Can Innovation Lift Plant-Based Meat Alternatives?

While the category is still growing, with new products debuting regularly, refrigerated plant-based meat alternatives saw a deceleration in the latter half of 2021, and data for early 2022 indicates a continuing trend.

Sales of refrigerated plant-based meat alternatives, excluding meat alternatives in the frozen food aisles, totaled $109 million in fourth-quarter 2021—their lowest quarterly total of the year, after sales peaked in the second quarter at $128 million, according to data from Chicago-based market researcher IRI. For all of 2021, dollar sales reached $481 million, an increase of 1.8% over 2020.

While 1.8% growth seems minimal, Anne-Marie Roerink, president of 210 Analytics, notes that sales are lapping the big sales spikes of 2020, when a lot of foodservice demand—spurred by COVID-19 restrictions—moved to retail for a substantial part of the year.

Other factors Roerink calls attention to are distribution and inflation. “If we look at the IRI data for 2020, there was an increase of about 28% in what we call distribution, so stores that carry plant-based meat alternatives and their assortment. Because there was so much more availability in the marketplace compared with the year before, that often automatically equates to a big boost in sales,” she told WGB. “Now looking at 2021, IRI showed that there was only an increase of 6% in distribution—meaning that the existing assortment becomes responsible for generating sales gains. Whereas meat and poultry have seen high inflation, price increases in plant-based meat alternatives were much milder, so there wasn’t much of a boost there either.”

In 2022, the category continues to face these challenges. For the five January weeks, refrigerated plant-based meat alternatives reached $45 million in sales, down 3.7% vs. a year ago, according to IRI data. And for the latest 52 weeks ending Jan. 30, 2022, sales were down 1.3% year over year. While it’s hard to predict how the category will perform this year, Roerink said that given January's sales figures, “it seems that the trend lines we’ve been seeing in Q3 and Q4 of 2021 will continue in the early part of 2022.”

Source: IRI, Integrated Fresh, total U.S. multioutlet

Roerink added: “I suspect on the distribution side of things, we are going to see retailers right-size the assortment: What are the must-have brands, what are the must-have SKUs, how many facings, etc. We also see foodservice sales picking back up, which is affecting retail sales, without a doubt.” 

The Frozen Factor

The story is somewhat different in frozen meat alternatives. While sales of frozen meat and seafood alternatives reached $728 million in 2021—about $250 million more than the sales of refrigerated plant-based meat alternatives—the category saw sales decline 1.8% for the year, according to IRI. Furthermore, sales of meat alternatives represent only a fraction of the $16.8 billion in combined frozen meat, poultry and seafood sales—a trend that continues into 2022.

But when looking at January data, it appears frozen is heating up. Frozen meat, poultry and seafood alternatives sales reached $78 million in January 2022, an increase of 10.6% vs. a year ago, and about $33 million more than refrigerated alternatives.

“We’ve been doing studies for AFFI (the American Frozen Food Institute), and we continue to see enormous strength in [the frozen meat alternatives] department,” Roerink said. “Millennials love frozen foods and recognize them as convenient, healthy and fresh, and more and more boomers are also becoming involved as they turn into empty-nesters. The big advantage of no perishable waste and being able to use small portions of a larger bag is driving a lot of that, too.”

Aside from the overall popularity of frozen foods, new and innovative meat alternatives—in frozen and refrigerated—are seemingly flooding the market as of late.

“The level of innovation is inspiring, and I think we are going to see even better alignment between products and what consumers are looking for,” Roerink said. “Many consumers who like the idea of plant-based meat alternatives emphasize planet, health and social responsibility in their purchases. Some plant-based meat alternatives are seen as too processed or having too many ingredients by these consumers. I’ve seen some interesting innovations that include mushrooms and a wide variety of real vegetables that better meet that health delivery these consumers are looking for.”

The ease of shopping for these new products is improving as well, Roerink noted, as retailers create sections that specifically highlight plant-based options.  

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