There is no doubt that sales of herbal products in the United States are on the decline. The category’s meteoric growth in 2020 has flattened out in 2021, and since last September a key part of its retail sales have fallen more than 10%. Its reputation has also been badly damaged by the stock market performance of Beyond Meat Inc., which has plunged almost 80% from its peak after a spectacular 2020 IPO. nullify the value and potential of the sector as a whole, which will be a keystone of future climate solutions.
The fall in sales of alternative meats is partly due to fluctuating prices. The surge in demand for plant-based products in 2020 occurred alongside rising animal meat costs due to supply chain disruptions at the start of the pandemic. Today, conventional meat prices have fallen and inflation is hurting producers like Beyond Meat as they struggle to make their plant-based products more affordable.
For now, consumers are understandably reluctant to pay more for alternative products, but many analysts predict that, soon enough, prices will return in favor of animal protein. Far more concerning are the consumer perception issues that are punishing the herbal category. A study published last week by Deloitte Consulting LLP, in which 2,000 consumers were surveyed, found that consumers are increasingly skeptical about the environmental and human health benefits of plant-based meats over conventional meats. .
Diminishing confidence is dangerously wrong. The environmental benefits of plant-based products are well-documented and profound: recent analysis shows that producing plant-based burgers generates up to 90% fewer greenhouse gas emissions than producing beef burgers , while requiring less than a quarter of agricultural production. earth, about 95% less water, and resulting in significantly less water and air pollution.
Investors should also take note of a recent report by the Boston Consulting Group finding that, dollar for dollar, investments in the alternative meat and dairy sector result in greenhouse gas reductions seven times greater than investments in the green building sector, and a staggering reduction of 11 times greater reductions than investments in the production of zero-emission cars.
These figures are particularly poignant at a time when, just this week, UN Secretary-General Antonio Guterres warned that humanity now faces “a life-and-death struggle” for survival as “climate chaos gallop”.
Investors in alternative meats should also not be deterred by declining consumer confidence in the health benefits of these products. Alternative meat startups have made great strides in not only improving the flavor and texture of their products (the Deloitte study found that 70% of its respondents agreed that the taste of products had improved), but also their health benefits. A study published in the American Journal of Clinical Nutrition showed that when participants swapped their animal meat protein for plant-based Beyond Meat burgers, their weight and cholesterol levels went down, as did their risk of heart disease. Another recent European study based on the UK’s Nutrient Profiling Model found that a much higher percentage of conventional meat products were rated as “less healthy” compared to their plant-based counterparts.
And while sales of many alternative protein brands besides Beyond Meat have been disappointing this year, including Conagra Brands Inc.’s Maple Leaf Foods Inc. and Gardein, others in this space such as NotCo Inc. and Impossible Foods Inc. report growth. The CEO of Impossible, which sells its vegan patty at Burger Kings, reported a 70% increase in retail sales this year.
Outside of the United States, alternative protein sales are increasing worldwide. Even JBS is reporting growing demand for its herbal products overseas, and the company has opted to continue expanding its Planterra divisions in Brazil and Europe. And although demand for McDonald Corp.’s vegan burger, McPlant, has stagnated in the United States, it is gaining strength in Europe.
Keep in mind that food and agriculture is the third largest investment category in the world after transport and energy, and that protein is the most important area of innovation in this category. The human population has doubled over the past half century, while the demand for protein has tripled. In the future, increasingly affluent populations around the world will continue to demand higher protein diets.
According to the Boston Consulting Group report, investment in alternative proteins, including the promising new category of cultured meats (soon to enter markets in the United States and beyond), increased five-fold from $1 billion dollars in 2019 to $5 billion in 2021. Given current growth trends, BCG expects alternative proteins to account for 11% of global retail meat, egg and dairy sales in 2035, against 2% today.
“It’s still very early in the game,” investor Po Bronson, managing director of venture capital firm IndieBio, told me. “Alternative Meats is now in the iPhone 2 phase, and it’s the iPhone 3 that really took off. Now we’re walking around with phones 11 iterations better. Alternative Meats is ready for some amazing upgrades – better textures and flavors, whole products and a lot more scalability. There are still huge economic gains and efficiencies to be had from growing this sector.” That is to say, it is seriously premature to cancel a sector before it has actually started.
Also, remember that alternative meats are competing against a subsidized industry that has had over a century to achieve good profitability. Even in the United States, we can expect a price advantage for fake meats to come soon enough. Rising costs of water, feed and supply chain disruptions in the age of climate change will increase the cost of animal production and ultimately consumers will pay green rebate for produce alternatives rather than a green bonus.
The bottom line is this: for all the tough headwinds plaguing the plant industry today, there are still more powerful tailwinds pushing it forward. As demand for protein increases globally, there is no environmentally sustainable way to significantly increase production from animal products alone. All of us, consumers and especially investors, should be committed to helping this industry thrive.
More from Bloomberg Opinion:
Putin shows that food becomes the ultimate weapon: Hal Brands
You eat meat from factory farms. Why not a laboratory? : Amanda Little
To fight hunger, we need to fix food subsidies: David Fickling
This column does not necessarily reflect the opinion of the Editorial Board or of Bloomberg LP and its owners.
Amanda Little is a Bloomberg Opinion columnist covering agriculture and climate. She’s a professor of journalism and science writing at Vanderbilt University and author of “The Fate of Food: What We’ll Eat in a Bigger, Hotter, Smarter World.”
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