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Bernstein: ‘The alternative meat space is going through a shake-out period’

26-Aug-2022 - Last updated on 26-Aug-2022 at 04:57 GMT

The slowdown in plant-based meat alternatives growth has been “stark," says Bernstein. Graph: NielsenIQ and Bernstein analysis

Having experienced an average +30% YoY growth in 2019 and 2020, the alternative meat category slowed to flat YoY growth in 2021, with industry leaders such as Beyond Meat seeing negative growth in measured channels.

Despite this weakening performance, however, the industry enjoyed “robust early stage funding during 2021, as the number of deals for plant-based companies increased 34% and total deal value increased 79% compared to 2020, likely a result of optimistic valuations across the market as a whole,” note analysts at Bernstein in a new report on alternative proteins.

“Early indications suggest that valuations marched even higher in the first quarter of 2022—albeit off of a small sample size—despite public alt protein companies performing poorly over the past year. Beyond Foods’ stock price is down -76% when comparing the average price in Q2'22 versus Q2'21.

“Adding to our skepticism are references that shares of Impossible Foods declined -17% from January to June in secondary markets that transact in private companies, while Beyond Meat fell -61% in the public markets over that same period. We believe there is a risk that private valuations within the alt-protein space have room to fall and catch up with their poorer performing public peers in the coming quarters.”

While the slowdown in plant-based meat alternatives growth has been “stark,” concludes Bernstein, “nonetheless we continue to believe the long-term growth opportunities in alternative proteins remain attractive, although improvements in product quality and innovation in emerging alternative protein categories, mainly fermented and cultivated proteins, will be key.”