Slump in Sales of Meat Alternatives

A few days ago, Beyond Meat released their quarterly earnings report and indicated lower than expected profits and sales, leading to a tumble in the firm’s stock price. On Twitter, Julian Melletin noted the firm lost $1.25 for every $1 sold, and he showed some interesting data on the history of sales over the past few years.

Beyond Meat is just one company, and it would a mistake to take these headlines and draw broad conclusions about the market trends surrounding plant-based meat alternatives. After all, Beyond Meat might be losing sales because of new entrants and competition to this space.

There isn’t good public data available on sales of meat alternatives, but IRI (a purveyor of grocery store scanner data) has released a series of interesting dashboards showing aggregate trends in a variety of grocery categories, including meat and meat alternatives. Here is what their data imply about total sales meats and meat alternatives.

Derived from IRI data at https://indices.iriworldwide.com/covid19/?i=0

The figure above suggest the downward trend in meat alternative sales extends beyond Beyond Meat. For example, in the week ending October 31, 2021, sales of alternative meats were down 7% relative to the same week last year in 2020. By contrast, sales of beef are up 5%, chicken up 6%, pork up 8%, and turkey up a whopping 38%.

In addition to reporting sales, IRI also reports changes in prices.

Derived from IRI data at https://indices.iriworldwide.com/covid19/?i=0

Whereas prices of traditional meat items are all up 10% or more relative to the same time last year, the same isn’t true of meat alternatives. Indeed, despite all the headlines about overall food price inflation, the price of meat alternatives is actually lower now than it was a year prior.

The two figures above indicate: 1) prices of meat alternatives is down and 2) sales of meat alternatives are down. Taken together, these two facts are strong evidence that demand (i.e., consumers’ willingness-to-pay) for meat alternatives has fallen.

Why is demand for meat alternatives down relative to the same time last year? It isn’t entirely clear. However, note the data above relate only to grocery store sales. It is possible demand is up in the restaurant sector; however, at least in the grocery store, demand for meat alternatives is down. Moreover, the phenomenon can’t be explained by an overall reduction in grocery sales because sales of other meat items is, in fact, now higher than was the case at the same time last year.

Impact of Plant-Based Meat Alternatives on Cattle Inventories and Greenhouse Gas Emissions

That’s the title of a new working paper I’ve co-authored with Daniel Blaustein-Rejto, Saloni Shah, and Glynn Tonsor. Here’s the abstract:

“New plant-based meat alternatives that aim to mimic the taste and texture of beef could have significant economic, environmental, and animal welfare impacts if they replace animal-based meats and reduce livestock production. Whether plant-based meat alternatives can achieve these ends depends on the extent to which consumers are willing to substitute for plant-based meat alternatives, the structure of the meat industry, and the inter-linkages of the livestock industry with the other parts of the economy. We construct and calibrate an economic model to estimate how a reduction in plant-based meat prices, or increases in demand for plant-based meat, in the United States affect cattle production. For every 10% reduction in price or increase in demand for plant-based meat alternatives, we estimate U.S. cattle production falls approximately 0.15%, U.S. cattle producers’ economic welfare falls by $300 million/year, and U.S. consumer welfare rises by $513 million/year. Increases in U.S. demand for plant-based meat alter trade patterns, leading to a reduction of beef imports and an increase in beef exports, a phenomenon that further reduces global greenhouse gas emissions and land use given the relative efficiency of U.S. beef production. For every 10% reduction in the price of plant-based meat alternatives, we estimate that the global reduction in emissions is equivalent to 0.41% of U.S. emissions from beef production and 1.4 % when including carbon sequestration from reforestation of abandoned cropland and pasture and reduced land-use change emissions.1 Even substantial reductions in prices of plant-based meat alternatives are unlikely to have substantive impacts on the U.S. cattle population and emissions, suggesting the need to also pursue alternative mitigation strategies, such as innovations to reduce the methane emissions per head.”

You can read the whole thing here.

What Is Driving the Increase in Food Prices?

That’s the title of a piece I wrote for Econofact. In it, I discuss the latest figures out from the Bureau of Labor Statistics, and discuss some of the drivers of volatility in food prices since the onset of the pandemic.

“More than a year into the pandemic, they are facing another unfamiliar trend when it comes to accessing food: notably higher prices. Increases in wages in the food sector, rising agricultural commodity prices, transportation bottlenecks, and strong consumer demand have led to the highest annual grocery price increases in a decade and the highest annual restaurant price increases since the early 1980s.”

The main facts I outlined and discussed were:

• Food prices have risen at a faster average rate since the onset of the pandemic than they did over the prior decade.

• Food prices have been extraordinarily volatile throughout the pandemic.

• Meat price changes have been a primary driver of overall food price increases.

• Agricultural commodity prices have increased.

• Heightened consumer demand has contributed to food price increases.

• Wage rates in the food industry have significantly risen over the course of the pandemic and these higher wages get reflected in higher food prices.

• Food isn’t necessarily less affordable — especially when considering a longer horizon.

You can read the whole thing here.

The Achilles Heel of the U.S. Food Industries: Exposure to Labor and Upstream Industries in the Supply Chain

That’s the title of a new paper co-authored with Ahmad Wahdat, in which we attempt to quantify potential vulnerabilities of different food processing sectors to disruptions in the upstream input supplies.

Here is the abstract:

“The modern day food industries are part of a complex agri-food supply chain, where food production has become efficient, yet potentially vulnerable to supply chain risks. The COVID-19 pandemic is a testament to that end. This article measures and identifies the U.S. food manufacturing industries’ vulnerability to upstream industries and labor occupations by (i) calculating a food industry’s diversification of intermediate input purchases across upstream industries, (ii) quantifying the relative exposure of food manufacturing in a given industry and location to upstream input suppliers and labor occupations, and (iii) estimating each food industry’s gross output elasticity of inputs. Among our results, we find the evidence that the animal processing industry’s output is relatively vulnerable to production labor which is consistent with the observed disruptions to the meat packing sector during COVID19, which were largely caused by labor issues. Our results may help academics and practitioners to understand food industries’ vulnerabilities to upstream industries and labor occupations.”

The approach also allows us to explore geographic differences in a food processing sector’s concentration of input purchases, as shown for example, in the charts below for the oilseed milling industry.

Food Prices are Increasing - Again

The topic of food price inflation has surfaced again, with a lot of concern being expressed about the issue. Earlier today, I participated in a webinar for the US Chamber of Commerce on the topic. I presented data on the current rate of food price increases and then discussed monetary, demand, and supply-side factors contributing to the phenomena. For those who might be interested, my slides are here. Some of the key graphs are below.