Has plant-based meat peaked?

This is an audio transcript of the FT News Briefing podcast episode: Has plant-based meat peaked?

Marc Filippino
Good morning from the Financial Times. Today is Wednesday, February 2nd. And this is your FT News Briefing.

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Businesses in Myanmar defied government warnings and joined a nationwide protest yesterday. Google served up a strong fourth quarter with a stock split on the side. Plus, plant-based meats were all the rage, but last year the novelty wore off.

Emiko Terazono
Personally, I think it’s really down to taste. I’ve tried a lot of things out in the market, and I’ve been disappointed.

Marc Filippino
The FT’s Emiko Terazono explains why sales have gone from red hot to room temp. I’m Marc Filippino, and here’s the news you need to start your day.

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Google’s parent company, Alphabet, beat Wall Street’s revenue expectations by a cool $3bn last quarter. Alphabet reported earnings yesterday. It saw a bit of a slowdown from quarter to quarter, but still posted a 32 per cent increase in revenue over the year. But the big news is that Alphabet announced a 20-for-1 stock split so every share will turn into 20 shares, but the price will reflect the split so that the company’s market capitalisation will stay the same. It is only Alphabet’s second stock split in the 18 years since the company went public. The move still needs to be approved at Alphabet’s annual meeting in July. The company share price shot up more than 8 per cent in after-hours trading on the announcement.

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Yesterday was the one-year anniversary of the military coup in Myanmar. Despite threats from the junta, businesses shut down and marked the day by joining a nationwide silent strike. Here’s the FT’s John Reed.

John Reed
Some, you know, smaller businesses did keep their doors open and put out little symbolic displays, maybe with one item. These were sort of smaller traders because they were worried about repercussions from the regime. But the fact that so many people took part shows you that, how do I put it, I mean, you know, fear has evaporated, diminished and or people see strength in numbers when a mass protest like this is held.

Marc Filippino
John says the military coup along with the pandemic have been devastating for Myanmar. The World Bank estimates the country’s economy is 30 per cent smaller than it would have been otherwise. John said output shrank because of all the protests and general unrest and many people going underground.

John Reed
You could call it a nationwide insurrection against the military that’s gaining in violence and force. And that means, you know, an even bigger challenge for the international community if they hope to ever mediate this horrible conflict. The battle lines are very starkly drawn between the military and the people of Myanmar, who see the military as terrorists and not a force to be negotiated with.

Marc Filippino
The FT’s John Reed covers Myanmar from his post in Bangkok.

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Sales of alternative meat products have sizzled over the past few years, especially since the successful 2019 IPO of the company Beyond Meat. The following year, industry sales grew nearly 50 per cent.

Emiko Terazono
I think it really caught on with the consumer because of climate change and environment and people wanting to do the right thing.

Marc Filippino
But our commodities correspondent Emiko Terazono reports that sales of plant-based meat products have flattened. I’ve got her on the line to talk more about the industry’s future. Hi, Emiko.

Emiko Terazono
Hi.

Marc Filippino
So Emiko, what was the appeal of these plant-based meats? I remember there being such a big boom in this industry during the early stages of the pandemic.

Emiko Terazono
Yeah, I think one of the big things with plant-based meats is that, you know, it’s not coming out of a slaughtering house, but also at the, right at the start of the pandemic when things started shutting down, people rushed to buy things like oat milk and plant-based meat. And that was really interesting at the time and surprising as well. I guess they thought, people thought, what can we buy that we can put in our freezers or we can put it on our shelves, we can put it in our pantries and it will, you know, keep?

Marc Filippino
But Emiko, after so much growth, US sales fell, UK sales fell, although there was a bit of a comeback. You know, why do you think this is happening?

Emiko Terazono
Well, personally, I think it’s really down to taste. I’ve tried a lot of things out in the market and I’ve been disappointed. I’ve tried them, but nothing’s been so compelling for me to go back and say, yeah, I’ll buy that again. Talking to analysts for our story, some people said, well, you know, if you stock up on these things and then you have a chance to read the label really carefully, you’ll see these names, ingredients and names that you’ve never heard of. You know, things like methyl cellulose. What the hell is that? So I think that put a lot of people off as well.

Marc Filippino
So how are companies responding to the slowdown in sales?

Emiko Terazono
I think this is where the larger companies step in. Those with the real R&D muscle, the amount of investment that’s going in. A colleague, Judith Evans, and I sat in on a tasting with Nestlé, who had an array of things to let us taste. I mean, OK, it was very experimental still — things like smoked salmon made out of algae or hams made out of plant-based peas, but it was remarkable, the stuff they were doing.

Marc Filippino
So Emiko, are the big corporations like Nestlé becoming big players in the industry now, or is it still the Beyond Meat types?

Emiko Terazono
It started off with the small start-ups, and Beyond Meat started off as a very small outfit, as did Impossible. I think the big guys saw that this was a very attractive marketing proposition so they are now, most of them are in it. The big names — Nestlé, Unilever, whom we spoke to for our piece. Tyson, the meat company, it’s now calling itself a protein company. I think, you know, they’re smart enough to see, well, you know, you’ve got to diversify at a time when population growth is happening. There’s not going to be enough land or resources to feed everyone. But at the same time, you’ve got, still got money going in, and there are a lot of start-ups still coming in. So it’s a really lively active area. It’ll be interesting to see what this sort of sales pause or growth sales growth pause actually, you know, results in. Will we see bankruptcies? Will we see M&A? That is what some of the analysts are expecting.

Marc Filippino
So long term, Emiko, do companies still think that plant-based meat alternatives will become mainstream or at least become a profitable enough product that they are going to keep investing in it?

Emiko Terazono
I think they do. I think down the line, I don’t know what that, what kind of timescale they’re thinking of. But, you know, you’ve got this, at this tasting you went to, you had the CEO come out and say for every animal protein, and I think also that includes fish, there will be a plant alternative. And these big companies, they’re so bureaucratic. They’re not going to put the CEO in front of journalists to say that. So I think they are putting a lot on the line. How soon that will happen, it’s anyone’s guess.

Marc Filippino
Emiko Terazono is the FT’s commodities correspondent. Thanks, Emiko.

Emiko Terazono
Thanks.

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Marc Filippino
All right, before we go more food news, this time on the cake front. Colin and Cuthbert have reached a truce. Colin is actually a chocolate cake shaped like a caterpillar that, I’ve been told passionately on Twitter, has graced many British children’s birthday parties. Marks and Spencer makes it, but the cake war began when the discount food retailer Aldi came out with a mighty similar chocolate caterpillar cake named Cuthbert. Marks and Spencer launched legal action, and just yesterday the two parties agreed to a secret peace treaty. Marks and Spencer would only say that it felt Colin was now protected. But here’s the icing on the cake, Aldi’s response? Cuthbert is free and looking forward to seeing all his fans again very soon.

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You can read more on all of these stories at FT.com. This has been your daily FT News Briefing. Make sure you check back tomorrow for the latest business news.

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