Just a few years ago, Beyond Meat was widely viewed as the Next Big Thing. Today, this most prominent producer of plant-based “meat” has stalled, leaving investors to wonder if the entire concept has hit a ceiling.
During the pandemic, there was plenty of buzz about Beyond Meat. Sales of its plant-based hamburger patties and sausages soared as vegetarians and the simply curious gave them a try. Restaurants dove in on the trend, with Carl’s Jr., Subway and other chains incorporating the company’s plant-based alternative (PBA) meats into their offerings.
Today, it’s a company without much momentum. While some had projected a 33% sales growth this year, the company is likely to only notch a modest gain. Last month, the company announced it was laying off 19% of its 200-person workforce. McDonald’s finished a pilot run of a McPlant burger and opted not to continue it.
As if that all weren’t enough to cope with, Beyond Meat’s chief operating officer left the company in Octobrer after being arrested for allegedly biting a man’s nose — an act that’s decidedly off-brand for a business that eschews meat-eating.
Now, via internal documents obtained by Bloomberg, come revelations — with gut-churning photos — that a Beyond Meat plant in Pennsylvania was plagued earlier this year by mold and Listeria bacteria:
Beyond Meat logged 11 incidents of listeria out of 56 weekly tests at its Pennsylvania plant, with the most recent positive test in May 2022. Photos show mold and dirty ingredient containers. https://t.co/Fn6vTGPqW1 pic.twitter.com/DYI6UddGls
— T.J. Ortenzi (@tjortenzi) November 21, 2022
The company’s stock performance speaks volume. Beyond Meat shares trade around $13.29 — about 94% below the post-IPO July 2019 peak of $235.
While the Pennsylvania plant has apparently been cleaned up, there’s nothing to indicate the company’s broader situation will turn anytime soon. An analysis by Deloitte points to several headwinds for Beyond Meat and the entire industry. First — and most discouragingly for the sector — Deloitte’s research suggests the market may be smaller than had been projected.
“The portion of the US population open to trying (and repeat-buying) it may already have reached a saturation point,” said Deloitte Insights in a recent analysis of the industry based on its consumer surveys. The number of PBA meat-buyers was flat in 2022, with about 47% of participants saying they sometimes buy PBA meat for themselves or others.
Converting the other half of potential consumers will require overcoming formidable cultural dynamics. For example, when Cracker Barrel announced it would offer “Impossible Sausage,” it faced a social media backlash from patrons who view plant-based alternative (PBA) meat as part of a broader “woke” agenda being imposed on society.
“You just lost the customer base, congratulations on being woke and going broke,” one person wrote on a Cracker Barrel social media post about the new offering. “We don’t eat in an old country store for woke burgers,” said another.
PBA meat faces another hurdle: For all the talk about the inefficiencies of real meat production, PBA meat actually costs more. In a time of surging grocery and restaurant bills, it’s no surprise that Deloitte found willingness to pay more for fake meat dropped by 9 percentage points from 2021.
That makes it harder to attract new customers or retain existing ones. There’s more bad news in the latter group: Deloitte finds PBA meat-buyers are losing enthusiasm as their assumptions about the products’ health benefits are crumbling.
“Many early adopters believed that the health benefits of plants would apply to all food products made from plants. Last year, almost seven in 10 consumers (68%) who had purchased PBA meat believed it was healthier than animal meat. But some of these consumers are changing their minds, as this year, the number dropped by 8 percentage points.” — Deloitte
Similarly, the percentage who believe PBA meats are more environmentally sustainable dipped by 5 points.
In the face of all that, some people are still optimistic — but only over the long haul. John Baumgartner, a consumer food analyst at Mizuho Americas is one of them, telling The New York Times, “We’re positive on the future for plant-based meat, but this is a 20- to 25-year story. It’s not going to happen in three to five to 10 years.”