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Plant-based Meat
By Prashansani de Mel · Jan 23, 2023
Q4 2022 plant-based meat menu: Is the party over?
The plant-based sector continued to slow down in Q4 2022, recording a disappointing year. New product activity declined compared to the last quarter, with plant-based poultry continuing to dominate new launches. Market expansion activity slowed down during the quarter, with North America and Europe still holding the lead. Funding activity was torpid in Q4 2022, recording the fewest funding rounds for the year. We witnessed an increase in plant-based partnerships during Q4 2022, as companies sought out other businesses for diversification, distribution, and R&D opportunities. Beyond Meat’s problems continued during the quarter but not all companies were affected equally by the downslide, as Beyond Meat’s close rival Impossible Foods managed to record hypergrowth in 2022.
Through this Insight, we have presented a comprehensive outlook on the plant-based meat industry's activity for Q4 2022.
2022 overview
2022 was a disappointing year for the US plant-based meat industry, ending the strong growth trends experienced over the last few years. The lackluster performance continued into Q4 2022 while the turnaround of this trend could be linked to several factors.
The increased inflationary pressure that’s been developing since 2021 resulted in consumers becoming more price sensitive throughout 2022, with fewer consumers willing to pay a price premium for meat alternatives. The adverse impact of the Russia-Ukraine war in 2022 added fuel to the fire, with supply-related shocks to food and energy prices pushing inflation further.
The change in perception about meat alternatives among consumers was another reason for the decrease in demand for plant-based meat. According to a study by Deloitte, the positive perceptions around plant-based meat products have declined, as the percentage of respondents who believe that plant-based food is healthier dropped to 60% in 2022 from 68% in 2021.
The effects of inflation and change in consumer perceptions were reflected in the movement of plant-based meat sales over the year—unit sales for 2022 contracted across all segments throughout the year. While USD sales of frozen meat alternatives recorded growth, the USD sales of refrigerated meat alternatives, which are typically more expensive than their frozen counterparts, were on a steep decline.
US plant-based meat sales slow down
Although the plant-based meat industry had a disappointing year, not all companies were impacted equally. Beyond Meat and The Very Good Food Company reported double-digit YoY declines in sales numbers in Q3 2022, while Impossible Foods witnessed hypergrowth in 2022, with over 50% YoY increase in dollar sales of retail alone. Beyond Meat announced plans to cut down ~19% of its workforce in order to reduce operating expenses, while Impossible Foods also announced job cuts during the quarter, which the company claimed were not related to sales, but to its restructuring plans that resulted in some redundancies.
Despite stagnating growth in the US market, the EU continued to encourage the alternative meat industry due to its importance in a time of climate and global food crisis. In December 2022, EU’s flagship research and innovation program Horizon Europe announced a EUR 25 million (~USD 26 million) grant that will fund three projects in the fermented and cultivated proteins space.
The lack of clear federal regulation on product labeling has resulted in different labeling laws in various states. While restrictions on the use of terms associated with animal meat have been passed through bills over the years in many US states, an Arkansas court blocked the enforcement of meat labeling laws during the quarter.
We also witnessed a surge in plant-based partnerships during Q4 2022, as companies pursued other firms for diversification, distribution, and R&D opportunities.
New product and market developments: Market activity and product expansion decline during the period
In Q4 2022, we tracked 34 product and market initiatives.
New product launches declined 53% compared with the last quarter; plant-based poultry continued to dominate new launches, accounting for ~38% of a total of 15 new product launches.
Source: SPEEDA Edge
Plant-based beef picked up momentum during the quarter after a dip in Q3 2022, accounting for ~31% of total launches. Both plant-based pork and seafood lost traction during the quarter, with plant-based seafood remaining the lowest (just one new product launch), representing just 6% of total launches (down from 12% in Q3 2022).
- Product launches were slow in October and December, while the launches in November accounted for over 50% of the quarter’s total. There were fewer product launches in Q4 2022 compared to the previous quarter (-52.9%). However, Q4 usually records the lowest number of launches for the year for plant-based meat, as witnessed in 2021.
- Interesting product launch developments during the quarter include
- Beyond Meat’s launch of Beyond Steak
- Meati’s debut of the first-ever mycelium-based Carne Asada Steak
- Juicy Marbles’ launch of “whole cut loin” claimed to be the largest piece of plant-based meat in the market
- Omni Foods’ debut of proprietary vegan fat technology
As per our findings, there were 19 instances of companies either entering new markets or expanding within their existing ones in Q4 2022. Continuing the trend from the past few quarters, North America and Europe continued to lead market activity.
Source: SPEEDA Edge
- Foodservice expansion took the biggest hit this quarter, with numbers declining in both the US and outside.
- While plant-based sales rose in 1H 2022, driven by the strong performance in the frozen plant-based meat segment, 2H 2022 was unfavorable for the sector, with Beyond Meat announcing further job cuts, along with Impossible Foods reducing its workforce by 6%.
- Retail expansion on the other hand performed better within the US, with the most considerable expansions coming from OMNI’s launch of plant-based items at over 1,000 US Walmart stores and UNLIMEAT’s launch of plant-based Korean BBQ and pulled pork at 1,500 Albertsons across the US. However, expansions outside the US recorded a decline during the quarter compared with Q3 2022. Beyond Meat led the European expansion, with launches in the UK and Germany and a combined retail footprint of over 3,600 stores.
Distribution network activity plummets in the US in Q4 2022
- Beyond Meat’s problems continued during the quarter when internal photos and documents were released by a former employee, revealing unsanitary conditions at the Pennsylvania production facility. The company announced its plans to cut down ~19% of its workforce, while the company’s CFO resigned amidst job slashes and its global chief growth officer and president of North America was laid off. The company reported disappointing sales in Q3 2022, missing analyst estimates and reporting wider-than-expected losses. Considering the muted demand for plant-based meat, the company also reduced its revenue outlook for FY 2022 to the range of USD 400 million–425 million from its previous USD 470 million–520 million outlook. The highlights for the company in Q4 2022 included its partnership with Allana Consumer Products to expand to India and the addition of the McPlant burger (developed in collaboration with Beyond Meat) to McDonald’s Netherlands’ regular menu following a successful year-long pilot. Beyond Meat also began trialing a new plant-based steak and chicken products in US stores during the period.
- Beyond Meat was not the only company facing job cuts and disappointing sales during the quarter. The Very Good Food Company also recorded a 31% YoY drop in sales in Q4 2022, despite higher wholesale volumes. Beyond Meat’s close rival Impossible Foods laid off ~6% of its workforce in a reorganization. However, Impossible Foods said that its job cuts were not related to sales and that some roles were redundant after the company-wide restructuring. According to Impossible Foods, its dollar retail sales increased by over 50% in 2022, despite declining category sales. It claimed to be the fastest-growing plant-based meat brand at retail in 2022. Impossible Foods’ Founder and Chief Visionary Officer (CVO) Pat Brown (who stepped down as CEO in March 2022) announced that he will be stepping down from his role to launch a new research venture within the company, focused on “transformative innovation.”
Partnerships: Increase in partnerships paves the way for expansion and R&D initiatives
We tracked a total of 18 partnerships in Q4 2022, as companies seek support from other firms to expand and launch products.
Funding: Total funding slows down in Q4 2022
We tracked a total of seven funding rounds in Q4 2022, delivering ~USD 171 million in funding during the period.
The total number of funding rounds in Q4 was the lowest for the year, but the total proceeds from funding was just above that of Q2 2022 (USD 170 million), the quarter which recorded the lowest total funding in 2022. On a QoQ basis, funding was 39.3% lower than in Q3 2022 (USD 282 million) and was heavily concentrated on two players (accounting for ~61% of total funding). The funding was slow during the beginning of the quarter but picked up pace in December with four rounds.
After an active Q1 2022, which recorded USD 440 million in new funds during the quarter, the funding momentum slowed down during the rest of the year. The companies under our coverage raised USD 1.2 billion in new funding during 2022, less than half the USD 2.6 billion raised in 2021.
Accompaniments:
Featured companies
Beyond Meat
Founded in 2009, Beyond Meat is a leading producer of plant-based meat products. The company uses a patented process to convert plant proteins into structures that physically and nutritionally resemble...
HQ:
Manhattan Beach, CA
Funding:
USD 158.1 million
Impossible Foods
Impossible Foods produces plant-based meat products using plant protein and high-moisture extrusion cooking techniques to transform soy protein into a texture similar to that of meat. Its portfolio includes...
HQ:
Redwood City, CA
Funding:
USD 1.9 billion
The Very Good Butchers
The Very Good Butchers is a producer and distributor of food and meat products. Their products include packed beef, packed pork, breakfast sausages, flippin’ good burgers, pepperoni, smokin' bangers, smokin'...
HQ:
Victoria, BC
Funding:
USD 600.0 thousand
Meati
Meati Foods (formerly Emergy Food) is a Boulder-based startup that develops plant-based meat alternatives using a unique strain of mycelium (MushroomRoot), which claims to accurately imitate meat texture...
HQ:
Boulder, CO
Funding:
USD 374.5 million
Juicy Marbles
Juicy Marbles is a plant-based meat manufacturer that specializes in whole-cut beef and pork alternatives. Juicy Marble’s products which include plant-based filet mignon, loin, and ribs are developed using...
HQ:
Kamnik
Funding:
USD 4.5 million
Green Monday Holdings
Green Monday Group is a South Korean company that produces plant-based meat products under the OmniFoods brands. The brand offers several plant-based products like potstickers, pork-style ground, pork-style...
HQ:
Kowloon City
Funding:
USD 70.0 million
NotCo
NotCo is a Chilean startup that develops plant-based meat and dairy alternatives. Leveraging a patented AI algorithm named Giuseppe, NotCo develops plant-based products that match the taste, texture, and...
HQ:
Santiago
Funding:
USD 433.0 million
Equinom
Equinom is an Israeli food tech company that combines its agricultural, culinary, and deep tech expertise to develop non-GMO plant-based ingredients. The company uses crops such as peas and soy (bred naturally...
HQ:
Rehovot
Funding:
USD 72.6 million
Nourish Ingredients
Founded by Dr. James Petrie and Dr. Ben Leita in 2019, Nourish Ingredients is a spin-off of the Australian government scientific research agency CSIRO focusing on food technology. The startup has developed...
HQ:
Canberra
Funding:
USD 43.5 million
Heura Foods
Heura is a Spanish plant-based meat startup that develops meat alternatives from high-protein and GMO-free legumes. The company uses a moisture extrusion process to maintain the meat-like texture of its...
HQ:
Barcelona
Funding:
USD 94.9 million
Black Sheep Foods
Blacksheep Foods is a San Francisco-based startup that manufactures plant-based lamb using pomegranate, beets, potato, bamboo, pea protein, and cocoa butter with the use of analytical chemistry and its...
HQ:
San Francisco, CA
Funding:
USD 17.8 million
Unlimeat
UNLIMEAT is the plant-based brand of the South Korean company Zikooin. It produces plant-based Korean BBQ, pulled pork, tuna, and jerky using upcycled grains, oats, and nuts. UNLIMEAT launched in the US...
HQ:
Seocho
Funding:
USD 45.3 million
