Beyond Meat CEO Ethan Brown once talked about changing the world. Yet, right now, it seems the challenge of changing buying habits is proving hard enough.

Falling sales, widening losses, and 1,400 staff to be axed: Beyond Meat’s Friday results were a pretty miserable affair. A number of reasons were given including inflation, rising interest rates, increased concerns over a recession, Covid, labour availability and the war in Ukraine.

It’s a similar story over at Oatly, whose shares slumped to a new low earlier that week. The Swedish dairy alternative giant downgraded its sales forecast as it admitted it was struggling “to convert new consumers from dairy to plant-based milk” at the rate it hoped.

It is a worrying trend not only for these two companies, but for much of the plant-based sector. These products typically operate at a price premium to their meat and dairy equivalents and in a cost of living crunch, that’s a precarious place to be.

Oatly CEO Toni Petersson is adamant this is not a factor in its falling sales, telling concerned analysts last week that demand for plant-based milk was “very sticky” despite mounting cost pressures.

“This is not about demand, this is about the pace of growth, and how fast you can recruit new consumers into the space,” he said.

 

Read more:

 

Is his confidence misplaced? It would be much easier to argue for the ‘stickiness’ of plant-based if the majority of its brand’s customers were vegans or vegetarians. But the reality that is that most people who buy Oatly, Beyond Meat, or almost any other plant-based brand, are flexitarians trying to cut down – but not cut out – their meat and dairy consumption for health or environmental reasons.

At a time of economic turmoil, the strength of those commitments will certainly be tested. Oatly’s one-litre cartons retail at around £1.90 across the major supermarkets – far higher than the £1.15 standard price for two pints (1.1 litres) of cows milk. Beyond Meat burgers, meanwhile, retail at £4.30 in Tesco – almost £2 more expensive than four meat quarter pounders.

Beyond Meat at least seems to be cognisant of the issue. It is working to cut its prices across Europe. Burgers are down 70p in Tesco from 12 months ago, and it’s worth noting that its UK sales have actually risen in the past year. It has recognised the need to go further and achieve price parity with traditional animal proteins.

Oatly thinks differently. Its insistence that inflation doesn’t affect sales is presumably giving it some peace of mind at a time when food prices have hit a 13-year high.

That theory will certainly be tested to its limit over the coming months. One thing is for sure: at a time when shoppers are facing mounting costs on all sides, the likes of Oatly will have to work hard to convince them to pay a premium.

Topics