IRI: US retail sales of refrigerated plant-based meat -3.1% YoY in Q3 as Beyond Meat predicts slower sales

By Elaine Watson

- Last updated on GMT

Beyond Meat expects Q3 sales to be around $106m vs guidance of $120-140m. Image credit: Beyond Meat
Beyond Meat expects Q3 sales to be around $106m vs guidance of $120-140m. Image credit: Beyond Meat

Related tags Beyond meat plant-based meat

US retail sales of refrigerated plant-based meat alternatives were down -3.1% in Q3 2021 compared with the same period in 2020, but were still up 74% vs the same period in 2019, according to IRI data for the 13 weeks to September 26.

That said, the “gains are decelerating​,” said Anne-Marie Roerink, president at 210 Analytics, in a briefing note issued last week as Beyond Meat released updated guidance predicting slower than expected sales in Q3.

In the first quarter of 2021, gains versus 2019 were still 156.5% versus the first quarter of 2019,” ​said Roerink. “Growth dropped to 115.7% in the second quarter ​[vs 2019] and 74% in the third quarter ​[vs 2019].

Higher percentage sold on promotion ‘indicating a marketing effort to further drive trial’

As for price, she said: "Prices for plant-based meat alternatives changed very little. In September, shoppers paid an average price per pound of $8.08, up just 0.2% from September 2020. The percentage of September dollars sold on promotion increased from 30.9% last year to 34.9% in September 2021 — indicating a marketing effort to further drive trial.

“Third quarter and September volume also dropped, at -3.3% and -2.9%, respectively. Much like the share of dollars sold on promotion, the share of volume sold while on sale also increased. In September 2020, 33% of plant-based meat alternative pounds were sold on promotion. In August 2021, this ratio stood at 38%.”

The performance by substitute format was mixed, meanwhile. “The three biggest sellers, dinner sausage, patty and ground substitutes were down year-over-year in September. While a few of the newer, smaller formats grew, they were unable to offset the losses in the bigger formats.”

Conventional meat volumes up 4.1% year to date in 2021 vs same period in 2019

By way of comparison, fresh [conventional] meat sales were up 2.8% in Q3 vs the previous year, but up 24.9% vs 2019. While some of this was driven by higher prices [the average price per pound in the meat department was $4.32 in September 2021, up 11.8% from September 2020], volumes are still up solidly vs 2019, said Roerink.

"While inflation certainly plays a role, the retail supply chain continues to move more pounds​ [of conventional meat] through the system when compared to 2019. Year-to-date, volume sales were down 7.1% compared with 2020, but still average 4.1% more than in 2019, with above average gains for processed meat, at +5%."

How much of Beyond Meat’s shortfall is due to supply disruptions vs disappointing consumer demand?

As for Beyond Meat, it will be helpful to quantify how much of the firm’s shortfall in sales over the third quarter (it expects Q3 sales to be around $106m vs guidance of $120-140m) was driven by short to medium term supply chain disruptions versus disappointing end consumer demand, said Bernstein in a note to investors this morning.

Beyond Meat – which notched up sales of $149.4m in the second quarter, but says it expects a more modest $106m in the third quarter when it releases its Q3 figures on November 10 – cited multiple drivers for the shortfall “although specific details were vague​,” noted Bernstein.

These included “severe weather resulting in the loss of potable water for two weeks in one Pennsylvania facility and water damage to inventory in another,” ​the impact of the Delta COVID variant on foodservice channels, delayed distribution expansion and shelf resets driven by labor shortages, disappointing retail orders from a Canadian distributor that was pivoting back into foodservice and a change in distributor servicing a large customer.

Bernstein: McPlant news is ‘encouraging’

Updated information on consumer repeat rates when the company releases its Q3 figures “may give us some indication around whether loyalty remains buoyant​,” said Bernstein, which believes the reopening of foodservice channels in North America and Europe should help to build momentum in 2022.  

“Moreover, the opening of the new plant in the Netherlands may enable price reductions in Europe that could further boost sales growth next year. And the recent news that McDonald's will be trialing the McPlant burger at 8 restaurants in the US starting next month is also encouraging.

“Finally, the May announcement that KFC would expand the limited time offering of its Plant-based Spicy Beef Wrap to 2,600 outlets in 28 cities in China (a major step up following a three-week trial in October 2020 in just 210 outlets in 6 cities) also bodes well for global expansion over time.”

Kroger exec: 'Right now I think we're only scratching the surface'

Asked about how bullish he felt about the sector in FoodNavigator-USA's Oct 13 'Where next for meat alternatives?' webinar (now available on demand if you register here​​​, click on the grey 'on demand' tab, then 'login' to the session), Marcellus Harris Assistant Commodity Manager of Poultry at Kroger, said: "Right now I think we're only scratching the surface. 

"Flexitarianism is a growing dietary movement, and like any grocer want to capture that and entice them into Kroger.

"We've seen great success with the red meat analogs... but we've got quite a saturation of burgers and beef alternatives as I think, suppliers, rightly so, saw the success that some other brands had had in creating that space and decided to follow suit. But there is chicken that needs an answer, pork that needs an answer, and seafood."

Nowadays CEO: 'What is the primary motivator behind flexitarians occasionally swapping animal based meat for an alternative?'

Speaking at the same event, Max Elder, co-founder and CEO at plant-based chicken startup Nowadays​, which​ ​seeks to punch above its weight in the category with frozen plant-based chicken nuggets with an ultra-short ingredients list (filtered water, yellow pea protein, whole wheat flour, sunflower oil, yeast extract, maple fiber, mushroom extract, with no added salt, sugar, starch or methylcellulose), said:

Unfortunately, many alternative protein companies will fail, and some will succeed. And the ones that succeed will actually create value in consumers’ lives.  

 “What is the primary motivator behind flexitarians occasionally swapping animal based meat for an alternative? Overwhelmingly it is health. So we've built a brand that's hyper focused on communicating that meat can actually be healthier for you* and for your families.

“The other pillar is price. These products are expensive, and it's primarily because of the complexity of manufacturing in our minds. So, we've been hyper focused on figuring out a way to produce meat, in a way that is as cheap as basically a commodity on the market.”

Alternative meat: Keep it simple, stupid

The third piece is consumer communication in a category that is becoming increasingly complex, he added: “There is this diversity of innovation that's occurring, that's leading to a lot of complexity and I worry consumers will struggle to navigate. If we imagine the protein aisle 10 years from now, and what it might look like, there are a bunch of different possibilities from cultured meat to blended hybrids of cultured and plant based meats, to plant based meats and so on.

"We want to make it easy and simple and​ intuitive for consumers to understand what our product is, and its benefits, and so I think the grand challenge for folks who are working on alternative forms of food production is how do you tell a narrative that is simple, that is intuitive that doesn't feel fake, or sci-fi, so that it ultimately gets adopted by the mass market?"

​Compared with plant-based rivals, Nowadays nuggets have 140mg sodium (vs a more typical 300-500mg); 5g fiber (vs 1-3g); 3.5g fat (vs 7-10g); zero grams of saturated fat (vs 0.5-1.5g); and 120 calories (vs 170-220) per 85g serving.  

Tyson chicken nuggets, meanwhile, contain 444mg sodium, no fiber, 4g saturated fat and 16g total fat, and 255 calories.   

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