The Next Economy
Brands Grapple with Sustainable Growth in Crowded, Stalling, Alternative-Protein Market

The environmental benefits of having a hefty proportion of the global population moving to a meat-free diet are well documented. Animal farming uses around 77 percent of the world’s agricultural land; yet, it only supplies 17 percent of our food. It is this inefficiency that continues to drive the expansion of farms, and ongoing deforestation and loss of ecosystems. Meat production contributes more to the climate crisis than the whole of the world’s transport sector, including aviation. And almost a third of all water used on Earth is channelled into supporting animal agriculture.

So, arguments in favor of plant-based meat, lab-grown meats and other alternative proteins have been deafening in recent years. The accompanying growth in the market, particularly for plant-based meat substitutes, has gotten environmentalists very excited.

It has also encouraged brands to scramble to make a move. Swedish furniture maker IKEA successfully reimagined its best-selling meatball with a plant-based version said to have the “same taste and juicy bite” of the original, despite being made from pea protein, potatoes, oats and onion. Food giant Kellogg improved its line of MorningStar Farms vegetarian patties; and spun out Incogmeato — a plant-based line of sausages, burgers and chicken priced to compete with forerunners such as Beyond Meat and Impossible Foods. Meanwhile, McDonald’s and Yum! jumped into bed with new incumbents to double down on plant-based meat, “demonstrating the long-term potential they see in the category,” according to Bruce Friedrich, executive director of the Good Food Institute.

Back in 2019, conventional meat farmers began to worry. Barclays predicted the alternative meat market could jump by more than 1,000 percent in the next decade to $140 billion. Then, Forbes reported on the potentially “game-changing” impact of plant-based trends on animal farming — particularly in the US, where even a 5-10 percent market share shift might send “ripples throughout production agriculture.”

Fast-forward to today, and the industry appears to have stalled. Three years ago, Beyond Meat went public, to great accolade. At one stage, the company was valued at more than $10 billion as its products were adopted by high-profile restaurants and grocery stores. But in the last 12 months, shares in the business have plummeted by more than 80 percent and sales have stalled, according to the New York Times. Beyond has laid off hundreds of employees, and staff disgruntlement points to wider problems for the business.

It’s not just Beyond Meat that is having problems. Impossible Foods also cut jobs late last year as part of a “restructuring exercise” led by its new CEO, Peter McGuiness. And Brazilian meatpacker JBS recently announced plans to close its plant-based arm of the business, Planterra Foods.

So, what gives? Well, for a start, all food-based businesses are finding it hard amid rising inflation and the cost-of-living crisis. Plant-based meat is rarely cheaper than real meat; so, consumers are acting in the interests of their wallets, as opposed to the environment. GlobeScan’s latest Healthy & Sustainable Living Global Consumer Insights study shows that, although the majority of consumers say they are willing to pay a premium for sustainable products — such as meat-free protein — their willingness to pay more has declined. Across 23 markets, just 55 percent of survey respondents tracked between 2019 and 2022 now say they at least “somewhat agree” they would be willing to pay more for sustainable goods — down from 58 percent in both 2020 and 2021. Three-quarters of people also tend to agree that sustainable products have become more expensive in the past 12 months.

Another argument against meat-free substitutes is that, while they may be better for the environment, they might not always be healthier.

So, what does the future hold for the meat-free market? According to Deloitte, the market might be more limited than many previously thought: “Dramatically improved taste in recent years (vouched for by seven in 10 consumers) unlocked new interest in plant-based alternative (PBA) meat,” it says in a report on the subject. “[But] the number of consumers who sometimes buy PBA meat for themselves or a household member did not grow in 2022. The half (53 percent) who aren’t buying it may not be easily reachable, partly due to cultural resistance to a product some view as ‘woke.’ Others, many of whom say they want to reduce their red meat consumption, still aren’t interested in PBA meat.”

Despite the numerous setbacks experienced by the meat-free movement this year, the market continues to evolve. The US Food and Drug Administration approved the first cultivated meat in the US — Upside Foods’ cell-based chicken — opening up an entirely new alternative to conventional meat production that could boast the environmental benefits of plant-based protein while still being, well, meat. Meanwhile, Israel is becoming a hub for lab-grown meat startups. Already home to major players including Aleph Farms and Steakholder Foods, the country is second only to the US in terms of attracting investment for alternative-protein companies. Since 2020, nearly $1 billion has been channelled into Israel — a nation that has had to be inventive when it comes to food production given the lack of accessible water nationwide.

Whichever way the wind blows, industry players will need to shift, refocus and reformulate their products to make their proposition even more attractive, appeal to older generations and bring down costs. Only then can we create the sustainable alternatives the world needs to address the significant environmental impacts of animal agriculture while satisfying the meat-loving masses.