(Bloomberg) -- Just a few years ago, with a blockbuster initial public offering from Beyond Meat Inc. and the unveiling of an Impossible Whopper at Burger King locations nationwide, plant-based meats were ascendant.
Now, after once enjoying double-digit growth, sales in the plant-based meat category are not just flat but declining, according to data from Information Resources Inc., or IRI. That’s due to possible saturation of the US market as new brands hit the shelves, according to Deloitte Consulting LLP.
Sales of refrigerated meat alternatives at retailers are down 10.5% by volume for the 52 weeks ended Sept. 4, IRI data show. While higher prices are the top reason for the slide, it’s not the only one, according to Jonna Parker, a fresh food specialist at the market research company.
“Proteins that were cheaper on a price-per-pound basis did fare better,” Parker said, noting that semi-vegetarian shoppers that may have opted for an alt-product will now just go for the less-expensive real thing. With inflation, consumers have become less willing to pay a premium for faux meat. Taste and health concerns are also playing a role, she said.
Deloitte believes the industry is suffering from a perception problem. In July, it surveyed 2,000 consumers and found a decline in the belief that plant-based meat is healthier and more environmentally sustainable than meat from animals. (While the environmental credentials of plant-based products compared to their meatier counterparts are well established, the health claims are not.)
Deloitte also suspects that the addressable market may be more limited than previously thought with a growing cultural resistance to its “woke” status — even among those seeking to reduce red meat consumption. Case in point: When Cracker Barrel announced plans to add Impossible Foods’ sausage to its menu over the summer, it faced an onslaught of criticism on social media.
The slowdown doesn’t appear to be uniform for all brands. Closely held Impossible Foods said in a recent interview on Bloomberg TV that its retail sales have risen 70% in 2022. The company has rapidly expanded its distribution in supermarkets across the US in recent years.
“We have a lot of room to go,” Impossible Chief Executive Officer Peter McGuinness said last week, adding that the company can still add many new points of distribution with restaurants and retailers. He said consumers still have “low awareness” and “low understanding” about plant-based foods.
“The category in and of itself has done a pretty lousy job of communicating it, and we haven't done a great job either,” he said in the interview. He said Impossible Foods is working to improve its communication to win new customers.
(Adds Impossible CEO comments. An earlier version of this story was corrected to clarify where trend information came from.)
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