If there are many people who have eaten such plant-based foods as beyond eat, most of them may have tried; But if you ask how many people insist on eating, the data may not be good-looking. Although plant substitute foods, including beyond meat, oatly and impossible foods, were once popular all over the world, they are now facing an unprecedented crisis.
Article ｜ Lianzi editor ｜ vickyxiao
Once more popular than real meat
2020, the year when the epidemic broke out, is the most optimistic year for this kind of food in the entire capital market. In the whole track, both beyond meat, impossible foods and Swedish brand oatly are the favorites in the market around 2020.
In the early outbreak of the epidemic in the United States, people had to cook at home due to home isolation and other reasons. Therefore, the demand for food materials, including plant-based substitute food, rose rapidly. At this time, many people try to eat vegetable beef, chicken or sausage for the first time, even if they are not vegetarian. This has directly accelerated the development of the whole industry and the sales of various brands.
At that time, a good trend made more investors bet on this race track to invest in such vegetable meat brands. For example, oatly has become a dairy product that young people can't miss under the recommendation of a large number of online celebrities.
Growth and valuation were rising like a rocket. At that time, the event that brought this optimism to the top was the listing of oatly in may2021. Although oatly had not yet made a profit, its market value had reached US $13.1 billion at that time.
Beyond meat's share price experienced more dramatic changes. In may2019, it launched its IPO at the price of $46 per share, and soared wildly in the following months. In the past two months alone, it hit a record high of $235.
The hot situation has also attracted more competitors to participate in the competition. Some are new start-ups and some are traditional meat processing enterprises. Tyson Foods, one of the investment companies behind beyond meat, also later launched its own plant production line. Some traditional meat processing giants JBS and Cargill also rushed into the track.
Competition also puts pressure on oatly. Oatmeal Milk Market has been growing since oatly became popular, which makes oatly losing its original market share. The dairy company HP hood's planet oat recently unexpectedly surpassed the Swedish brand oatly to become the oat milk brand with the largest market share in the United States.
"We have also seen many irrational new players join us. They occupy a lot of shelf space, but the quality level is uneven." Kellogg CEO Steve cahillane told analysts at the financial report meeting.
Kellogg owns the Morningstar farm brand, which has operated meat substitutes for 47 years. This brand is currently the largest seller of similar products in the U.S. market, accounting for 27% of the total market. Beyond eat, which ranks second in the market, currently accounts for 20% of the market, and imposible foods, which has a difficult listing plan, ranks third, accounting for 12% of the market.
Although more and more companies join the track with high ambitions, the number of consumers has not increased. As more and more people tried this "fake meat", people's curiosity about it disappeared. Most non vegetarians eventually choose to eat real meat.
The turning point of the whole market occurred in November last year. At that time, Maple Leaf Foods warned that the growth of plant-based alternative products was slowing down. Maple Leaf Foods also joined the war in 2017, acquiring plant-based substitutes, fiield Road, Chao and lightlife, hoping to quickly enter the track and share the net red food through the acquisition.
”In the second half of 2021, the growth of plant proteins showed a rapid slowdown trend. Our performance is also being tested. "At the financial report meeting, Maple Leaf Foods said that it would review the strategy of the race track of plant-based alternative products.
When the industry enters the downturn, the financing entering the industry becomes less and less. According to the data of the good food institute, compared with around 2020, a large amount of financing poured into the track. In 2021, the investment capital of plant protein was about $1.9 billion, only one third of the financing of the track in 2010.
It is worth noting that the online popularity of such "fake meat and milk" comes largely from online marketing. Therefore, the marketing cost of this track is a huge expense compared with the traditional food industry - they need to let users pay for this new and subversive food.
McDonald's is also on the street
In the story of beyond meat, the cooperation between it and McDonald's can't be missed. The two companies signed an agreement to launch mcplant, a plant substitute hamburger, but its sales amount may not meet expectations. In the last earnings conference call, McDonald's did not provide mcplant with plans to continue its expansion as expected, nor did it say that it would turn the new hamburger into a permanent menu.
According to a report by btig analysts Peter Saleh and Ben parente, each McDonald's store with high passenger flow can only sell about 20 veggie burgers a day, which is much less than the prediction made by McDonald's when it was launched that each store sells 40-60 burgers a day.
At the same time, their survey also pointed out that due to the small number of customers ordering this hamburger, some stores took a long time to make this hamburger, even slowed down the entire meal delivery progress, and caused congestion in the drive through purchase area.
Market returns to rationality
As consumers begin to feel that real meat is "really fragrant", the market also returns to rationality. According to the industry data released by Nielsen, in the 52 weeks before April 30 this year, the retail sales of plant meat were basically the same as last year, with no growth. IRI, a market research firm, said that the total sales of meat substitutes decreased by 5.8% in the past year.
Two weeks ago, beyond meat released its new quarterly financial report. In this poor financial report, beyond meat CEO Ethan Brown constantly mentioned the instability of the market itself. But at the same time, he could not avoid those bad sales and profits.
In the first quarter of 2022, beyond meat's net loss exceeded $100million, compared with about 27.3 million in the same period last year. In the first quarter of this year, the net income only increased by 1.2% over the same period last year, lower than expected. At present, the share price of beyond meat is maintained at about $26, and the share price is about 90% lower than its peak. The same is true of oatly. In less than a year, the market value of the company has shrunk by 80%.
Screenshot from oatly official website
Compared with these listed companies, the dilemma faced by the unlisted company, impossible foods, may be more difficult to solve.
The listing of impossible foods can be traced back to April 2021. At that time, Reuters took the lead in reporting that the company was negotiating a listing plan, with a target valuation of $10billion, about $1.5 billion higher than beyond meat, whose share price soared at that time. However, the company did not submit a prospectus. Instead, it continued to raise about $500million in November last year. This year, the news that it will be listed in the first half of the year was released again. However, as 2022 enters the midsummer, the company's IPO plan seems to have made no new progress.
The company said that such a volatile market is too fragile, and it may not be a good idea to go public at this time.
It can be said that the whole market of plant-based alternative food has changed from hot to cold.
Difficult to profit
For the lower than expected financial report, Ethan said in an external statement: the financial report is not ideal because they have adopted the cost intensive strategy to develop new products for the long-term goal, which has greatly reduced the gross profit margin. The new product they are talking about is beef jerky, a plant-based substitute developed by them and Pepsi. This research and development was described as "expensive and inefficient" in the financial report meeting.
The financial report shows that the gross profit of beyond meat in the first quarter accounted for only 0.2% of the revenue, which is far from the data of 30.2% in the same period last year. At present, this dried meat is sold in more than 50000 outlets.
In addition to the setback of the U.S. domestic market, beyond meat also submitted a less optimistic data globally. In overseas markets outside the US market, its net revenue fell by about 7% year-on-year. Beyond meat said that exchange rate fluctuations also affected overseas sales performance.
In addition, the volatility of share prices is related to the uncertainty of the US macro-economy. Among them, he mentioned by name inflation and rising interest rates, epidemics, supply chain disruption and other issues.
It can be said that the internal and external causes have left the company with no chance to breathe. It is worth noting that in order to compete with real meat and seize a larger market, beyond meat and other companies are still trying to reduce their prices, which will lead to less and less gross profit and profit opportunities.
A remnant of hope
However, we may not have to deny the whole industry so early.
Although the cooperation between beyond meat and McDonald's did not meet expectations, at present, almost all the world's first-line fast food brands are cooperating with such plant-based alternative food companies. McDonald's and KFC choose to cooperate with beyond meat to launch hamburger and chicken products. Burger King chose impossible foods as its partner and launched impossible whopper several years ago.
At the same time, although the economic slowdown has affected the listing plan of impossible foods, the company's performance has still become a shot in the arm for the whole industry. In March this year, impossible foods said that its retail revenue increased by 85% in the fourth quarter of 2021. However, since the company is not listed at present, the outside world can not get more information about its financial statements.
It is undeniable that at present, meat substitutes are still a large market, and its annual sales have reached 1.4 billion US dollars. During this period of economic downturn, some industry experts expect to see a large number of brands integrating soon.
In addition to fake meat and milk, there is another branch track that deserves attention, that is, fake eggs. Sales of vegetable egg substitutes almost doubled in the year to April 30, according to Nielsen. Aucoin also said that he believed that although plant-based substitutes are trying their best to be in a short downturn, consumer interest may increase. He also firmly believes that when this wave of bear market passes, the real winners will stand out.