The fanfare around plant-based burgers, sausages and hot dogs that captured the attention of many fast-food companies and meat manufacturers might have faded, but the alternative meat market still has a long runway of growth ahead of it, experts say.

“As consumers became much more educated and the technology advanced, and then (companies) started to introduce plant-based product offerings, consumers were much more receptive to it. And the market really, for this area, increased dramatically,” said Robert Carter, managing partner at The StratonHunter Group, in a phone interview.

He said the wider distribution of plant-based products, messaging around sustainability and evolutions in the taste of such products helped drive consumer demand initially – all factors that “didn’t really exist previously.”

The plant-based meat market really started to become mainstream roughly five years ago, when fast-food chain A&W began to add vegan meat products to its menu. At the time, it was so popular that A&W sold out of its Beyond Meat burgers across Canada within weeks of its menu debut.

Fellow fast-food chains such as Burger King, Kentucky Fried Chicken, and Chipotle, among numerous others followed suit, adding plant-based offerings to their menus.

Additionally, meat manufacturers including Maple Leaf Foods Inc. expanded into the plant-based category when it bought Lightlife Foods and Field Roast Grain Meat Co. in 2017.

However, more recently, consumer demand for alternative meats have faded.

“I wouldn't call it a saturation point. We've gone through a period of trial. So we've got a whole bunch of consumers that have come in and they've tried the product. And now we've got some consumers that are kind of dropping off. … Are we getting the repeat usage? No, I don't think we're getting that repeat usage that everyone expected to take place,” Carter said.

ADJUSTING TO DEMAND

For companies that invested heavily in plant-based proteins such as Maple Leaf, Mark Petrie, an equity research analyst at CIBC Capital Markets that covers the company, said an adjustment to the current market conditions is in order.

“As the demand profile has evolved, and the [plant protein] category has proven to be a slower-growing category than what [Maple Leaf] initially anticipated, they have pivoted their strategy to right size their cost base and manufacturing capacity in an effort to achieve near-term profitability or breakeven,” he said.

Maple Leaf reported sales of its plant-based products fell 15 per cent in the second quarter compared to a year ago and said it’s restructuring the division to bring costs down significantly. The segment was the biggest drag on its bottom line.

However, Petrie doesn’t foresee Maple Leaf exiting the business because of the company’s desire to be a sustainable protein manufacturer.

For fast-food chains, Carter said sales of plant-based products will be an area that continues to grow, but not at the dramatic rate many companies were expecting.

GROWTH STILL AHEAD

Despite the current lull in consumer demand for plant-based meat, the industry overall is still likely poised for growth in the coming years.

“Essentially, the market size/opportunity did get over-hyped,” Colin Stewart, chief executive and portfolio manager at JC Clark Limited, said in an email.

“I think as new plant-based products develop (ground meat, sausages, etc.) and it is not just all about the burger, that should help broaden the market and stabilize growth.”

Stewart also said he expects Maple Leaf’s plant-based segment to become profitable within the next two years as investment spending is scaled back and costs are reduced. JC Clark holds Maple Leaf in client portfolios.

Petrie agreed in that over time, the growth trajectory of the broader industry will become more clear.

“I believe plant based still has a long term future as a category, and I think consumer tastes will continue to evolve to include more alternative proteins. But the settling out period continues,” Petrie said.

In the meantime, most fast-food restaurants that added plant-based options to their menu continue to offer them today. McDonald’s is a notable chain that ultimately removed its vegan meat offering, dubbed the P.L.T., which was short-form for plant, lettuce, tomato, after a six-month trial in Canada.

“I think everyone's expectations were so high in terms of what this was going to do and how much of a game changer it was that they're not realizing, you know, we're not going to sustain 30-40 per cent growth in these products. We've hit a level. We're going to have two, three, four per cent growth over a certain period of time. We're not going to have that dramatic growth,” Carter said.