Two burgers (one beef, one Impossible Burger), fries and a pumpkin spice milkshake. So, which burger is which, may we ask?
There’s good news for the plant-based protein industry and the planet as a whole in a recent report out by Kearney. As prices become competitive with traditional meat, plant-made alternatives are expected to experience a sudden and dramatic increase in market share. But while price parity could lead to a 20 percent expansion, that increase could in turn further fuel falling prices and lead to a snowball effect where plant-based meat and other proteins are cheaper, and thus potentially in higher demand, than thought possible at present. This is even more true if governments choose to encourage this trend through health warnings and ad campaigns.
The cost to produce plant-based protein is currently about the same as it is to raise and slaughter animals for food, but that is set to change as brands step up production. However, it isn’t production costs that are keeping the price of these alternative products elevated by 50 to 300 percent above regular meat, but rather the need to supply shareholders with continuous returns on their investments while also financing research and development as well as marketing. As these additional costs wane, the resulting price decreases should lead to intensive growth — with a 3 percent increase in market share expected to come from a mere 1 percent drop in price.
So, how long will price matching take? That depends on numerous factors, but a 2021 report from Boston Consulting Group and Blue Horizon expects parity for most meat and dairy items by 2035. Still, many categories are expected to reach it before then. Beyond Meat, for example, intends to have at least one product priced at or below the protein it is imitating by 2024.
Falling prices on plant-based protein isn’t the only issue pushing toward parity. Another element to consider is the rising price of meat. Thanks to a variety of factors that haven’t affected its alternatives, beef is up in price more than 10 percent while other animal proteins are up 22 percent. And while it is estimated that by 2035, 11 percent of the protein that humans eat will come from plant sources, mitigating factors such as increases in the price of animal protein could cause that number to be much higher.
Another factor to consider could be government influence. Many readers likely remember slogans such as Got Milk? and Beef. It’s what’s for dinner. Likewise, consumers could be nudged toward plant-based protein through similar campaigns. On the flip side, warnings against meat consumption can be effective if they are specific and related to health, not just the environment.
Price parity is one thing — meat alternatives that undercut the original present a situation where consumers could potentially find the plant version more attractive. No doubt the rising prices on animal proteins have consumers feeling the pinch, though the increases are still quite a bit shy of the 50.6 percent that has been reported as the average threshold purchasers are willing to accept. But at least one brand has declared its intention to price its entire line of products below real meat competitors. The full ramifications of this remain to be seen. When faced with a cheaper alternative that is comparable in taste, it seems reasonable that real meat could become something to splurge on as opposed to something that is eaten multiple times per day.
Pushback from the meat industry might well be expected, but instead major players are getting into the fake meat game. With big names like Tyson and Unilever involved, it appears the industry has chosen the "if you can’t beat ‘em, join ‘em" tactic.
The advent of generics and private-label products on the scene will undoubtedly have a tremendous effect on price parity — assuming they maintain the taste and mouthfeel of successful name brands. President’s Choice and Aldi already make their own. WalMart’s Great Value has vegan cheese and plant-based chicken patties — not much, but it’s a start. It seems natural to wonder what effect the retail giant could have on prices should it choose to join the fray with a full line of products.
Three-quarters of consumers are willing to consider plant-based protein if it is priced equal to or less than the real thing, according to the Good Food Institute. In the U.S., 57 percent of households already bought a meat alternative in 2020. As price parity approaches, more and more people are willing to include alternatives in their diets, which creates a cycle driving prices down even further. Governments interested in curtailing climate change, biodiversity loss and health issues related to high rates of animal protein consumption could use nudges to bolster this trend. It remains to be seen how consumers will react once the other side of parity is reached and plant-based proteins are cheaper than their animal counterparts. Nevertheless, it is likely to have a huge effect on market share and could lead to dramatic changes in how we eat.
Image credit: Rob Martin via Unsplash
Riya Anne Polcastro is an author, photographer and adventurer based out of the Pacific Northwest. She enjoys writing just about anything, from gritty fiction to business and environmental issues. She is especially interested in how sustainability can be harnessed to encourage economic and environmental equity between the Global South and North. One day she hopes to travel the world with nothing but a backpack and her trusty laptop.