Plant-Based Meats Are Looking Undercooked

(Photo credit: UBC Media Relations/Flickr)
(Photo credit: UBC Media Relations/Flickr)

Sign up for smart news, insights, and analysis on the biggest financial stories of the day.

Tasting like chicken but costing a lot more will only get you so far as a business today, no matter how good you think it may be for the planet.

Amid rising interest rates and soaring inflation, plant-based meat startups are seeing their popularity start to fade. Consumers on a budget seem to have lost their taste for the product, and venture capitalists, which have funded many startups within the sector, are taking notice.

Money’s Too Tight for Beyond Steak

A major selling point for plant-based meats was that they created far-less greenhouse emissions than harvesting livestock. However, many shoppers no longer have the luxury of engaging in conscious consumerism. Plant-based advocacy group The Good Food Institute reported that per pound plant-based meat is twice as expensive as beef, three times the price of pork, and four times more expensive than chicken.

And less demand means less funding for alternative-meat startups. According to PitchBook data reported by the Financial Times, VCs invested just $75.2 million into plant-based startups in this year’s first quarter, down nearly 90% from $703 million a year earlier. The effects can be felt throughout the industry:

  • California-based Tattooed Chef recently announced it was filing for Chapter 11 bankruptcy after failing to secure enough funding and is currently seeking a buyer. Last month, UK’s Meatless Farm laid off its staff and shuttered its website after major shareholder SK Inc pulled out of a planned $38 million capital injection. It was quickly saved and acquired by chicken maker VFC for $13 million.
  • In March, Nestlè pulled its Garden Gourmet products from UK and Irish store shelves along with two of its other plant-based brands — Wunda and Mezast — to focus on its “core” portfolio. In the summer of 2019, Beyond Meat — one of the premier plant-based brands — saw its stock price hit a peak of $235. It now sits at less than $15.

Back to the Lab: With prospects dimming for plant-based meat, its cousin — lab-grown meat made from live animal cells — is also facing strong headwinds. Though companies Upside Meat and GOOD Meat received FDA and US Department of Agriculture approval last month, it might be a while before the industry catches on. Nutritionist Diana Rodgers told The New York Post “I’d rather eat my shoe than lab-grown meat.” One study — still yet to be peer-reviewed — from the University of California, Davis, argues that lab-grown meat production can be magnitudes worse for the environment than traditional meat. For the summer barbecue season, maybe you should just reach for the portobello mushrooms instead.