Is Alpha Foods’ acquisition a sign that the plant-based meat market is reaching maturity?

By Ryan Daily

- Last updated on GMT

Image Credit: Getty Images - coldsnowstorm
Image Credit: Getty Images - coldsnowstorm

Related tags Alpha Foods plant-based meat

Consolidation in the plant-based meat market -- like in the case of Alpha Foods (Alpha) this week -- will likely continue into the foreseeable future, Miri Eliyahu, senior research analyst at Euromonitor, told FoodNavigator-USA.

This is going to be an ongoing theme for meat substitutes in the near future, and even up to the next five years. If the past six years were of rapid interest and expansion in the space, we are now reaching the early stages of maturation, which means that not every company -- as innovative as it might be -- will survive.​”

Alpha is the latest in a string of plant-based alternative acquisitions

This week, Livekindly Collective announced its acquisition of Alpha to expand in the US market, with its other five brands primarily serving the Europe and South Africa markets.

This announcement also follows a string of acquisitions in the plant-based meat space, including US tofu manufacturer Morinaga Nutritional Foods' acquisition of Tofurky​ announced earlier this year and previous acquisitions of competitors Field Roast and Lightlife.

While some will be able to fundraise based on their path to market strategy ... others will not and will have to close down. Being acquired is another survival path that allows founders and small companies to continue operating within a larger environment that can help scale them faster. There is no way to avoid this phase, as it is a part of the market maturation process.​”

Some plant-based brands are resorting to steep layoffs to avoid going under or filing for bankruptcy protection. This week, plant-based frozen meal brand Tattooed Chef filed for bankruptcy​ and will auction off its assets. Earlier this year, plant-based cheese startup Misha’s reduced its headcount from 30 to three and shifted manufacturing to a co-packer to launch in Walmart stores​.   

Alpha might be an outlier to the trend though

However, unlike some other recent acquisitions, Alpha Foods is joining a collective of brands and the additional resources can help the brand grow, Eliyahu said. While Alpha has “already succeeded in proof of concept in retail channels ... [it needs] the support of investors with capabilities to move beyond this and the collective is a good strategic partner at this point.​”

She added: “This acquisition isn’t like what we usually see: a large food CPG buying a small startup. This is Livekindly Collective, which is a part of a larger lifestyle movement institution that has a clear mission (animal welfare, sustainability, etc.), buying a company they can scale up using their existing distribution infrastructure and funds.​”

As Livekindly Collective looks to grow its presence in the US, it will provide that support and work with the brand to innovate in the plant-based space, Shaun Richardson, Livekindly Collective U.S. GM, shared in the announcement press release.

Our global infrastructure, allowing for better distribution, R&D pliancy, and innovation, will open up opportunities in the market and beyond. From a business point of view, this asset acquisition will help Alpha become a sustainable operation and propel growth. Consumers can expect more delicious products, stocked shelves and, ultimately, competitive pricing.​”

But what do consumers think of plant-based meats now?

At the heart of the troubles facing some plant-based meat players is slower unit sales. Plant-based products fell 3% to 1.9bn units though dollar sales were up 7% to $8bn due to higher price points, according to data from the Good Food Institute’s Plant-Based State of the Industry report​. Per category, the plant-based milk market fell by 2%, meat and cheese both by 8%, and plant-based butter by 11%, the Good Food Institute reported.

Part of the reason for the dip in sales is that “consumers are stressing about the cost of their shopping basket, and so they are less adventurous, less flexible as they were in the past with their purchase,​” Eliyahu said.

We cannot expect them to push for plant-based alternatives when animal products might be cheaper, and they are stretched financially. Once the strain on consumers will ease, we might see a return to more flexible spending that benefits meat substitutes and alternatives. We are seeing a return to new product development that will increase engagement of course, and so we will see a boost again, but it will be more closely related to pricing than in the past," ​Eliyahu added.      

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