"Plant-based substitutes of meat? The biggest failure in food industry history."
Plant-based meat substitutes are not attracting a majority of consumers. Indeed, they may be the biggest failure in food industry history. That is what Julian Mellentin believes, industry expert and author of the new report “Failures – and what you can learn from them“,. After making so much buzz and noise in the echo chamber created by media, consultants and the investment community, plant-based meat substitutes are simply not resonating with consumers. This unexpected result is due to a lot of strategy mistakes. “There is a shakeout happening among the many newly launched plant-based meat substitutes”, – Mellentin commented – “There are about ten common causes of failure in the business of nutrition and health. And many plant meat makers have made most of them”.
The category of plant-based meat analogue is experiencing a sharp slowdown in the United States and some parts of Europe. New Nutrition Business conducted financial data research on 100 plant-based meat brands in Europe, the United States, Canada, Australia and New Zealand. None showed any profit, even after five or more years of activity. Indeed even those with the fastest-growing sales also had the fastest-growing losses. According to Mellentin, the main reason for this failure is that the products did not live up to expectations: “Brands aren’t delivering the taste and texture that consumers are looking for. This means they aren’t converting trial into repeat purchase, and the category isn’t reaching habitual buying patterns“.
The biggest cause of a brand failure is the lack of performance on taste and texture. The category has recently received great support from supermarkets and large retailers, which dedicated a lot of shelf space to these alternative products. But how likely is it that supermarkets continue this level of support as it turns out to be a low-performing category? “Retailers have provided lots more space since about 2017. They will be shrinking that in the future,”- Mellentin predicted – “There is a long way to go to get the category from the current 1.4% to even 5% of total meat category sales”.
So why do so many brands continue to invest in plant-based products and try to launch into mainstream distribution channels that attract a wide spectrum of consumers? According to Mellentin, the size of the opportunity derived from these products has been widely over-estimated: “The media and consultants and the investment community created their echo chamber in which they had decided that for meat substitutes, the only way was up. There was little evidence to suggest much growth beyond the “big niche”. The data that these sources cited was only a small part of the picture. They failed to look at food culture and the consumer. It didn’t help that Silicon Valley think tanks were feeding the echo chamber by saying plant-based would get 30% market share by 2030“.
Julian Mellentin said that start-up companies continue to make the same mistakes that companies were making 20 years ago, while established and experienced food companies have tended not to make these mistakes. New Nutrition research argues that the category is unlikely to reach the 30% market share by 2030 due to a great shortcoming since plant-based advocates have not been able to convert consumers significantly: “Growth in the numbers of meat reducers has slowed dramatically. This makes sense because consumers’ beliefs about food and health are fragmented. We must see markets and consumers as they are, not as we wish them to be. Plant-based execs, their investors and the other inhabitants of the echo chamber didn’t think that these realities applied to them. Together they have created a category failure, maybe one of the biggest in food industry history“.
So then, what will be the future of these brands and will they be able to improve their taste and consistency and win over consumers in large numbers? “Beyond the current Gen 1 of plant-based, the companies coming to market with products based on mushrooms, mycoprotein, etc. have a chance to do better”, – Mellentin commented – “The only positive for this category will come from a technological improvement to create Gen 2 products with better taste, texture, nutrition, as their micronutrients profile, for example, is not good at the moment, and a shorter ingredients list. That will take 3-5 years. Until then, this old-established category will remain what it has been since the 1970s: a niche. In the US, it has a 1.4% share. That’s a niche, not mainstream,” – he concluded.