The past year has not been easy for the plant-based meat industry. This category, which had grown rapidly due to multiple factors, experienced a significant sales slowdown throughout 2023. Numerous market participants of varying sizes either exited the field, reduced innovation investments, or conducted layoffs.

Since the industry boom in 2019, two alternative protein pioneers—Beyond Meat and Impossible Foods—have led the sector and become household names. However, similar to the challenges facing the entire category, both companies have encountered obstacles in maintaining growth and meeting consumer demand.

"It's important to remember that this industry is really just getting started," Impossible Foods' Chief Marketing Officer Leslie Sims said in a statement to Food Dive.

Both Beyond and Impossible implemented operational adjustments in 2023 (and 2024), including layoffs, consolidating production facilities, executive changes, and reprioritizing product lines.

"When your own operations are running smoothly, the way you interact with customers also becomes easier to demonstrate," Bloomberg Intelligence analyst Jennifer Bartashus said in an interview with Food Dive.

"The many efforts Beyond Meat, Impossible, and other companies have made over the past year to improve internal operations are crucial for laying the foundation for success and bringing consumers back to the brand," Bartashus added.

The need to broaden audience reach

To regain growth momentum in the new year, Impossible Foods says it is seeking to expand its consumer base. "We want to continue reaching more meat lovers and flexitarians, but we have to get the message right," Sims said. "We need to be inclusive, not make consumers feel judged for loving meat, and help them understand they don't have to change their lifestyle to contribute to the planet or their own health."

Bartashus noted that plant-based companies' messaging has so far lacked inclusivity. "The core issue is that these companies are trying to spark consumer interest. When you're in a young and developing industry—and I still consider plant-based meat alternatives a relatively young industry—you have to cast a wider net."

Bartashus believes companies need to refocus on their own narratives. "There's a delicate balance to strike without alienating consumers," she said. "A range of promotions around potential health and environmental benefits is useful, but you can't try to do everything at once, or the message becomes muddled."

Looking ahead to the new year, Sims said Impossible Foods is focused on attracting more consumer attention by broadening its marketing strategy.

"The core issue we face is more about messaging than the product itself. We have to challenge misconceptions, debunk myths, and we need to talk more proactively about the nutritional value of our products," Sims said. "We have to play both defense and offense, and that takes skill. This will be a key focus for us next year."

Meati makes progress with a new narrative

While well-known brands like Beyond and Impossible seek to expand their customer base, emerging brands like Meati Foods aim to capture that "big net" from the start.

The Boulder, Colorado-based company has taken a different path in its marketing, never simply defining itself as a "plant-based" brand.

Meati Chief Operating Officer Scott Tassani said that when you think of the "traditional players" in the alternative protein space like Beyond Meat and Impossible Foods, they have done well in getting consumers to try their products, but have not succeeded in converting trials into repeat purchases. "They have sustainability appeal, but they don't necessarily reap the rewards of success because of the experience they provide," he said.

Meati also does not position itself as particularly "anti-meat," whereas some market players have used language that denigrates the use of animal products. This allows Meati to offer consumers an experience not built on guilt or shame about choosing a plant-based diet.

"The world is polarized enough today; we don't need to bring that opposition into our food as well," Tassani said.

Bartashus added that to better connect with more consumers in 2024, companies need to return to the original purpose of their mission. "Consumers love stories, so the further you get from your story, the harder it is to attract people, especially when there are plenty of alternative options in the market."

Meati Foods also conducted layoffs last year to focus on profitability, and the company has not been immune to the industry's headwinds, but its marketing strategy appears to be working. The company is steadily progressing toward its goal of reaching 8,000 retail locations by summer.

Taste still takes priority over sustainability

Many founders of plant-based food companies are passionate about sustainability in the sector—for some, it's why they started their businesses—but the reality is that this enthusiasm has not resonated on the consumer side.

"Sustainability as a selling point is more attractive in markets outside the U.S.," Bartashus said. "Overall, sustainability is not as embedded in the daily lives of American consumers as it is in Europe."

In many foreign markets, consumers are willing to pay a premium if they believe their spending can better improve the environment—whether in transportation, food, or overall lifestyle. "Companies need to realize that this is not the case everywhere," Bartashus said.

Ultimately, she said, taste, availability, quality, and health benefits—these are the attributes by which American consumers measure these products.

"The original actual market for plant-based foods was people following a flexitarian diet and trying to add more greens to their meals," said Sam Dennigan, CEO of Strong Roots, an expert in growing small and international brands. "Everyone wants to be more sustainable. Everyone wants the planet to thrive, but not at the expense of taste. Many alternative protein companies focused on the science and overlooked the nutritional essence of food, and I think that was a major mistake."

Taste is the most frequently cited reason consumers repurchase plant-based foods, but it is also the primary barrier to trial in the industry.

Even the most established companies in the field have faced significant challenges in achieving satisfying flavor and texture while remaining price-competitive, which has been an obstacle to profitability.

In its latest earnings report, Beyond Meat posted negative sales growth for the sixth consecutive quarter, and its CEO Ethan Brown told investors that the company needs to adjust its strategy, including by exiting certain U.S. markets.

Beyond Meat declined a request to comment on its plans for the coming year.

Meanwhile, privately held Impossible Foods claims its retail performance continues to outperform the category average and plans to expand its foodservice business, its CEO Peter McGuinness told AgFunder News.

The sector has also faced consumer pushback from those who want to see more whole, clean ingredients in alternative products rather than additives attempting to mimic animal proteins.

A report from Grandview Research points to rising consumer demand for whole-food products high in fiber, vitamin C, and iron, echoing findings in a Whole Foods Market report, which stated that plant-based companies must clean up their labels to reach consumers.

However, Impossible Foods is moving in a different direction with innovation. Competing with fruits and vegetables has never been the company's strategy.

"We're targeting meat lovers who are seeking better choices for themselves and the planet," Sims said. "However, there's a lot of noise about 'ultra-processed' and 'processed' foods that lacks nuance and misleads consumers, when in fact processing doesn't inherently make food unhealthy."

In December of last year, the company was testing a plant-based hot dog product with street vendors in New York City.

Bartashus said the issue comes down to cultivating more brand advocates. "You need consumers to embrace your story and share it with others through their own experiences, and over the past year and a half, we seem to have drifted away from that."

Today, consumers have higher expectations regarding innovation, ingredient quality, and taste, and companies must respond in some way.

Atypical plant-based players

As more established legacy companies have built brand loyalty, the sector may see product innovation from some unexpected participants.

Long-standing food companies like Kellogg Co. (which owns Morningstar Farms), Maple Leaf Foods, and Conagra, which owns the Gardein brand, are beginning to outperform alternative protein startups and pure-play plant-based brands like Beyond and Impossible with their own plant-based portfolios.

According to Grand View Research, these large companies can leverage their extensive consumer networks and offer products at lower costs.

In November 2023, Kraft Heinz launched a plant-based version of its beloved macaroni and cheese—NotMac&Cheese. This is the company's third innovation in partnership with NotCo, using its AI platform to reimagine traditional foods with plant-based ingredients.

To date, the alternative protein sector has focused on using plant-based ingredients to replicate American favorites. For example, the Impossible Burger is marketed with typical burger accompaniments—lettuce, tomato, onion, plus a toasted sesame bun—while Beyond Meat claims its Beyond Burger "looks, cooks, and satisfies like beef" while having "all the juicy, meaty deliciousness of a traditional burger."

Bartashus believes this could change in 2024, as companies innovate with new products that don't try to mimic something else, and the plant-based sector will gradually evolve into a category with more of its own identity.