To understand how far someone has fallen, one should examine what an incredible flight of fancy it was before. So then, July 2019: Beyond Meat, manufacturer of plant-based alternatives to meat products, was valued at $14.6 billion on the stock exchange. The group was a so-called unicorn, a mega success, and there was no indication why this flight of fancy should ever end.
The Beyond Meat products were popular, especially among young people, and as a result of clever marketing, there seemed to be a rethinking of society as a whole: away from animal consumption, away from torturous factory farming, away from CO₂ emissions from cattle farming – towards plant-based alternatives that not only available in vegetarian restaurants or in the supermarket with vegan products, but also as a burger at a barbecue, as a substitute for salami on pizza or as a hot dog in the stadium. Even more: Beyond Meat worked on chicken and steak alternatives, i.e. meatless nuggets or meatless steak pieces for tacos or quesadillas.
Plant-based meat alternative (PBMA). Products that imitated meat models in taste and promised a healthier and more climate-friendly alternative. That was a story that sounded way too good, but in the end it was: This week, Beyond Meat stock has fallen below $12 from its high of $234.90, leaving the company with just $752 million dollar valued. The horn of the unicorn was severed.
Despite massive discounts, Beyond Meat sold less
This is of course also due to the devastating figures that the group announced on Wednesday – even worse than experts had forecast: sales fell by 22.5 percent in the past quarter to $82.5 million; 98 million had been expected. The group had tried to boost demand with massive price reductions, but volume sales also fell by 13 percent. Managing director Ethan Brown called the numbers “disappointing”, which can be seen as an understatement – because: The loss was $ 101.7 million.
Now you could say: Okay, one company couldn’t cope with the rapid rise; there had been internal problems, such as CFO Doug Ramsey going to jail for biting someone’s nose during an argument in a parking garage. A few rather optimistic decisions had been made, such as trying to establish oneself on the menu at the burger chain McDonald’s or producing meatless snacks and drinks with beverage manufacturer Pepsi. McDonald’s announced the cooperation, the Beyond Meat burger simply didn’t sell – and that leads to the first problem for Beyond Meat.
It’s ultimately a niche product that’s not specifically aimed at vegans and vegetarians – they’ve developed other innovative, tasty products – but rather at people who long for alternatives without breaking their habits (protein on the nachos, a bun with a kind of sausage on it in the stadium, burgers when grilling). Then along came Beyond Meat, and people were dying to try this product. “I’m one of those people,” says Jim Chanos, one of the more well-known Beyond Meat short sellers; i.e. people who bet on falling share prices: “The demand was enormous because of curiosity.”
However, curiosity alone is not enough for sustainable success, the Beyond Meat products remained in the niche like the entire PBMA industry. So not only did the market not grow because 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. US sales of PBMAs fell more than 10 percent in the past 12 months after a year of stagnation; Meat consumption, on the other hand, remains the subject of a study by the magazine Nature according to the same.
The second problem they call the margarine phenomenon in the USA: In the 1970s it was touted as a healthier alternative to butter; then it turned out that was not the case. Something similar is now happening with PBMAs, which is discussed in an analysis by the Food Watch Group Food & Water Watch means, “These aren’t nut’s plant-based burgers made from beans and other plants.” Rather: an industrially processed product with a lot of sodium – which was more than 60 percent more expensive than the cheapest meat variants at the time of the hype.
For many people, good intentions stop when it comes to money
This is exactly where the third problem lies: no matter how much you want to live healthy, do something about climate change and animal cruelty – many people’s good intentions stop when it comes to money. Inflation hit the food industry particularly hard, with prices in this area rising by 13 percent in the USA. “We’re feeling pressure because people are looking for cheaper protein products, including animal products,” said Beyond Meat CEO Brown.
A month ago, the company announced that it would lay off 200 employees, 20 percent of the workforce. “We have to shrink down to the right size to deal with the difficult economic situation around the world,” says Brown. That also means: no more experiments, but concentration on those products that pay off – and partnerships with a few fast-food companies.
Of course, that still doesn’t solve the bigger, the real problem of this industry. There are wonderful meatless protein suppliers such as peas, beans and lentils. Perhaps the hype surrounding imitation meat was simply not justified and the products were not as popular as the high-flying story suggests – and the industry has arrived in the post-hype reality.