Plant-based meat expected to match animal meat prices by 2023: sooner than you think
To win the favor of consumers, plant-based meat brands need to be competitive enough with animal-based meat brands on price. This could happen sooner than expected, new reports suggest.
According to the latest information from the nonprofit Good Food Institute (GFI), the cost of plant-based meat is expected to equal that of traditional animal meat by 2023. Achieving price parity is critical to mainstream adoption of plant-based meat, as consumers are more likely to try new plant-based food options that are comparable in price to comparable animal-based meat products.
In a recent study by GFI and consumer research firm Mindlab, which looked at price as a driver of purchase intention, consumers ranked price as the second most important factor (after taste) for purchasing plant-based products. While retail sales of plant-based meat increased by an average of 45% in 2020, Neilson’s data shows that plant-based meat currently costs twice as much as conventional beef, three times as much as pork and four times as much as chicken. For most consumers, closing the price gap is likely to increase purchase intentions for plant-based products.
Plant-based foods face some looming hurdles in order to achieve price parity. The livestock industry has been able to keep costs down because it has slaughtered animals on a large scale for food for decades with the help of government subsidies. However, the plant-based industry is newer and has not yet achieved the same economies of scale.
Emma Janiszewski, Corporate Engagement Program Manager at GFI, said:
“Achieving price parity is ultimately about scaling. Improving the efficiency and resilience of the plant-based meat supply chain can reduce costs for manufacturers and ultimately increase consumer affordability.”
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A 2021 report from investment firm Blue Horizon and business advisor BCG also noted that the key to consumer acceptance is price flat. The report states that new protein products must taste and feel as good as the traditional foods they replace, and cost the same or less.
According to their research, price flattening will happen in three key stages: First, plant-based products such as plant-based meat, dairy and egg substitutes made from soybeans, peas and other plant-based proteins will achieve price flattening in 2023. By 2025, new protein product categories made from microorganisms such as fungi, yeast and single proteins will reach price parity. Finally, protein grown directly from animal cells (often referred to as “cellular meat” or “cultured meat”) will reach price parity by 2032.
GFI’s own research shows that cell-cultured meat could be cost-competitive with some traditional animal meats as early as 2030, when the production cost of cell-cultured meat is expected to reach $2.92 per pound.
“None of this will happen unless consumers are satisfied with the taste of plant-based meat products. Scaling up to produce something consumers won’t buy doesn’t help. So, most importantly, companies must produce something that’s closer to the taste A plant-based product that is the same as or better than conventional meat. Scaling up a plant-based product that tastes as good or better than conventional meat to the point where the price is par is a golden formula.”
Why is the cost of traditional animal meat rising?
According to GFI, the progress towards parity in plant meat prices has been affected not only by production costs, but also by market effects caused by higher costs of traditional animal meat products. Recent developments in animal farming, such as higher input costs, labor issues for meatpackers and supply chain disruptions, have impacted the price of animal meat. Traditional meats such as beef, chicken and pork all saw double-digit price increases in fall 2021 compared to the same period in 2020. Plant-based meat prices fell or stayed the same compared to the previous year.
Abattoirs and meatpacking plants across the U.S. have seen scenarios of supply chain disruptions during the pandemic. Crowded “side-by-side” working conditions in slaughterhouses mean workers are at a higher risk of infection. At the time, workers and factories were forced to shut down. And GFI said in its report: “Disruptions like this and the resulting increase in the price of conventional meat are closely linked to inefficiencies in the production of conventional meat supply chains.”
Plant meat prices at par with animal meat in progress…
In recent years, some plant-based brands have tried to further drive demand for plant-based products by cutting prices to lower prices than animal meat. In 2020, Trader Joe’s (US supermarket chain) launched a plant-based burger patty made with soy protein, and two half-pound patties cost $4.49. Also in 2020, Kroger (one of the world’s largest retailers) launched a one-pound package of plant-based ground chicken for $6.99 .
Last year, plant-based meat brand Impossible Foods announced its second price cut in a year for its plant-based ground meat, bringing the suggested retail price to $9.32 (59 yuan) a pound, a 20% drop. Rival Beyond Meat has also said it aims to be cheaper than comparable animal protein in at least one product category by the end of 2024.