Plant-Based Food Tops $7.4 Billion in Sales, but Has the Market Hit Peak Fake Meat?

American grocery shoppers filled their carts with $7.4 billion worth of plant-based food in 2021, a 6% bump from 2020 and a 54% increase over the last three years, according to a study from Good Food Institute and the Plant Based Foods Association. But consumer demand for meat substitutes, the high-profile darlings of the category, flattened after record-busting growth and more than $1 billion in sales during 2020’s pandemic lockdown. It’s too soon to declare that the flexitarian public is burned out on meatless burgers, researchers say, but the slowdown may beg the question: has the market hit peak faux meat? “Despite the growth seen in the last decade, the success of the plant-based meat category is not inevitable,” Emma Ignaszewski, corporate engagement project manager for the nonprofit GFI, told Adweek. “More investment and innovation are needed to ensure plant-based proteins can compete with conventional products on the key drivers of consumer choice: taste, price and accessibility.” Fake beef, sausage, pork, chicken and seafood logged $1.4 billion in sales last year, according to the report, compiled with Spins data, which fell short of industry expectations. Dollar sales of both plant-based and conventional meat were flat during that period. It’s worth noting that meat alternatives have hit some of the same snags as other consumer goods, such as supply chain problems and ingredients shortages. And in a segment packed with startups, producing at scale can be a work in progress. The bright spots for faux meat include dollar sales since 2018, which have increased by 74% and outpaced animal meat’s growth by almost three times, and unit sales, which jumped 51% during that period, besting conventional meat’s growth by more than six times, per the report. More options and better access More than 200 meatless products from Beyond Meat, Impossible Foods, Morningstar Farms, Gardein, Quorn and others made their debut in U.S. groceries in 2021, swelling the category by 19% to some 1,100 SKUs. That gave consumers something they have consistently asked for: more options and revamped versions of existing products. Still, plant-based meat has some ground to make up as it targets the omnivore audience, even as its steady long-term growth mirrors the natural and organic segments. Price continues to be a major pain point, especially as grocery bills have ballooned in recent months. Plant-based meat on average is twice as expensive per pound, per GFI’s The Power of Meat 2022. (That could help explain why sales of modestly priced, private-label faux meat products have tripled since 2018). And only 30% of consumers believe that meatless meat tastes as good or better than its animal counterpart, according to the study, and 64% who plan to buy less plant-based meat say it’s because they prefer the taste of conventional meat. Though the category overall has shown “extraordinary innovation” to amp up the “sensory qualities” of its products, Ignaszewski said, there’s significant room for improvement. (If it follows the route of nut- and grain-based milk, a more mature category, it has a $16 billion potential, per the report). “Brands must go to market with great-tasting product that meets consumer needs,” Ignaszewski said. “Otherwise they’ll risk that consumers won’t give the brand a second chance.” Among the report’s other findings: Plant-based products are a key driver of sales growth at grocery retailers nationwide, growing three times as fast as overall food sales. Six out of 10 households bought plant-based food, up slightly from the unprecedented 2020 numbers, with repeat rates—how often consumers buy the same products again—also increasing, with 79% of consumers purchasing multiple times across the category. Repeat rates were highest for milk (76%) and meat (64%). 98% of consumers who buy plant-based meat also purchase conventional meat. Plant-based milk—the most entrenched segment with 42% household penetration—continued its steady growth with a 4% increase in sales, for $2.6 billion. With its 16% share of the total milk market, milk made from nuts, soy and grains continues to serve as the consumer gateway to plant-based food, researchers said. (Top 3 in order: almond, oat and soy). Plant-based eggs, creamer, ready to drink beverages and non-dairy spreads, dips, sour cream and sauces are among the fastest-growing niches, all reporting double-digit sales jumps in 2021. Egg substitutes, a tiny fraction of the business with $39 million in sales, are growing “exceptionally rapidly,” the report says, posting a 1,000% leap since 2018. As 71% of Americans Dabble in Plant-Based, 2022 Will Be a High-Stakes Brand Battleground