the number of SKUs on shelves from 200 in 2021 to a current offering of around 150. This has meant a number of plant-based food brands have failed, going into administration or bankruptcy, including Meatless Farm, which collapsed in June 2023.

“But I actually believe this reduction in the number of SKUs is a good thing in many ways because so many brands were added to retail shelves that it actually left the consumer confused,” said Filott. “Likewise, fewer brands also means consolidation and evidence that the category is maturing. We are now entering into a steadier phase that will help forge greater customer loyalty towards the reduced number of brands that are out there.”

Text and flavour has not been on point

While many industry observers expected plant-based food brands to go mainstream, that has not happened. Filott believes this is because the texture and flavour did not live up to expectations while many of the offerings were heavily processed, containing multiple ingredients, many of which consumers did not recognize.

“Essentially, many of the offerings are Ultra Processed Foods, and in many countries, particularly in the UK, there is a significant backlash to this type of food,” said Filott. “While the consumer is keen to buy meat alternatives that are more sustainable, that does not mean they are willing to compromise on health or taste.”

A five-point strategy to turn things around

So, what is the solution to getting consumers on board with plant-based meat alternatives? Filott outlined five main areas that should be tackled if companies are going to get it right:

1. Tackling PBMA’s perception as an Ultra Processed Food (UPF)
2. Emphasise the nutritional benefits of PBMAs
3. Recognize that sustainability alone is not the key to an effective marketing campaign
4. Stress the importance of quality and sensory aspects, as opposed to just price
5. Diving deeper into the plant-based chain to fully include the farming and ingredients processes

Discussing points #1 and #2, Filott said: “With respect to the issues about UPFs, PMBA manufacturers have to think about the fact that consumers want healthy, nutritional foods, so why not turn that around by emphasising the plant content and the nutritional benefits?... The consumer is interested in nutritional products, so why not tell the story of what is actually in there by emphasising the strength and power of plants.”

Concerning point #3 and #4, focusing on the sustainability and sensory aspects, Filott pointed to Beyond Meat’s widely publicized claim that its burgers represented 90%  lower emissions than a regular beef burger. “But at the end of the day, the actual product was simply not good enough for the majority of consumers, so consumers either switched back to regular burgers or stopped eating meat altogether. This is because the most important thing is always going to be the taste of the food, and then price comes in second.”

Rounding off the presentation, Filott pointed to the importance of point #5, addressing every aspect of the PBMA food chain in an effort to make changes that will positively impact the category. “So, we believe, taking it from the very beginning, that seed companies should be working with farmers and so on all the way up the food chain. Each and every step of the value chain needs to come together and think about how we can come up with the right solutions to help improve these products.”