Time to Reevaluate
Plant-based meat was the topic on everyone’s mind prior to the arrival of the Coronavirus. The Impossible Whopper rolled out nationally, Beyond Meat’s sales were soaring, and meat producers like Tyson were coming up with their own products. As soon as people began panic-buying, the tweets started coming in. It appeared that consumers were not buying plant-based meats when they were stocking up.
Flash forward a few weeks, and Covid-19 has created a meat shortage. Wendy’s cannot supply burgers to its consumers, leaving some wondering, “Where’s the beef?”
During this global pandemic, Covid-19 has created two profound times to reflect upon plant-based meat – panic-buying and a meat shortage. Looking at both instances can tell us a lot about plant-based meat and where it may be heading.
Panic-Buying – Data Versus The Shelves
There are numerous ways to look at what happened when consumers were panic buying. One way is to look at the shelf. The number of tweets I saw making light of consumers not buying meat alternatives are too many to count. Anecdotally, in my own shopping trips, the meat alternatives shelf during that time period was full. Kroger made the strategic decision to shelve plant-based options with their real meat counterparts, further highlighting the difference for me. From this metric, it would appear that plant-based meats were not doing well.
On the other hand, I am a proponent of data. While the shelves were saying one thing, point of sale data told a different story. Fresh meat alternatives were still in the triple-digit growth rates compared to the same time a year ago in late March, according to Nielsen. Their frozen counterparts weren’t up that high, but they had growth rates that would make any executive smile. This was over a number of weeks through March.
Panic Buying – Past Results Do Not Guarantee Future Success
Investors are familiar with the term, “past results cannot guarantee future returns.” While data states that plant-based meats are doing just fine, it must still be alarming to be one of the few products left on the shelf when consumers are buying everything in the store. There are a number of ways to explain what happened:
- Consumers may not find plant-based meats to be comfort food
- Meat alternatives haven’t been established as household staples
- Consumers are reevaluating how plant-based fits into their lifestyles
- Plant-based options are not perceived to provide the same nutritional benefits as real meats
- The list goes on and on
Without doing a study, it’s impossible to find the root cause of it all. Heading into another stage of this global pandemic, plant-based meats will be tested again. As the US is in the midst of a meat supply shortage due to processing plant closures, plant-based alternatives will not have the same supply stress. Will they prove to be chosen as replacements at this time?
Meat Shortage – Can Plant-based Replace The Real Thing?
The big question here is: will consumers buy more plant-based meat in response to the shortage? The data is trickling in slowly, and I have yet to see the results. In a few weeks, it will be interesting to see if we’re talking about how the shortage accelerated the growth of plant-based meats or if it did little to add fuel to their fire. As companies like Impossible Foods started in foodservice and then moved to retail later, the shortage is a huge opportunity to reach new customers, especially with their newly announced distribution into Kroger.
Beyond Meat announced their Q1 2020 results on May 5th. They are not slowing down in the slightest – their revenue grew 141% year-over-year and their net income grew to $1.8 million. So even through this pandemic, Beyond Meat continued to grow quickly. There’s a chance that some of the other big players in the space saw similar results. According to a resent article in the New York Times, it appears customers are sampling plant-based meats during the meat shortage and enjoying them. Clearly, from the current sales results, and customer response meat alternatives will still be around after this pandemic is over, it’s just a matter of how big they’ll be.
What’s Next in Plant-based Meat?
There are a few places the meat alternative market is expected to grow. Expect to see new plant-based versions of different cuts of meat. Ground beef and chicken patties have been done, so expect to see plant-based versions of your favorite cuts and varieties of meat very soon.
Plant-based seafood is already here and is waiting to grow. Whole Foods already carries Good Catch, a plant-based tuna – it makes a solid tuna salad. New Wave Foods has created plant-based shrimp. For those that don’t know, shrimp is the most popular seafood in the US and it appears to be a great option for an alternative. Impossible Foods has been very public about its intention to create a plant-based fish option. Finally, my colleague’s personal favorite is Ahimi from Ocean Hugger Foods. It’s a plant-based alternative to tuna sushi.
The products exist and the market is ready for disruption. Consumers are concerned with overfishing and the pollution of our oceans. Once plant-based seafood has its distribution channels established, we’re expecting it to grow rapidly and we’re of course excited to help create the future of plant-based meat.
Wrapping It All Up
It is clear that we will know more about meat alternatives coming out of the Coronavirus Crisis. We already know that their sales continued to grow even though the shelves seemed to tell a different story. Currently, we’re figuring out if they will gain new consumers when there is a meat shortage. Next, we will see if those consumers decide to continue to replace their meat all the time, occasionally, or none of the time with plant-based alternatives. Finally, plant-based seafood has an opportunity to make a splash in the marketplace – it’s an interesting time to be following the world of plant-based meats.