Has the promise of plant-based meats gone bust?

This episode explores the rise, challenges, and potential future of plant-based meats in the context of environmental, economic, and consumer trends.

1. Plant-based meats surged in popularity but face sustainability challenges in consumer markets.
2. Economic factors, such as pricing and inflation, significantly affect consumer choices between plant-based and traditional meats.
3. Government policies have historically favored traditional meat production, impacting the competitive landscape.
4. The plant-based meat industry might need more innovation and government support to thrive.
5. Cultural and political dynamics play crucial roles in the adoption of alternative proteins.

1. Introduction

Hosts discuss the episode's focus on the rise and challenges of plant-based meats. Quotes include insights on industry growth and consumer trends.

2. The Rise of Plant-Based Meats

Discussion on how Beyond Meat and Impossible Foods spearheaded the popularity of plant-based meats with innovative strategies.

3. Economic Impact and Consumer Response

Examination of how economic conditions and pricing affect consumer preferences for meat alternatives.

4. Government Policies and Future Outlook

Analysis of the role of government subsidies in shaping the meat and plant-based industries, suggesting paths forward for policy and industry adaptation.

1. Explore plant-based options to diversify dietary choices.
2. Compare prices and nutritional content to make informed food purchases.
3. Stay informed about environmental impacts of dietary choices.
4. Advocate for supportive policies for sustainable food options.
5. Experiment with plant-based recipes to enhance culinary variety.

Plant-based meat has been touted as a way of having our steak and eating it too. The industry had grand plans to remake the way we eat, cut down greenhouse gas emissions in meat and dairy production and address animal welfare concerns. Companies like Beyond Meat and Impossible had a meteoric rise in the late 2010s, with influencers, celebrities and investors backing the companies.

But now, it appears the hype over plant-based meat is over. Sales have dropped off and stock prices are worth less than a tenth of its peak.

Vox staff writer and journalist Kenny Torrella tells us why the noise around plant-based meat’s potential – and its flop – doesn’t tell the whole story.

People

Kenny Torella, Annika Ramon Wellms

Companies

Beyond Meat, Impossible Foods, Vox

Books

Guest Name(s):

Kenny Torella

Content Warnings:

None

Vas Bednar
Welcome to lately a new Globe and Mail podcast. I'm Vas Bednar, and every Friday I'm going to be having a conversation about big defining trends in business and technology that are reshaping our everyday find lately. Wherever you get your podcasts.

Annika Ramon Wellms
Hi there, it's me, Annika. Today we've got one of our favorite episodes from the last year for you. Hope you enjoy it. And we'll be back with a new episode on Monday.

A few years ago, there was a lot of excitement around plant based meat.

Vas Bednar
Shares of beyond meat are up 700% since the IPO.

Annika Ramon Wellms
Beyond Meat is surging this morning after reporting its first quarterly results. Up around 400%, beyond was valued at $10 billion. Hell, it even bleeds like a medium rare burger.

But this patty is actually all plant.

Kenny Torella
McDonald's put a vegan burger on its.

Vas Bednar
Menu, and this get together really could be a game changer for the faux meat market.

Annika Ramon Wellms
Companies like Beyond Meat had shockingly high growth. Sales of plant based meat surged 42% from 2016 to 2019. In the US, fake meat had gone mainstream.

But then the hype wore off, stock prices tumbled, and for some companies, sales shrunk.

Kenny Torella has covered the rise and fall of fake meat as a staff writer for Vox, and before that he worked in communications at animal welfare nonprofits. Today, he'll tell us about the challenges in shifting to plant based protein, but also why the future of fake meat might not be as grim as it seems.

I'm Anika Ramon Wellms and this is the decibel from the Globe and Mail.

Kenny, thank you so much for being here.

Kenny Torella
Thanks so much for having me.

Annika Ramon Wellms
So I think if we're going to talk about alternatives to meat, we should probably talk about why we would want to do that in the first place. So, I guess, how would you describe the problems with eating meat?

Kenny Torella
Yeah. So each year, over 90 billion animals are raised on land for food.

Globally, meat and dairy production account for around 15% to 20% of global greenhouse gas emissions. So often we talk about fossil fuel, transportation, energy production, but right behind those issues, there's agriculture. And livestock production really takes up the lion's share of agriculture's emissions. Globally. It's the leading cause of deforestation because we cut down a lot of land for cattle to graze or to grow corn and soy to feed livestock. And it's also a leading cause of water pollution and biodiversity loss. So kind of whatever way that you look at it from an environmental angle, it's something we really need to change to meet climate and environmental goals.

Annika Ramon Wellms
Okay. And so a lot of people then turn to plant based meats now. So why is this kind of seen as a potential solution to these issues that you were talking about before?

Kenny Torella
So people have been making, you know, imitations of meat and dairy products, actually, for centuries, but the current iteration really kind of launched in the 1970s and 1980s when you saw the growth of the organic food movement, the back to the land movement, and it was a pretty small and niche category for most of its modern existence. And the simple idea is that you take plant ingredients and you try to mimic them to taste and chew like meat, usually using a concentration of soy or wheat or peas.

And the big idea around it is that, you know, it's hard to encourage people to eat less meat. It's hard to get them to eat more tofu or beans. And so why not just make something that gets as close to real meat as possible and can kind of just be slotted in to replace meat in dishes?

This category was pretty quiet up until 2015, 2016, when companies like beyond meat and impossible foods came onto the scene and said, we really are going to put more effort. We're going to dump hundreds of millions of dollars of research and development into making something that tastes as close to meat as possible.

Annika Ramon Wellms
Can you tell me about that? Like, what was it about that time, really, that led things to start becoming more popular?

Kenny Torella
Yeah. I think for so long, plant based meat companies just tried to appeal to the vegetarians and the health conscious. They focused on products that were kind of, you know, maybe not as delicious, lower fat, all organic ingredients.

Annika Ramon Wellms
So things that, like, people didn't mind if people wanted to eat tofu or veggie burgers like that, they knew that's what they were getting and that's what they would expect then. Okay. Like a healthier option there.

Kenny Torella
Yeah. Then beyond meat and impossible, foods came along in the early two thousand ten s and thought, there's an opportunity here to really try to make something that tastes as close to meat as possible.

And around those same years, you also just started to see a slow but marked increase in people learning about issues around modern meat production, whether that's from the animal welfare angle or the climate change angle or public health.

So there was a lot in the air for these companies, I think, to kind of grab on to and to try to make something new that could appeal to everyday Canadians and Americans and not just those looking for a veggie burger or the more health conscious consumers. And they were onto something because I think for a while, there was a lot of hype. And these companies debuted their burgers around 2015, 2016 in high end restaurants because they wanted to position them as, first and foremost, just a really delicious product that elite chefs would want to use. It was almost kind of like the Tesla approach. Like, the first popular electric car was the Tesla, which was very expensive. And the idea was that appealing to people who could afford it at first would help them eventually scale up and bring the price down. And there was a lot of hype, both from investors and journalists around these products.

And you started seeing huge investors like Bill Gates, Leonardo DiCaprio, Drake, even conventional meat companies like Tyson Foods started investing in these companies.

And that created a lot of buzz to the point where in 2019 was really kind of the big flashpoint for plant based meat, because you had, in May of 2019, Beyond Meat had its stock market debut, and it was the most successful IPo in the prior decade in the US.

Annika Ramon Wellms
Wow.

Kenny Torella
And then about five months later, at the end of the summer, impossible Foods launched its impossible whopper in every Burger king in the United States, which then made it accessible, affordable for anyone to go and buy.

And so 2019 was really the year that plant based meat took off. But then it went even higher when the Covid-19 pandemic began.

Annika Ramon Wellms
Why did Covid make it spike?

Kenny Torella
Yeah, well, the first one is that the entire grocery sector had a big spike because people were stockpiling groceries in the first couple months of the pandemic. But I also think it was this time where people were just stuck at home reading all day on the Internet, and so they wanted to try new things. I mean, this was the time when people got really, for some reason, got really into sourdough bread. And I think some of that translated over to just trying novel food products, like higher tech, plant based meat.

Annika Ramon Wellms
It sounds like it kind of came out with a boom here. Like, as you said, beyond meat had this massive IPO. People are wanting to try it. It's in Burger King's. It was in A and W's as well. They had their beyond meat burger in Canada, I guess, at its height. While this is all happening, Kenny, do we know what the market share of plant based meat was? I mean, like, compared to conventional meat.

Kenny Torella
It was still tiny. It was just about 1% of the meat market, give or take. So, yeah, there was a lot of hype from journalists and investors, but a lot of it was around potential, not actual sales. Now, sales were growing really, really fast, but they were starting from such a low point.

That explains why, even though it felt like these companies were huge. They were just 1% of the meat market.

Annika Ramon Wellms
Yeah. So 1% sounds really small.

Was the expectation, I guess, that it was going to continue like that? Did people think at some point that this could overtake regular meat and actually have this kind of big societal change?

Kenny Torella
Yes, some of the predictions were coming from the companies themselves, which obviously have self interest in doing so. But the founder of Impossible Foods, Pat Brown, was saying, we're going to end all factory farming by 2035. These kind of products are just going to totally take over the market, which is obviously just a huge exaggeration of what's possible here. But it wasn't just the companies. There were all kind of pundits, you know, Wall street analysts, food industry researchers who maybe didn't think animal farming would end in 15 years, but that this industry could continue to chip away at the meat market and, you know, obtain maybe a 10% market share in a decade or two. So there were a lot of predictions saying that it's not going to totally upend how we eat, but it's going to be a much bigger share of the plate in the decades ahead.

Annika Ramon Wellms
We'll be right back after this message.

Vas Bednar
Welcome to lately, a new Globe and Mail podcast that's all about navigating life in the new economy. I'm your host, Basbetnar.

Every Friday, I'm going to be having a conversation, maybe even a raucous one, about big defining trends in business and technology that are reshaping our everyday. It's about the innovations that are changing our world, whether you've noticed them yet or not. Join us for the latest on lately wherever you get your podcasts.

Annika Ramon Wellms
So let's talk about this part. Kenny, I just want to look at beyond meat currently and just look at their share price. So they're at less than $10 a share now, but in its peak in July 2019, that was about $170 us. So a huge difference there. Let's dissect this a little bit. What happened?

Kenny Torella
There are a few reasons why you see companies like beyond and others with declining revenue. So I think the biggest thing that the industry can agree on is that a lot of consumers flocked to grocery stores and to Burger King to try these novel products. They were curious. They had heard that a company had made a product that tasted just like meat, and so they wanted to taste the future, essentially. But I think for most consumers, the quality of the beyond burger, the impossible burger and their other products just didn't live up to the hype for most consumers. They gave them a shot they maybe buy them occasionally, but they didn't become a regular part of their diet, of their grocery list. Another big factor is that they're still much more expensive than animal meat. And so we've had high inflation over the last two years. And so we saw consumers swapping more expensive meat, like beef and steaks for cheaper meat like poultry.

That might explain why sales are declining, because instead of buying more plant based meat, people are just buying animal meat, which tends to be cheaper.

Annika Ramon Wellms
Can we talk about that price difference? What does it usually cost to buy a plant based meat versus, I guess, a regular meat?

Kenny Torella
Yeah. So looking at data from 2022, and again, this is for the United States, but it's going to be similar differentials in Canada.

Plant based meat, whether it's refrigerated or frozen, is going to cost about seven to $8 a pound, and that is pretty close to beef. Beef tends to cost about $7.50 a pound.

But you look at pork, that's closer to $5 a pound and chicken is closer to 250 a pound. So these are pretty big gaps aside from beef. And so when consumers are thinking inflation is really high, I need to bring my grocery bills down.

Even if they're really excited and are interested in plant based meat, but they're not a vegetarian, they're probably going to look at these prices and say, I'd rather buy pork or chicken than beef or plant based meat.

Annika Ramon Wellms
So, Kenny, we've been talking about this at an individual level, right? People's choice to eat one versus the other. I guess I wonder at a policy level if there's anything behind this. I've been thinking about the idea of moving towards electric vehicles. Governments often put subsidies in place to try to encourage that kind of behavior because we know it's good for the climate. Is there anything at the policy level that has to do with this plant based meat industry?

Kenny Torella
When we look at the meat aisle, meat is so cheap and so abundant. But that's not an accident. And it's because for decades, government policies have favored scaling up and industrializing the meat sector.

The biggest way is just from exempting meat operators from a lot of critical environmental laws, animal welfare laws, labor laws that just make it cheaper to produce meat. But there's also a lot of subsidies, whether it's giving money directly to farmers or the farmers who grow crops that are fed to livestock or subsidies in the form of crop insurance.

There's also been decades of a lot of investment in research and development to make animal farming more efficient, to make animals grow bigger and faster.

But increasingly there are calls to flip this, to change government policies and government subsidies to instead be more favorable to more sustainable plant based farming and food production. And actually, Canada has been a leader on one of these fronts.

Canada has invested a lot of money. Even just this year it was about 110 million into this multi year program. It has to try to develop Canada's plant based farming and food production system.

Annika Ramon Wellms
Interesting, really, the focus for the government is kind of on investment and encouraging that kind of behavior on that side of things.

Kenny Torella
I think that's right. It can ruffle feathers across Europe. Whenever policymakers have stuck their neck out on this issue, they often get flak from farming groups who have a lot of political power.

I think it's a bipartisan issue to not be told what to eat, but it tends to rile up the right even more.

And it's even entered the realm of conspiracy theories, where you see conspiracy theorists saying that global governments just want us to eat fake meat and to eat bugs because it's more sustainable.

And that's been a really interesting development over the last few years. And it's a really wicked problem because climate scientists have been saying for years, rich countries like the United States and Canada really need to cut back on their meat consumption to meet climate targets, that even if we were to phase out all fossil fuels, we can't meet climate targets unless we change how we farm and how we eat. And I think it's going to become a growing climate problem because as we see industries like the energy sector and the transportation sector decarbonize pretty quickly and in large part thanks to government programs that encourage things like electric vehicle purchasing, we're not seeing any kind of equivalent when it comes to agriculture and farming. So I think this conversation is going to continually evolve and it's going to be a real political challenge that no one's really figured out how to solve yet. But I think the first steps are going to be doing more carrots than sticks. So trying to just make it easier for people to eat these foods, whether that means making the food better, making it more available and affordable.

But I also think there needs to be some kind of cultural shift because we have this expectation that we need to eat meat, dairy and eggs for every meal.

But today, the way that we're eating is very different from people just a few generations ago. And really around the world, I mean, Canada's meat consumption is about double the global average.

And while these habits are pretty new, relatively speaking, they're really entrenched. And so I think it's going to take a lot of efforts, both at the individual and community level, but also the political and corporate level, to try to see a change here.

Annika Ramon Wellms
So just lastly, to get back to this idea of plant based meat, what are we to make of this? Kenny, is the industry failing? Was this just kind of a faddeen or will it bounce back? And are we going to see this become more of a thing in the coming years?

Kenny Torella
So I think the sector is far from dead. There have been a lot of headlines that are essentially obituaries for the plant based meat sector, and there's no doubt that sales have declined in recent years. But in 2022, sales were still higher than they were pre pandemic.

Another problem is that it's become a very crowded sector with a lot of bad and mediocre products. And so I think we're going to see some of those startups flame out over the next couple of years. But I think what is reasonable is that this sector could make incremental progress and incrementally make their products taste better, be more affordable, be more appealing to everyday consumers.

If I were to pull out my crystal ball, I think over the next few years some companies are going to call it quits.

But I also think we're going to see more government investment in trying to make products better and more affordable. It's an issue that's like eternally interesting to cover and write about. So I'm excited to see what the rest of the 2020s bring for the plant based meat sector.

Annika Ramon Wellms
Kenny, thank you so much for taking the time to be here today.

Kenny Torella
Yeah, thanks for having me. I really appreciate it.

Annika Ramon Wellms
That's it for today. I'm Manica Ramon Wells. Our producers are Madeline White, Rachel Levy McLaughlin, and Michal Stein. David Crosby edits the show, Adrian Chung is our senior producer and Matt Fraynor is our managing editor.

Thanks so much for listening and I'll talk to you soon.