That’s the title of a new article, co-authored with Glynn Tonsor and Ted Schroeder, that was just released by the journal Applied Economic Perspectives & Policy.
Here’s the abstract:
“This article reports results from four studies determining the US market potential for plant-based meat alternatives in different contexts and settings. The first study shows that a pair-wise choice between beef and a plant-based alternative was not significantly affected by the presence of nutrition facts panels or ingredient lists. A second study, framed as a food service meal choice, reveals that the introduction of a plant-based burger has roughly the same effect on beef sales as does the presence of a chicken wrap. The final two studies estimate own- and cross-price elasticities of retail demand. We find small cross-price elasticities between plant-based patties and ground beef. Each of the aforementioned results varies for regular meat consumers as compared to consumers who self-identify with an alternative diet such as flexitarian, vegetarian, or vegan. Combined, this study increases understanding of the impact presented by plant-based offerings in the US protein market.”
A bit more detail from the conclusions …
“Regular meat consumers are much less likely than those declaring an alternative diet (vegan, vegetarian, flexitarian, or other) to select a plant-based item when a beef item is available. The median willingness to pay and market share differences are substantial and documented in this research. Characteristics of consumers most likely to select plant-based proteins include younger, those with children under the age of 12 years, having higher household income, residing in a Western state, and affiliating with the Democratic party. Replacing a chicken item with a new plant-based protein offering on a food service menu has a small (less than 3%) impact on the frequency of selecting beef burger meals. Changes in the price of beef and chicken have a much larger impact on consumer decisions to buy beef than the impact of changes in the price of plant-based offerings. This means plant-based burgers are relatively weak substitutes for beef. Plant-based burgers have more elastic demands than hamburger and chicken breast for regular meat eaters. This suggests regular meat eaters will be more responsive to adjusting consumption to plant-based proteins as their prices change.
A key question relates to the ultimate US market share of plant-based protein products. This research indicates that if facing a binary choice between a plant-based alternative and traditional beef, around 25% of consumers select a plant-based alternative. However, a few caveats are worth mentioning. Some of the individuals who choose the plant-based alternative are unlikely to consume much (if any) beef. In this sense, growth in the market share of plant-based alternatives is not entirely coming at the cost of reduced beef demand and indeed if a plant-based alternative simply replaces a substitute competitor (like a chicken sandwich) or reflects overall growth in protein demand, the impacts on beef demand are likely to be negligible. Nonetheless, the fact that roughly a quarter of consumers indicate they would choose a plant-based alternative suggests there is ample room for this market to grow relative to the current position of limited market share. That is, our estimates suggest we will likely continue to witness growth in the plant-based alternative market even if all that changes is increased availability (and prices remain fixed at the status quo and consumer preferences and beliefs remain unchanged). Strong growth rates could occur for plant-based items, yet a smaller market share resulting. In fact, early in the COVID-19 pandemic, this occurred as retail sales of plant-based items jumped, but so did many other protein items (Meatingplace, 2020). Accordingly, plant-based item retail market share declined despite the growth of overall sales—an observation that conveys caution on using market-share measures.”