Lisa M. Keefe 2025-01-23 05:45:36
7 to 17 seconds
WITH A PHENOMENALLY SHORT AMOUNT OF TIME TO GRAB SHOPPERS’ SHARE OF WALLET, ALT-MEAT PROCESSORS NEED TO PICK THEIR BATTLES IN 2025
The alt-meat retail space is a game of inches now, and attrition. Pathways to success exist, though, if you know where to look. And Chris DuBois, executive vice president of Fresh Foods for Circana retail market research firm, knows where to look. He took the time to lay out his vision of the year to come with Alt-Meat.
Alt-Meat: I’m getting mixed messages from the headlines. In 2025, can you help us understand where the consumer is in terms of retail shopping for food? Inflation has moderated, but consumers don’t feel like it’s moderated. How does that drive shopping habits?
CHRIS DuBOIS: The last three years in particular have hit the consumer hard. After many years of relatively flat, stable prices, there was an increase of 30%, 40%, 50% on the food side. The easy part, though, is that a lot of people internalize that in our industry and say, ‘Wow! Our products are up 30%!’
If you’re buying home or auto insurance, prices are up a lot more. Services, haircuts, anything related to cars, seems like it goes up. It’s not just food.
What that means is, we’ve seen a retrenchment, almost — oh, I would call it a reset — back to home-centricity, or people coming back to eating more from home or at home. And that’s been a big flip for retail from food service.
You could say the first instinct for a lot of people is to go, ‘Well, they’re going to buy everything cheap. It must be all private label and ground meat.’ And it’s not. If you go through the store you’ll see in many cases the super-premium and premium items in different categories throughout the store that cost, say, 25% higher than the average in that category, and those sales are up. That’s partly the upper-income consumers buying, but it’s also people who are willing to treat themselves a little bit more because they’re eating at home.
Alt-Meat: That brings me, then, to my question specifically about protein consumption. Proteins of whatever sort, animal-based or alternative meats, tend to be the most expensive part of a shopping trip. And yet what you’re saying is people are not shying away from paying the higher dollar because they’re balancing that against dining out. On the other hand, you have middle- and lower-income consumers who maybe are not treating themselves as much. Can you break that down for us?
DuBOIS: There is a bifurcation in income. But when you think about it from a lower income side, it may mean that they’re just not going out to food service or restaurants at all in some cases.
And, in many cases, say, chicken’s about the same price it was in 2015. That’s not great when you’re Tyson and Perdue. But we’ve grown a lot of chickens and prices are where they are, and chicken is relatively inexpensive, pork is relatively inexpensive. Beef is the one that blows people’s minds. The meat department’s high, but it’s not super high in that sense, with the exception of beef.
Alt-Meat: How do these shopping trends then feed into alt-meat volume and velocity? Or is that marching to the beat of its own drummer?
DuBOIS: It’s sort of marching to the beat of its own drummer, and it has its own set of problems. If I look at sales and velocity, there are just some things that are set up to cause problems from the get go. One would be the price gap to meat. If I look at the average price of what alternative meat products are in the marketplace, in many cases they’re more than $4 per pound higher. And if you look at alternative dairy or plantbased milk, you’re only paying 30 cents more per item.
I’m not saying that plant-based meat doesn’t deserve it. I’m not saying their costs aren’t there. It’s not about gouging. It’s just saying that you’re asking a consumer to pay up a lot.
I think the other big one is we’ve seen a natural consolidation over the last, call it two to three years, from some pretty big expansion back in 2019-2021. I mean, those markets were up 30%, 40%.
Alt-Meat: It was insane.
DuBOIS: Here’s a product going into McDonald’s. Here’s another one going into Burger King. It was everywhere.
What we’re seeing is sort of a natural retrenchment and consolidation, and not all brands get to win, you know. There are a lot of big meat processors that put [alt-meat] brands out there believing that they could win and that hasn’t happened. What we’ve seen is a natural selection, and that’s been a tough part in the marketplace.
The other big difference is fresh vs. frozen. The fresh [meat] case is probably one of the most competitive market spaces in the supermarket. This is something people buy every week and they buy multiple different items. They know the prices. And these products get replenished multiple times a day in most supermarkets. When plant-based meat went in there, it doesn’t move as fast. Without those turns, it’s tough to keep your place there.
The frozen side’s different. That is where plant-based meat grew up, and consumers, when we do the research, expect to find it there. It’s a natural home. When you look at the future strength of where alternative meat is likely to need to make a stand, to me, it’s frozen.
Alt-Meat: It also plays into the reduced food waste trend, because fresh will spoil more quickly if you don’t get right to it.
DuBOIS: Part of the thing as we’ve seen it from the numbers side is, sales went up into 2020, 2021, and yes, they’re coming down and it’s not pretty watching the sales declines, but the sales declines are different in frozen and fresh. Fresh, you kind of see the same continual down double digits almost every month. Frozen, now, we’re seeing slower, lower declines — much lower declines. That’s the beginning of where that turn begins to happen.
Alt-Meat: Is it beginning to happen or are we still waiting for that actual inflection point?
DuBOIS: We need the actual inflection point of it to go up. But the first step is slower decline. Even this last month or two, we’re only down about 1%. That’s better than 10% or 20% at this point.
And the other side is, we’ve seen the buyer set come down to more of a core set of heavy buyers. In meat alternatives, about 19% of buyers make up 75% of the dollars. That’s a heavy concentration.
So what? Unfortunately, a lot of the casual buyers have fallen out — the people who buy it a few times a year. That’s a lot of the pain you’re going to feel. That’s part of the volume that makes up any brand on that side.
But now we’re down to the core. Keeping the core, that’s going to be one of the big things going forward.
Alt-Meat: Do we expect these trends to continue to play out in 2025?
DuBOIS: I’d say there are a couple of things that have to happen that I’m looking for, because the numbers still don’t play out in a really positive way.
One, the packaging needs to be right, the price gaps need to be right and everything else from a marketing side.
Two, we’ve seen a nice splash of flavor and form come in from the industry. It’s the steak imitations. It’s spicy chicken nuggets that have popped. Flavors are really working in this different space. To me, kudos for those manufacturers that are making that happen.
But the first step is holding the buyers that need to be held, the heavy buyers. If only 19% of the U.S. population is buying meat alternatives right now, that’s a knowable and findable group. If I think about the marketing efforts right now, it’s locking in on the frozen space to get the product offering right. Those are the two big things that I think need to start.
Alt-Meat: Looking at a more macro level and over a longer period of time, we are seeing shifting demographics. The baby boomers are exiting the market, and the millennial and Gen Z shoppers are moving up in their careers. They’re making more money and they are starting to have kids to spend it on.
You’ve said in the past that younger consumers seek out greater variety, are more willing to sample new items. That would seem to bode well for alt-meat sales over the long term that hasn’t shown up in the U.S. numbers.
And yet, is there something else underlying the demographic trends that needs to be understood?
DuBOIS: I’d say the idea of that’s right. Millennials in particular and Gen Z are looking for the flavor and the texture and have the willingness to explore. But what’s really important is the texture and the eating experience all the way through. Part of that’s saying the flavor could be right but if the eating experience isn’t all of what they’re looking for, that’s going to be the kind of the deciding factor on the purchase.
I think the other one is, we’ve seen a big change on the ingredient panels in terms of cleaning up some of the longer ingredient lines out there. That’s a big deal.
Alt-Meat: I want to ask more about the ingredient panels, because alternative meats by and large have no way of existing without being dumped into the ultra-processed food category. A lot of the objectionable ingredients are, in fact, perfectly innocent and have been around for generations. So why is it that a clean ingredient panel is such a selling point?
DuBOIS: I’m not a food scientist, so I’m not here to judge one multi-syllable ingredient versus another. But I do know consumers, and no matter how much we want them to be highly involved, they think about a lot of other things.
The industry only gets a few seconds to make that statement [at the point of purchase], and in that period shoppers might be thinking about updating their fantasy football team. They’ve got text messages going on. Something’s really cool on TikTok, or whatever else is going on during that shopping trip. Even the normal chaos of household life, of having young kids around.
When people are looking for that quick decision, it might be seven to 17 seconds, vs. ‘Let me do some research on that item and try to figure out, is that really something good or bad?’
You get a lot of, I would call it directionally informed thoughts, that may not even be specifically correct. The hard part is you want to make it easy, and the cleaner things are, the easier it is.
Alt-Meat: This is where marketing triumphs over engineering.
DuBOIS: A little bit. That’s the battle being fought now. And I’ve heard it from a consumer side, too. They might say, ‘Well, I can make it out of black beans, corn, quinoa and a few other ingredients at home..’ Not that everybody’s doing that, but if you think about the standard, and you could do it at home, why can’t it be done [on the label]?
How do you get through to someone who’s not fully invested, and might give you seven seconds to think about it?
Alt-Meat: The alt-meat sector is more global than animal protein. A lot of the brands that we see in the United States in our frozen sections have come here from overseas; Quorn comes to mind. And also, a lot of the U.S.-based companies would like to export to other countries.
Alt-meat has been much more thoroughly embraced in Europe. The retailers love it, the consumers are buying it. The numbers look much better. Are there lessons in what’s going on, particularly in Europe, that U.S. companies and retailers looking to reach U.S. consumers should consider?
DuBOIS: In Europe, there’s been the benefit of what I would call a regulatory push, but also a retailer-led push: Retailers are embracing alt-meats as a way of thinking about climate change.
So the markets are stronger, the brands are a little stronger, the pickup in the markets are just stronger overall.
That’s the price gap we talked about, and the form and the flavor and texture [in the U.S. market]. It doesn’t mean these elements are wrong, it just means Americans tend to be really picky because our meat is relatively inexpensive and of high quality.
Alt-Meat: With these trends in mind, what should companies in the U.S. do in 2025 to counteract the headwinds?
DuBOIS: On this competitive battlefield, the place to win and to hold has to be frozen. It doesn’t mean discontinue the fresh products; I’m not here to tell someone to get out of that space. But you’ve got to put all your energy into winning frozen. If you can’t win there, and you can’t get the volume back, and you can’t get consumers attracted and get that product fit right, the whole thing can begin to fall apart quick.
A second one is the heavy buyers. They’re important because they are 19% driving 75% of the dollar value. That’s a ridiculous amount compared to most categories. The hard part is, we’re losing heavy buyers more than some of the other categories of buyers. We’ve got to stop that buyer loss because if not, things will continue to go down. Both goals are achievable.
Alt-Meat: I want to drill down a little bit on the heavy buyers, because, as you said, it’s a bit of an anomaly that you have such a high percentage of heavy buyers driving so much of the sales. I think it’s generally considered that the quality of the alternative meats is improving over time, so what is causing the heavy buyers to fall away?
DuBOIS: Part of it is, the price competition’s really hard right now. Heavy [alt-meat] buyers that are willing to buy meat — chicken patties and turkey burgers and things like that that have become cheaper — their volumes have been increasing. So the competition is seeing price declines again. When you’re running into the competition for the meat side and the ‘healthy halo’ meats are doing well — the competition’s really there, and it isn’t so much Impossible vs Beyond. It’s much more about alt-meats vs regular healthy meats on that side because that game has gotten more competitive with the price declines.
Alt-Meat: Are there any changes that you would suggest alt-meat companies make, particularly in terms of flowing through the retail channel?
DuBOIS: Let me let me turn that back around to some things that are going really well. Like Beyond Meat’s steak product. Consumer response has been pretty good on the eating side, and it’s something from a form side that’s continued to grow. Impossible Foods put out spicy chicken nuggets, so that’s a flavor-form-texture that kind of hits. That’s not just, ‘Here’s another patty.’
Also, finding new ways to have plantbased meat be an ingredient in a stir fry or something else, totally works.
But this is also all about getting the packaging right, looking at what goes through in the case and making the case for why alt-meat needs its own set of doors, and how you get the signage right, how to pull people into that aisle. That’s the signage that has to stop consumers in their tracks, so it’s all the point of purchase. It’s getting your packaging to lay up right. But all that’s doable.
Alt-Meat: Yes, especially at this point, with people still feeling the push of inflation.
DuBOIS: People know what a ribeye steak is, and if they go to Costco it’s $12.99 or whatever, right? If I pay up, I know what I’m getting.
When you’re asking people to pay a premium for a product, they wonder, ‘is it that much better? Is it worth that gap?’ The product has to be worth that gap, and the market’s telling us it’s not.
This, to me, is a long game. We’re talking at a point in time right now and yes, the numbers are pretty rough, but it’s still a billion-dollar category. That’s a lot of money here in the U.S. What can’t happen is, you can’t just say, ‘Let’s try to defend everywhere,’ meaning all the fresh items. Frozen, to me, that’s where you make the stand.
To me, in 2025, it’s going to be all about customer intimacy. The marketing needs to be laser-focused on the buyers that you really want. This is not about winning everywhere. It’s about protecting that 14% that really buy your products today and finding maybe the next 3 to 4 percentage points of the U.S. population to bring in.
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