The end of the veggie burger hype
The stock price of plant-based alternative meat producer Beyond Meat has fallen by more than 90 percent in two years. The group just announced devastating numbers. what went wrong
Beyond Meat products, which are also available at major distributors in Switzerland, have been particularly popular with young people. Clever marketing seemed to prompt a rethinking of society as a whole: away from animal consumption, away from torturous factory farming, away from the CO2 emissions of livestock farming – to plant-based alternatives that you get not only in vegetarian restaurants or in the supermarket with vegan products, but also as burgers on the grill, as a substitute for salami on pizza or as a hot dog at the stadium. Even more: Beyond Meat has been working on alternatives to chicken and steak, meaning meatless nuggets or pieces of meatless steak for tacos or quesadillas.
Plant-Based Meat Alternative (PBMA). Products that mimicked the taste of meat models and promised a healthier and climate-friendly alternative. It was a story that sounded almost too good, but it ended up being: This week, Beyond Meat shares fell below $12 from a high of $234.90, making the company worth just $752 million. The horn was cut off from the unicorn.
Despite massive discounts, Beyond Meat sold less
Now you might say, OK, one company couldn’t handle the rapid rise; there were internal problems, like when CFO Doug Ramsey went to jail for biting his nose during a fight in a garage. Some rather optimistic decisions were made, such as trying to gain a foothold in the menu of the McDonald’s burger chain or producing meat-free snacks and drinks at the beverage maker Pepsi. McDonald’s announced the collaboration, the Beyond Meat burger just didn’t sell – and that leads to the first problem for Beyond Meat.
Ultimately, it is a niche product that is not specifically aimed at vegans and vegetarians – they have developed other innovative, tasty products, but rather at people who craved alternatives without changing their habits (protein on nachos, a bun with some kind of sausage on stadium, hamburgers at the barbecue). Then Beyond Meat came along and people were eager to try the product. “I’m one of those people,” says Jim Chanos, one of Beyond Meat’s best-known short film sellers; i.e. people who bet on falling stock prices: “Demand has been enormous due to curiosity.”
However, curiosity alone is not enough for sustainable success, Beyond Meat products have remained as niche as the entire PBMA industry. So not only did the market not grow, as studies show that after trying it for the first time, many people switched to other products – either to other vegan foods or back to meat. U.S. PBMA sales fell more than 10 percent over the past 12 months after a year of stagnation; meat consumption, on the other hand, remained the same according to a study by the journal Nature.
The second problem, which in the US is called the margarine phenomenon: In the 1970s, it was touted as a healthier alternative to butter; then it turned out not to be the case. Something similar is now happening with PBMAs, of which an analysis by the Food & Water Watch group says: “These are not plant-based burgers made from nuts, made from beans and other plants.” Rather: an industrially processed product that, at the time of the hype, was more than 60 percent more expensive than the cheapest meat variants.
For many people, good intentions stop when it comes to money
A month ago, the company announced it would lay off 200 employees, 20 percent of the workforce. “We need to downsize to deal with the difficult economic situation around the world,” says Brown. This also means: no more experiments, but a focus on those products that are profitable – and partnerships with several fast food companies.
Of course, that still doesn’t address the bigger, real problem in the industry. There are great suppliers of meat-free protein such as peas, beans and lentils. Perhaps the hype surrounding the imitation meats was simply not justified and the products were not as popular as the sensational story suggests – and the industry has entered a post-hype reality.
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