Plant-based meat alternatives haven’t caught on like their proponents had hoped.
One indicator of the sector’s troubles is the share price of perhaps its best known brand, Beyond Meat.
Its launch in 2019 onto the stock market had the hype similar to a Silicon Valley tech startup.
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Its price immediately soared above US$100 a share, and with regular announcements that fast food chains and grocery stores would sell their offerings, the share price rose close to $200 in October 2020.
However, it has been mostly downhill from there. As of May 8 this year, it was at only $2.34.
Other companies that jumped into plant-based meat substitutes also had disappointing results and scaled back or closed operations.
When these products launched, their supporters said they might deliver a blow to the meat industry similar to what plant-based milk substitutes were doing to dairy at the time.
However, with the lacklustre performance of plant-based meat substitutes, it appears the meat industry can breathe easier, at least for now.
Perhaps meat, with its deep cultural connections and preferred taste, will always be unassailable.
But an attribute of the meat substitute business that works against it now, that it is made in a factory, means it might have the potential to overcome its weaknesses: taste, health attributes and price.
Borrowing from a term used in the technology industry, there can be new iterations of meat substitute products.
Don’t like the taste or texture? Here is a new recipe that addresses that.
Too expensive? Here is a tweak to the manufacturing process that lowers costs.
The meat industry can’t change as quickly.
And one of its weaknesses, particularly in the beef business, is price.
The Canadian and American beef herds have shrunk to the lowest levels in decades, and that is forcing cattle and beef to record prices.
Why have herds shrunk? Several dry years in Western Canada and the United States reduced the carrying capacity of pastures.
Russian president Vladimir Putin’s invasion of Ukraine caused the price of all crops, including feedgrains, to soar, adding to the stress caused by general inflation and rising interest rates.
Meanwhile, the cost of pastureland climbs as ranchers compete against expanding crop farmers and non-agricultural land users.
The result is that the Canadian beef cow herd as of Jan. 1 was 3.38 million head, down one per cent from last year and the fourth consecutive yearly deadline.
The herd is now the smallest since the 1980s.
The U.S. beef cow herd also fell one percent from last year, and it is now the smallest in 64 years.
Fewer cows means fewer calves born.
However, because slaughter cattle are now much larger than in the past, beef production has been more steady.
In the U.S., beef production peaked at 28.36 million pounds in 2022. For 2025, it is forecast at 26.7 million lb., down almost six percent from that peak.
Canada beef production has seen a similar decline over the past few years.
The result is sky-high beef prices.
The U.S. Bureau of Labor Statistics reports that ground beef in March averaged US$5.79 per pound, up from $3.88 in March 2020, a 49 per cent increase. The increase in just the last year was almost 13 per cent.
Even with this cost increase, consumer demand has been remarkably resilient.
But if beef costs continue to rise, could meat substitutes start to beat it at price?
One of the biggest criticisms of meat substitutes goes like this: why would you pay more for a product that at best tastes similar and likely is less desirable?
Also, many consumers don’t like the long list of ingredients in meat substitutes. They prefer less processed food.
If you are a vegetarian or vegan, maybe you would pay more, but that is a small segment of the population. For meat substitutes to capture a significant market share, they have to appeal to traditional meat eaters that are flexible and persuadable in their choices.
In a recent conference call about its first quarterly results, Beyond Meat’s president and chief executive officer, Ethan Brown, said the company is targeting those people.
It has worked hard to drive down production costs and is regularly tweaking products to address taste, texture, ingredients and nutrition.
Its flagship product, Beyond Burger, is now in its fourth iteration. He said it regularly performs well in consumer taste tests.
The company is taking to social media to try to address what he called misperceptions about its products.
So while meat substitutes might be on the ropes, they are not down for the count. Maybe they can stage a comeback.
The beef industry can’t let down its guard and must continue to address its own weaknesses, including price.
