Beyond Meat Is Struggling, and the Plant-Based Meat Industry Worries

For a while, it seemed Beyond Meat was taking over the world.

Its faux burgers and sausages were landing on dinner plates in homes throughout the United States and on the menu boards of chains like Subway, Carl’s Jr.and Starbucks. When the company went public in 2019, its shares skyrocketed as investors bet that the meatless movement was finally having its moment. During the pandemic, Beyond Meat’s grocery store sales surged as curious consumers tried its vegan options.

But these days, Beyond Meat has lost some of its sizzle.

Its stock has slumped nearly 83 percent in the past year. Sales, which the company had expected to rise as much as 33 percent this year, are now likely to show only minor growth. McDonald’s concluded a pilot of the McPlant burger — made with a Beyond Meat patty — this year with no plans to put it on the menu permanently.

In late October, the company said it was laying off 200 people, or 19 percent of its work force. And four top executives have departed in recent months, including the chief financial officer, the chief supply chain officer and the chief operating officer, whom Beyond Meat had suspended after his arrest on allegations that he bit another man’s nose in a parking garage altercation.

What investors and others are debating now is whether Beyond Meat’s struggles are specific to the company or a harbinger of deeper issues in the plant-based meat industry.

“At the category level, we’re seeing volumes for plant-based meats down 22 consecutive months now,” said John Baumgartner, a consumer food analyst at the financial institution Mizuho Americas.

A few years ago, investors expected the category to explode with growth year after year, Mr. Baumgartner said. Now, he said, those expectations are being reconsidered.

“We’re positive on the future for plant-based meat, but this is a 20- to 25-year story,” he said. “It’s not going to happen in three to five to 10 years.”

Beyond the Orange Chicken “showed us just how great the demand is for an innovative plant-based dish at Panda,” said Evelyn Wah, a Panda Express executive. Credit…Jeenah Moon for The New York Times

Some say the slowdown in sales is a product of food inflation, as consumers trade pricier plant-based meat for less-expensive animal meat. But others wonder if the companies have simply reached the maximum number of consumers willing to try or repeatedly purchase faux burgers and sausages.

Analysts at Deloitte, who conducted a survey of consumers this year, questioned whether the 53 percent who were not buying plant-based meats could be turned into customers.

“The category had been growing at double-digit for a long time and was expected to continue, but what we saw this year is that the number of consumers who were buying it did not increase,” said Justin Cook, the U.S. consumer products research leader at Deloitte.

While inflation played a role, so did a decline in the perception that plant-based meats are healthier than animal proteins. (The companies focus on the environmental benefits.) But the Deloitte analysts said another problem might be resistance to a product that some segment of customers see as “woke” and linked to politically left-leaning ideas.

In August, when the Cracker Barrel restaurant chain stated on its Facebook page that it had begun offering the meatless “Impossible Sausage,” the post was flooded with thousands of comments from irate customers. “Go woke, go broke,” one wrote. “You just lost a ton of your base. You obviously don’t know your patrons.”

The data around the category are mixed. Over the past year, volume sales of refrigerated plant-based meats slid 11.6 percent, with packages of faux ground meat and patties taking a particular beating, according to IRI, a market research firm. But volume sales of frozen plant-based meats, which are typically less expensive than the refrigerated products, fell only slightly. Volume sales of faux chicken nuggets and patties rose sharply.

Beyond Meat’s chief executive, Ethan Brown, said his company was competing in an increasingly crowded field. Credit…Jeenah Moon for The New York Times

Moreover, while some plant-based meat manufacturers are struggling, others are seeing rising sales.

In October, the Brazilian meatpacking giant JBS said it was closing Planterra Foods, its plant-based meat operation, after just two years. And volume sales for the vegetarian-meat maker Morningstar Farms, which Kellogg has said it plans to spin off or potentially sell, dropped sharply in nearly every category this year, according to the IRI data. On a call with Wall Street analysts in August, Kellogg’s chief executive, Steven Cahillane, attributed the drop to supply-chain issues with a co-manufacturer of the products.

But privately held Impossible Foods said demand for its products grew tremendously last year.

“We’re not experiencing anything like what Beyond Meat has reported or some of the other brands in the space,” Keely Sulprizio, a spokeswoman for Impossible Foods, said in an email. “Quite the opposite: We’re seeing hypergrowth, with over 60 percent year-over-year dollar sales growth in retail alone.”

The IRI data show that while volume sales of Impossible ground meat and faux burger patties were down slightly, volumes of other categories, including frozen faux meat and chicken, soared.

“We launched in frozen more recently with a larger family size, and it’s been very popular with both retailers and consumers,” Ms. Sulprizio said.

In a call with Wall Street analysts in early November, Ethan Brown, the founder and chief executive of Beyond Meat, said an increasing number of plant-based meat players were battling for a smaller group of consumers as shoppers traded down to less-expensive animal proteins. As a result, “a shakeout does appear to be underway, and we expect more brands to either retreat or consolidate,” Mr. Brown said. Beyond Meat declined to comment for this article beyond the call with analysts.

While the company hoped to restore growth to its refrigerated products, which have some of the highest profit margins, Mr. Brown noted that it was expanding distribution for many of its frozen products.

“Frozen plant-based chicken is the largest single subcategory in all of plant-based meats and continues to grow at a double-digit pace,” he said.

Mr. Brown also noted that McDonald’s continued to offer the McPlant burger in other markets, including Britain and Ireland, and that Beyond Meat was testing new products with other chains, including KFC and Taco Bell.

In addition to Panda Express, chains like KFC and Taco Bell are testing Beyond Meat products, Mr. Brown said.Credit…Jeenah Moon for The New York Times

Panda Express, for instance, said in September that it would offer Beyond the Original Orange Chicken on its menu nationally for a limited time after an initial offering in New York City and Southern California sold out in less than two weeks last year.

It “showed us just how great the demand is for an innovative plant-based dish at Panda,” Evelyn Wah, vice president of brand innovation for Panda Express, said in an email. She added, “We’ve been pleased with the positive sentiment we’ve received from our guests.”

Mr. Baumgartner said that when his firm had asked consumers in a survey why they weren’t buying plant-based meats, they said they didn’t like the taste. While the competitive companies have continued to improve existing products while quickly rolling out new ones, he said, he is concerned that some products are coming to market too quickly.

“You’re not selling iPhone version 1.0 and maybe it’s not the best and greatest, but the consumer can upgrade to version 2.0, which has better graphics and keypad,” Mr. Baumgartner said. “If you roll something out in the food industry that’s not quite where it needs to be in terms of quality and taste and the consumer tries it and has a bad experience, he’s not coming back.”

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