“Rising Meat Prices Drive Demand for Plant-Based Alternatives: Beyond Meat and Impossible Foods Position for Growth Amid Pandemic Challenges”
As the coronavirus pandemic continues to affect various sectors, the price of meat is on the rise. With meat processing facilities becoming hotbeds for the virus and facing shutdowns, shoppers are seeing increased costs for poultry, pork, and beef at grocery stores. According to IRI’s Inflation Tracker, meat prices surged by 14% during the week of May 3 compared to the previous year. CoBank has projected that by Memorial Day, nearly a third less meat may be available in grocery stores, potentially leading to a 20% price increase for pork and beef compared to last year.
In the meantime, companies producing plant-based meat alternatives have been striving to lower their product prices for years. Although the pandemic has severely impacted their foodservice business, they are making significant strides in offering appealing retail options. Both Impossible Foods and Beyond Meat manufacture products that closely resemble conventional meat in taste, texture, and cooking behavior, while ensuring a steady and even increasing supply. Their facilities are safer than traditional meat plants, with no reported outbreaks among employees.
During a recent earnings call, Beyond Meat’s CFO Mark Nelson expressed the company’s aim to achieve price parity with traditional meat by 2024. The company is well-positioned to reach this goal without compromising its profit margins, especially given the current tightening of the meat market due to the pandemic, which is driving prices up. Similarly, Impossible Foods recently reduced prices for foodservice distributors by approximately 15% and is dedicated to aligning its product costs more closely with those of traditional meat. CEO Pat Brown emphasized the company’s eagerness to reduce prices quickly, noting the robust demand from consumers at current price points.
Beyond Meat has reported profitability in its earnings, achieving a notable 38% profit margin even as the pandemic forced the closure of dining establishments. By early this year, nearly 69% of their revenue stemmed from retail products, with retail sales skyrocketing by 190% year-over-year. As consumers stockpiled groceries, Beyond Meat experienced a 233% increase in sales compared to the previous year, making it the top seller in the plant-based meat category.
While Beyond Meat has aggressively pursued foodservice opportunities, its retail presence has grown significantly, with products available at major chains such as Del Taco and Carl’s Jr. Despite an overall increase in foodservice revenues, the pandemic hindered potential sales growth. Nonetheless, Beyond Meat continues to introduce new retail offerings, including its Beyond Breakfast Sausage.
Impossible Foods, a private entity, has also witnessed a surge in retail sales. The company has rapidly expanded its grocery presence from a handful of stores to approximately 2,700 locations nationwide, including major retailers like Kroger. Retail sales are breaking records monthly, driven by an increase in product variety and strong consumer demand for protein.
Meat processing is labor-intensive and has seen little change over the years, with workers often standing close together. In contrast, plant-based meat production is designed to ensure worker safety through social distancing and staggered shifts. Pat Brown confirmed that Impossible Foods has implemented strict safety measures to protect its employees during this time.
Both Beyond Meat and Impossible Foods are focused on delivering their products to consumers at competitive prices. Beyond Meat has invested heavily in marketing its products’ quality and health benefits but has shifted to offering discounts to achieve price parity with animal-based meat. By enhancing efficiencies in its supply chain and ingredient sourcing, the company is working to lower costs further.
Beyond Meat is also adapting its product offerings during the pandemic, providing value packs that offer more servings at a lower cost per serving, encouraging consumers to purchase more. CEO Ethan Brown believes that as more people fire up their grills, interest in plant-based options will grow, positioning Beyond Meat favorably among consumers.
For Impossible Foods, the focus remains on scaling up manufacturing and distribution to lower prices. The company’s long-term goal is to double its growth annually, and as operations resume, there is optimism about further advancements in product development. With plans to expand capacity significantly, Pat Brown is confident that the company will soon be able to meet consumer demand more effectively.
In conclusion, as the demand for alternative protein sources continues to rise, the landscape of the meat industry is evolving. With the increasing prices of traditional meat and a growing consumer interest in plant-based options, companies like Beyond Meat and Impossible Foods are positioning themselves to meet this demand while striving for competitive pricing. As they invest in research and development, and improve production efficiencies, they may soon see the fruits of their labor, potentially transforming the market dynamics for protein consumption, including the incorporation of nutritional supplements like calcium magnesium citrate supplement as part of a balanced diet.
