The decision of Meetless Farm, a company specializing in alternative meat production, to permanently send its employees home suggests a particularly challenging time for the sector. This failure adds to the many other failures in the field, leading experts to question whether the alternative food sector has a future or not, as reported in an analysis by FoodNavigator.

Not the only victim

British analog meat producer Meatless Farm has filed for insolvency. Although the company has not made an official statement, insolvency firm Kroll has announced the appointment of Geoff Bouchier and Benjamin Wiles as joint administrators of the company.

Meatless Farm is not the only victim in the plant-based meat sector recently. Plant & Bean, a co-producer that supplies products for Quorn, has also recently appointed administrators, citing inflationary challenges, while sausage producer Heck has downsized most of its vegan range.

Do these failures suggest a particularly challenging period for the plant-based sector? Should we remain hopeful for the future of alternatives? These questions are justified.

Alternative meat: What do we know so far?

This issue became apparent in recent weeks for the aforementioned company. Last month, The Grocer reported Kroll's appointment by Meatless Farm alongside founder Morten Toft Bech justifying that a "major investor" had withdrawn from its commitment to invest.

"This has come as a surprise to the board and the MF management team as the cash raise was scheduled to fund this anticipated investment," he said in a statement to the publication.

Then, last week, more news came through the LinkedIn platform as a number of Meatless Farm employees changed their status to "open to job offers."

Commercial Director Tim Offer posted that his time at Meatless Farm "has come to an end." "After 10 fantastic months leading a talented and very committed sales team, unfortunately, the business has made all teams redundant." According to founder Bech's LinkedIn page, his position at Meatless Farm also ended this month.

And the filings submitted to Companies House suggest that the business has not reached profitability in recent years. The financial results for the year ending December 31, 2021, revealed an operating loss of £22.9 million (€26.72 million).

A popular sector with more casualties on the horizon

For some, Meatless Farm's fall is somewhat of a canary in the coal mine, a signal that the "hype-driven" sector is seriously struggling for financial viability.

According to Julian Mellentin, Director of consultancy New Nutrition Business, the plant-based meat sector has largely been financed by "tech and finance brothers" who have not taken the time to understand the technology and consumer requirements. "Most of the business models for meat substitutes have bypassed ignoring consumers and the food and drink market," he told FoodNavigator.

"The disappointment experienced by Meatless Farm and many others is the result of many people in our industry falling in love with a myth that there will be a 'plant-based meat revolution.' Mellentin believes that the plant-based meat substitute market may be niche at best.

The plant-based meat substitute business, in the UK, the US, and elsewhere, is on course to be one of the biggest failures in the history of the food industry, he told us. "The intentions of investors who have tried to apply the Silicon Valley growth model to the much tougher world of food are shattered by contact with reality."

An unprofitable industry

And in a category driven by "investor and media illusion" and opposed to consumer needs, many brands are failing to make a profit, Mellentin emphasized. New Nutrition Business analyzed the financial situation of the top 20 brands in the market and reported that nine were recording losses "far beyond the proportion of their sales."

"Together, these nine had accumulated losses of £130 million (€151.8 million) in their balance sheets, with annual sales of only £70 million. "After Meatless Farm, many, many meat substitute brands will be lost in the next three years."

Although more optimistic than Mellentin, a representative from the Good Food Institute (GFI) Europe, an advocate for alternative proteins, suggested similarly that the casualties are not unexpected.

"The news of layoffs at Meatless Farm is clearly very unfortunate, and my thoughts go out to everyone affected," said Helen Breewood, Research and Resources Manager at GFI Europe, to the publication.

Many food companies, including conventional meat producers, are facing challenges, including rising inflation, she explained, adding that those in the plant-based meat sector – which often rely on private investment – are particularly exposed.

"This sector continues to mature and expand beyond the initial excitement that fueled its early growth, and, as with any rapidly developing industry, unfortunately, we may see some companies failing."

"Why make vegetables look like something they're not?"

That the plant-based meat sector is struggling with the rest of the market is a view shared by supporters of the meat industry.

According to the British Meat Processors Association (BMPA), "almost all" plant-based, meat-free companies are struggling for financial viability, chief executive Nick Allen told FoodNavigator. "And that's not just here in the UK, but across Europe."

Allen predicts the plant-based meat sector will "continue to struggle" and "will not be attractive to investors".

The BMPA also agrees with Mellentin that plant-based meat products do not meet consumer demands, suggesting that imitation meat obtained through ultra-processing methods is not the answer to achieving a "healthy balanced diet".

"I don't think the interest was ever there from the consumer side in the first place," Allen told FoodNavigator. "And as people realize that these products are highly processed foods, with all the concerns that come with them, they're moving away from them."

The BMPA chief executive says vegetables are an important part of a healthy balanced diet, just like meat, and it's "much" healthier to eat fresh food than processed food.

"So I think everyone would do better to focus on how vegetables are presented and made attractive and appealing to the consumer, rather than processing them and trying to make them look like something they're not."

Presentation, for New Nutrition Business' Mellentin, is not the only concern. With the exception of mycoprotein maker Quorn, the New Nutrition Business director believes meat substitute brands are failing to meet consumer expectations for taste and texture. "The state of technology is such that these problems cannot be overcome anytime soon."

After being "aggressively" marketed for the past five years or so, plant-based meat products have been readily available for consumers to try, he continued. “That means a lot of people have tried the products and found they just don't taste good enough.

“The vegan niche prefers whole foods to artificial meat. And people who want 'plant-based' want more vegetables, herbs and spices, not a 10-ingredient soy burger."

A "turning point"

Others are more bullish about the future of the plant-based meat substitute category. Plant-based imitation cheese brand Julienne Bruno, for example, suggests that the recent demise of some plant-based meat brands marks a "tipping point" for the category. "I think we'll look back and remember this as a turning point for the plant-based category – it's not the end of a fad, but plant-based is reaching a turning point," said founder Julienne Bruno, Axel Catalan.

Aligning himself with GFI Europe's Breewood, Katalan suggested that, like any category experiencing exponential growth, as the plant-based meat market has in recent years, there will unfortunately be a rationalization of products or companies that are not part of this high level. growth process.

Lessons to be learned

But with so many herbal brands on the market, there are lessons to be learned, Katalan pointed out.

So what can other plant-based brands learn from the current "upheaval"? According to Katalan, they should recognize that nowhere, quality is something that cannot be rushed, the transition from start-up to expansion is done differently when it comes to hiring and financing, that it is important to "find your niche ” and finally to “know when to stop”.

“If something isn't working, don't keep pushing the business forward. Do consumer testing, listen to customer feedback, and keep that feedback loop open so you're open and flexible about changing things if they're not working."

GFI Europe is equally skeptical about the future of the category if it can deliver food as tasty, affordable and convenient as conventional meat. That's why more investment in R&D and infrastructure is needed to enable this, only investors are getting a little tired of waiting for really profitable results.

“We have to remember that this fast-moving sector faces challenges and it would be like giving up on solar panels in the 1990s.

"Next-generation products that offer significantly improved taste, price and nutrition are just beginning to hit the market, and the sector will continue to innovate and meet consumer expectations."

Could the market be oversaturated?

While the plant-based market saw its first sales decline in 2022, GFI Europe is confident that appetite will remain strong. Recent Kantar data backs this up, revealing sales of own-label meat-free products are up 14% over the past year, with volumes up 6%. Plant-based meat substitute brands aren't doing so well - down 10%.

Globally, retail sales of plant-based meats continue to grow, Breewood, the research and resource manager, told this publication, linking the slowdown to factors such as inflationary pressures and price premiums.

As the plant-based meat market in the West is particularly crowded, which could create a challenging environment for alternative meat players, GFI Europe agreed that the market is indeed set. "Our recent NielsenIQ analysis found that, for example, the UK has come second to Germany in the European rankings for plant-based meat sales in 2022."

But GFI Europe says there is still more room for growth, with market research company IPSOS finding that almost half of adults plan to reduce their consumption of animal products.

Too expensive

Thirty-three percent of those surveyed said plant-based options were too expensive and a quarter said the taste was not yet up to par, which is why Breewood believes "critical" companies are taking advantage of this "growing appetite" and invest in offering better products.

GFI Europe is generally optimistic about the future of meat alternatives. "Looking further into Europe, our NielsenIQ analysis found plenty of reasons to be hopeful about the future of plant-based meat, with sales growing to €2bn across 13 countries last year," Breewood told the publication .

"And globally, dollar sales of plant-based meats are up 8 percent in 2022 to $6.1 billion (€5.57 billion)."