The setbacks also hit insect breeders and lab-grown meats
Unreal Food has ended its attempts at an eggless egg. Remastered Foods has stopped developing vegan bacon. The Meatless Farm has discontinued its plant-based sausages.
The big shake-up in the global meat substitute sector is here and expanding.
With money flowing less freely due to rising interest rates, investors have sharply withdrawn funding just as inflation is driving up production costs and making consumers more selective about their food choices. This hits a crowded field that mushroomed after the early success of Beyond Meat Inc. and Impossible Foods Inc.
With consumers put off by excessive processing, nutritional value and taste, a growing list of alternative protein companies are closing, laying off staff and selling their businesses. Industry observers say there is more upheaval to come before the sector stabilises.
Enthusiasm for alternatives to beef and pork grew after Beyond Meat’s initial public offering in 2019, and venture capital was willing to invest in companies that offered little more than a recipe book.
But sales fell short of wildly optimistic forecasts, as high prices and strange flavors and textures made expensive products easy to cross off shopping lists. The streak of failures stretches from plant proteins and vertical farmers to insect breeders and lab-grown meats. Global investment in food and agricultural technology is set to drop by 44% in 2022, according to AgFunder.
The downturn so far has wiped out mostly obscure names and early-stage companies, such as Canada’s Merit Foods and China’s Hey Meat.
In the UK, two promising companies recently appointed administrators: The Meatless Farm cut staff at its Leeds headquarters, while Plant & Bean was hit by a spike in food and energy prices just two years after opening a mega factory in Lincolnshire.
The upheaval is part of an adjustment phase happening in almost every high-growth consumer segment from smoothies to popcorn, said Andy Shovell, co-founder of British plant-based meat company THIS, whose sales have grown about 45% this year.
The result will be less confusion in stores, better quality and prices that will approach those of meat, according to Chauvel. “From the customer’s point of view, this is only good news,” he said.
Strong industry leaders have also stumbled. Beyond Meat, whose market value is down more than 90% from its peak, has had several rounds of layoffs in the past year, as has Impossible Foods. The cuts also affected Spain’s Heura Foods and California-based Eat Just Inc., which continued to expand its U.S. distribution.
Traditional food companies are also downsizing. Nestle SA has pulled its Garden Gourmet line and Wunda pea milk from the UK due to stiff competition. Meat giant JBS SA has spun off its Planterra unit after pouring cash into a mega factory in Colorado.
Despite the turmoil, some investors remain optimistic. Big Idea Ventures, a fund of food-tech investors, said last month it was closing in on a $75 million fundraising goal. Fake bacon maker MyForest Foods raised $15 million in new funding earlier this month, and Israeli startup Chunk Foods announced a seed round of the same size in the spring.
