Consumers are starting to slow purchases of plant-based meat alternatives as their promises of improved sustainability don’t overcome the health considerations of those alternatives, according to a new report from Rabobank.
JP Frossard, Rabobank consumer foods analyst, told Agri-Pulse the original driver of plant-based products was to mimic meat. But consumers have now started questioning the healthiness of plant-based products to substitute meat that has gone through extensive processing to try to replicate the taste.
“There is this idea that if you replace meat with plants, plants trump everything in terms of sustainability and healthiness,” Frossard said. “The consumer is a bit more skeptical now.”
According to Frossard, the top reason many consumers are rejecting plant-based meat is due to uncertainty if replacing meat — either in single-ingredient form or a processed item with meat as the primary ingredient — and substituting it with one that has 15 ingredients that are sometimes even hard to say is the healthy choice.
Despite high expectations for widespread consumer acceptance of plant-based proteins to substitute meat, sales were down in 2022. Plant-based meat alternative sales in U.S. retail in 2022 declined slightly by 1% and unit sales declined 8% compared to prior year, according to data from the Good Food Institute and the Plant Based Foods Association commissioned from SPINS, a wellness-focused data technology company.
After a 47% jump in sales of plant-based meat alternatives in 2020, retail dollar sales dropped 9% in the first quarter of 2023, according to consumer analytics firm IRI.
JP Frossard, Rabobank
Despite some tough economic statistics, many industry analysts still see strong growth possibilities for plant-based products.
Frossard said there are opportunities in the plant-based industry to make products that inspire more consumer confidence. If plant-based proteins are to move beyond a niche product, offerings should also give consumers satisfaction that the alternatives are good for the body, plants, animals and the pocketbook.
He said the marketing strategy for the plant-based industry that tries to demonize meat may be missing the mark as many consumers are flexitarian.
“A lot of products promote themselves by bashing meat by saying that it’s bad for you and the environment and make the customers feel guilty for having any type of animal products,” Frossard said.
Instead, plant-based companies should be applauding the choices of flexitarians if they’re choosing a product a few times a week. The companies could, rather, market the product's impact on sustainability, consumer health and a balanced diet through diversified nutrient intake, Frossard said.
Companies who move to fewer and natural ingredients, while still delivering great taste and a pleasant eating experience at similar prices to premium meat, will establish a stronger hold in the marketplace, Frossard said.
“We expect a growing focus on food as a health driver, perceived sustainability and animal welfare benefits, increasing concerns about the level of processing of food and a refreshed appeal for convenience-at-home to gradually bolster plant-based products,” Frossard wrote in the report.
Speaking on an industry webinar, Daniel Gertner, GFI's business analyst, projected moderate growth for the industry in 2023, but said he believes plant-based sales and investment growth in several regions are both building momentum in the global market.
“Plant-based meats’ environmental benefits mean it’ll remain an important ESG consideration even in difficult market conditions,” he said.
Emma Ignaszewski, GFI's associate director of industry intelligence and initiatives, said based on conservative estimates, plant-based meat alternatives tend to emit 86% less greenhouse gas emissions than conventional meat. “We know that plant-based meat is an incredible tool for mitigating climate change and biodiversity loss as well as providing the protein consumers need,” she said.
However, Ignaszewski said only 21% of plant-based consumers identify environmental benefits as a reason why they purchase plant-based proteins. She said the plant-based industry needs to continue working toward innovations and scale-up so it can allow products to be more price-competitive with conventional animal products.
Frossard agreed sustainability claims for plant-based meat alternatives can’t change food habits on their own. He cited a Moonshot Collaborative analysis finding “78% of interviewed U.S. consumers would not, or would only slightly, increase their purchases of a regularly purchased food product if its ingredients became more sustainable while keeping taste and price unchanged, versus only 18% that affirmed they would buy a lot more.”
“At the same time, the same survey revealed that 59% consider a simple and familiar list of ingredients as very or extremely important,” the report added.
Governments are stepping up to the plate to diversify protein supplies with last year seeing significant investments around the world to increase consumption of plant-based proteins.
Domestically, support for alternative protein R&D was secured at both the federal and state levels, with Congress allocating nearly $6 million to USDA and California allocating $5 million to three universities. USDA has awarded about $15 million in research funding to 12 alternative protein research projects at universities across the country since 2020.
Emma Ignaszewski, GFI
“Some of the largest and most impactful public investments in plant-based proteins were made in 2022, with more governments around the world allocating more funding to more projects for more reasons,” said Michael Carter, GFI policy associate.
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Penny Eastman, GFI associate legislative director, said GFI thinks the farm bill could provide opportunities to advance alternative protein production.
“For decades, the programs and resources included in the farm bill have helped to advance sustainable solutions to the many challenging issues pertaining to food production, food insecurity and adaptation to new developments in agriculture,” Eastman said. “We look to the farm bill as a vehicle to increase investments in alternative protein research, which can lead to exponential growth in the U.S. economy, maintain our country’s global leadership in protein innovation and provide new export market opportunities for American agriculture.”
Specifically, GFI wants to see alternative proteins as a new research activity allowed within the Agriculture and Food Research Initiative. Most plant-based meat alternatives leverage just a handful of plant protein bases such as soy and wheat. GFI said additional research into other plant-protein bases could lead to better optimized ingredients and product outcomes.
The group is also seeking an increase in the loan cap guarantees for USDA’s Rural Development loan guarantee programs.
Another component of GFI’s focus in the upcoming farm bill discussion is the inclusion of $15 million in annual funding for alternative protein innovation at Centers of Excellence including at 1890 institutions.
Late in 2021, Denmark pursued its greenhouse gas reduction goals by announcing a wide-ranging plan to build out its plant-based protein industry, including incentivizing farmers to grow protein-rich crops and developing a market for plant-based products. In 2022, the country began to deliver on that pledge by investing nearly $100 million to support research and market development, Carter explained.
Carter said in Canada, they invested $127 million in 55 projects through the end of 2022. As a significant producer of protein-rich crops such as yellow peas and canola, Canada is financing infrastructure for plant protein processing and supporting the development of new products to stimulate its domestic economy and value-added agricultural products.
Australia's national government invested $75 million in three new plant protein processing facilities, in addition to $43 million provided by the state of South Australia bringing total government funding to over $117 million.
“The government expects these facilities to create 8,500 jobs, allow farmers to value add their crops eight times over and bolster Australia's export market to the rest of Asia,” Carter said.
Singapore, meanwhile, responded to 2022 food supply chain disruptions by supporting the development of a high moisture extrusion contract manufacturing facility that can produce as much plant-based protein as 4.3 million chicken breasts.
Earlier this year, Malaysia banned exports of chicks to neighboring Singapore in a bid to control high prices in the wake of food supply volatility; the move reduced Singapore's supply of chicken by one-third. The new facility will support more domestic food production as the country strives to produce 30% of its own food by 2030.
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