Challenges and breakthroughs: contextualizing alternative protein progress

The state of the industry

Rising interest rates, multi-year price increases, and an uncertain economic outlook moderated retail sales and private capital markets across sectors in 2023. While topline inflation slowed in 2023, prices remained elevated relative to recent years, and rising interest rates restricted the ease at which money flowed through the economy. Consumers had less disposable income to spend on food, and companies had increased difficulty accessing financing.

A table displaying changes in the food and beverage market from 2022 to 2023. Across the total food and beverage category, dollar sales increased, unit sales decreased, and the average price per unit rose. Conventional meat and seafood sales remained flat in dollar terms, but unit sales decreased, and the average price per unit increased. Plant-based meat and seafood sales saw a decline in dollar sales and unit sales, accompanied by an increase in the average price per unit.

The alternative protein industry was not immune to these trends. According to SPINS data commissioned by GFI and PBFA, year-over-year (YOY) plant-based meat sales fell by both dollars (-12 percent) and units (-19 percent) in U.S. retail, following the broader food and beverage industry trend of lower volumes and subdued dollar sales. For example, U.S. retail conventional meat unit sales—operating from a much larger base than plant-based meat—declined two percent YOY, while dollar sales were steady.

That said, according to Euromonitor, the global market for plant-based meat experienced slight growth in 2023, as did the global market for conventional meat and seafood. Notably, in the last decade, global plant-based meat retail sales nearly tripled from $2.2 billion in 2014 to $6.4 billion in 2023. (Source: Euromonitor International Limited 2023 © All rights reserved.)

And there are some promising consumer tailwinds—lapsed users who have not purchased plant-based meat in the past year remain open to repurchasing if products can more closely match the taste, texture, and cost of conventional meat. This underscores the importance of industry efforts to reach taste and price parity.

A graphical representation showing a decline in private funding across sectors including alternative protein, global venture funding, climate tech equity, and fintech.

Private funding slowed in the alternative protein industry and beyond. According to data from Net Zero Insights, private investments in alternative protein companies fell 44 percent in 2023—in line with global venture funding across all sectors (-42 percent YOY), climate tech equity investments (-40 percent YOY), food tech investments (-61 percent YOY), and fintech investments (-50 percent YOY).

The sales and investment slowdowns in 2023 weren’t unique to the alternative protein industry, but as a relatively nascent sector relying on private investments to navigate early-stage operations and strong sales performance to secure favorable placements on retail shelves, they played outsized roles in the sector’s 2023 performance.

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