Episode Summary
Executive Summary: The episode examines why plant-based meat fell far short of its hype despite pandemic-era gains, while plant-based beverages look comparatively durable. Guest analyst John Baumgardner argues the category still sits early in adoption, but faces major hurdles: weak taste/health perceptions, high prices, limited product formats, and poor restaurant economics. Longer term, he sees innovation, private-label growth, and possibly cultivated protein as future paths, but not a quick rebound.
Main Topics: Collapse of the plant-based meat growth story (Priority: 5/5): The conversation opens with the contrast between expectations of an adoption S-curve and the reality of declining plant-based meat sales after a COVID-era spike. The category has not sustained the penetration once implied by its hype, and public-market and venture sentiment have weakened sharply. Plant-based beverages versus plant-based meat (Priority: 5/5): Baumgardner distinguishes the meat category from plant-based milk/drink products, noting beverages have a longer history, broader use cases, higher household penetration, and a more stable value proposition, even if recent volumes softened due to price increases. Why plant-based meat struggles in food service and retail (Priority: 5/5): The guest explains that restaurant adoption has been limited, especially outside coastal markets, due to operational complexity, consumer skepticism, and competition from more familiar menu items. Retail placement beside animal meat also exposes consumers to price shock. Core barriers: price, health, taste, and product format (Priority: 5/5): The discussion emphasizes that plant-based meat is still not competitive on price, has lost some of its health halo, and is largely concentrated in ground-meat formats rather than higher-value structured cuts. These factors limit repeat buying and broader use occasions. Market structure and competitive landscape (Priority: 4/5): Impossible has gained share, largely at Morningstar’s expense, while Beyond and Gardein are relatively stable. The category’s future may involve more private label and licensing, plus competition for capital from fermentation and cultivated-protein startups. Long-term optimism and cultivated protein (Priority: 4/5): Baumgardner remains bullish over a generational horizon, believing innovation can improve ingredients and processed alternatives, and that cultivated meat may eventually offer a closer substitute to animal protein once costs fall and consumer familiarity rises.
Key Arguments: Plant-based meat volumes are still above 2019 levels, but only modestly, after roughly three years of post-COVID declines. The category’s big pandemic-era jump likely pulled forward trial and household penetration, but not enough to sustain a new growth trajectory. Food service has not become the durable demand engine once hoped for; operators often prefer familiar, lower-risk menu items. The category’s health claims have been undermined by concerns over processing and sodium, reducing repeat purchase and trial. Price remains a major barrier: many consumers want parity or a discount versus animal meat before switching. Innovation in plant-based meat has been overly concentrated in commoditized ground products, not higher-value structured cuts. The category likely needs more use occasions, better nutrition, and better taste to grow materially. Private companies are working on better ingredients and processing, but meaningful improvement is likely a multi-year process. Cultivated protein could eventually overcome some of the sensory and health issues of plant-based meat, but costs and scaling remain key challenges. In the near term, plant-based beverages are a stronger thematic bet because their use cases, penetration, and consumer logic are more established.
Data Points: Plant-based meat volume growth pre-COVID: mid-single to high-single digits (2014-2018) - Baumgardner described the category as growing steadily before the pandemic and Beyond Meat’s IPO. Plant-based meat volume growth in 2019: 15%-20% - Growth accelerated amid buzz around Beyond Meat and the category. Plant-based meat volume growth in 2020: 40% - COVID-era at-home eating boosted category volume sharply. Plant-based meat volume change in 2021: -3% - First major year of decline after the pandemic spike. Plant-based meat volume change in 2022: -8% to -9% - Category continued contracting after the COVID boost faded. Plant-based meat volume change in 2023 YTD: -15% - As of September 2023, volumes were still falling sharply. Plant-based meat volume vs. September 2019: +5% - Despite the declines, category volume remained slightly above pre-pandemic levels. Beyond Meat share price decline: more than 80% below 2019 highs - Used as a proxy for the market’s negative reassessment of the category. Plant-based meat household penetration: about 20% - Baumgardner used this to argue the category is still early in adoption. Plant-based beverage household penetration: over 40% - Shows a more mature and durable plant-based category. Plant-based beverages penetration in Europe: 50% - Illustrates stronger adoption in some markets than in the U.S. Consumers likely to buy plant-based meat in restaurants: about 10% - Survey data showing limited food-service pull. Consumers who say they will never buy plant-based meat: about one-third - Indicates a sizable anti-category segment. Consumers who are not interested in plant-based beverages: about 20% - Smaller resistance than in plant-based meat. Price premium for plant-based meat: 20%-30% per pound up to more than 2x - Range depends on promotions and discounts versus conventional meat. Price premium for plant-based beverages: about 2x per liter in some cases - Relative to cow’s milk, though still positioned below organic milk. Consumers seeking price parity for plant-based meat: about 40% of higher-income consumers - Among consumers earning $100K+ annually. Consumers seeking a discount for plant-based meat: about 25% - Indicates substantial price sensitivity. Impossible Meat retail share: about 10%-11% - Implied gains as the category shrank overall. Morningstar share: down from 30% to about 20% - Morningstar lost share, mostly to Impossible. Gardein share: about 7%-8% - Share stayed relatively stable. Beyond Meat share: low double digits - Share was described as stable but not leading growth. Private label share: from high single digits to low double digits - Private label gained modestly as volumes fell. U.S. per-capita plant-based beverage consumption: 3.4-3.5 liters per person - Used to show the category has room to grow despite decent penetration. VC/PE investment in fermentation in 2021-2022: about $2 billion - Shows capital shifting toward adjacent alternative-protein technologies. Cultivated protein investment in 2021: almost $2 billion - Highlights competition for startup capital. Potential private-label share in plant-based meat: high teens percent - Baumgardner expects private label to expand over time.
Pivotal Quotes: "we literally mean generational 20 years" — John Baumgardner: On the expected timeline for a meaningful long-term rebound in plant-based foods. "it's been about 33 consecutive months now of volume declines" — John Baumgardner: Summarizing the persistent deterioration in plant-based meat demand after the 2020 surge. "This is not an iPhone" — John Baumgardner: Explaining why product-version upgrades in food do not create the same repeat-adoption dynamic as software or consumer tech.
Implications: Plant-based meat is not dead, but it likely needs lower prices, better nutrition, and new formats to recover. In the meantime, investors may favor plant-based beverages, private label, and enabling technologies like fermentation and cultivated protein.