Struggles Facing the Previous Star of Alternative Protein Market: An Examination of Their Current Status
Revised Article:
Way back in 2019, when Beyond Meat went public, its stock skyrocketed by an astounding 163%. This was no small feat, not only for the food industry but for any American company over the past two decades. The hype surrounding alternative proteins at that time justified such a meteoric rise. Financial giants like Barclays and Boston Consulting Group predicted that the alternative meat market would rake in a stunning $140 billion and $290 billion respectively by 2030 and 2035. And between 2018 and 2021, the sales of alternative meat swelled by a whopping 74%. But fast forward four years, and the limelight has dimmed. Markets grow quiet, and so did the relentless advertising campaigns that once filled our screens. So, what's the state of the alternative protein scene today?
In the second quarter of 2023, Beyond Meat's net revenues plummeted by 30.5% YoY, causing a steep drop in its stock price by more than 10%. It's important to remember, though, that technology companies and alternative meat companies aren't cut from the same cloth. Tech companies thrive on scalability, adding new features and attracting various types of users with minimal effort. Food, however, especially complex recipes like alternative proteins, operates on razor-thin margins. These new products are trying to carve out a place in a stagnant protein market, resulting in extremely high customer acquisition costs and an ever-changing product market fit. Beyond Meat's CEO, Ethan Brown, summed it up nicely: "The main issue with the category is not bringing in enough new consumers. But the problem is (also) bigger than that."
But there's a glimmer of hope when we compare the alternative protein industry to the alternative milk industry. In 2023, over 15% of all milk sales in the U.S. were alternative milks, a less-imaginable stat just ten years ago. Sometimes, it takes time for mass food trends to catch on. Just look at the growth of chicken over beef in the American meat market over the past three decades.
However, it's important to note the stark differences between the United States and the European Union regarding alternative proteins. Earlier this week, Germany announced a €38 million investment to bolster the production, distribution, and farming of alternative proteins, along with a shift towards plant-based agriculture in their 2024 federal budget. What sets Germany apart is that their citizens are demanding more alternative proteins, and their government is responding. In fact, Germans are eating less meat than any time since 1989, making Germany one of the largest plant-based food markets in Europe, with sales rising by 11% since 2020 to €1.9B. Today, 12% of their population is vegan or vegetarian, with 55% considering themselves flexitarian, a diet that emphasizes a higher intake of plant-based protein.
I don't believe that the failure of the American alternative protein market is a foregone conclusion. The comparison to the EU demonstrates that the key to success is keeping supply in check while demand continues to soar. American companies poured billions of dollars into alternative protein research but forced mediocre products on the market when consumers weren't exactly clamoring for them yet. They were willing to try the new products, but as seen, repeat customers were rare because the market wasn't quite ready. But as American diets evolve, shifting towards more plant-based meals, either by choice or necessity, alternative proteins will likely develop into the multibillion-dollar industry it was predicted to be just five years ago. Whether that happens in the next 10 years or 100, it's only a matter of time.
Insights:
- The U.S. and European Union are both experiencing significant growth in the alternative protein market.
- The US market, at $2.99 billion in 2024, is projected to reach $15.12 billion by 2033, reflecting a CAGR of 19.91% from 2025 to 2033.
- The EU has a well-established market for plant-based and other alternative protein sources.
- Increased demand for sustainable protein sources, technological advancements, and heightened health consciousness are driving growth.
- The U.S. market faces competition from lab-grown and insect proteins, while the EU might face similar diversification challenges as the market evolves.
- Science and technology advancements play a crucial role in the alternative protein market, with technological innovations driving growth and reducing costs.
- Health-and-wellness concerns have contributed to the increasing demand for alternative proteins, as consumers seek more sustainable, plant-based options.
- Environmental-science focuses on the impact of traditional protein sources, such as beef, on climate change. As awareness grows, alternative proteins are seen as a potential solution to mitigate greenhouse gas emissions.
- Finance and investing play a significant role in the development of the alternative protein market, as financial giants like Barclays and Boston Consulting Group predict substantial growth and potential profits.
- Lifestyle choices are shaping the food industry, with a growing number of consumers adopting plant-based diets for various reasons, including health, ethics, and environmental concerns.
- Business, particularly in the real-estate industry, may adapt to accommodate the increasing demand for plant-based options. This could include the development of retail spaces for alternative protein products, plant-based restaurants, and plant-based farming facilities.
