Since its inception, plant-based meat has commanded a premium in most grocery stores and restaurants. Despite being inherently more efficient to produce — since it relies on plants rather than animals — plant-based meat is often more expensive than its animal-based counterpart.
Is it because of the technology required to produce it? Perhaps the profit margins? There are several factors to consider, and understanding them will help us to answer the ultimate question: will plant-based meat ever be cheaper, or at least on par, with real meat?
Why Plant-Based Meat is More Expensive
A growing trend toward plant-based eating and distrust in the safety of meat brought on by the COVID-19 pandemic has transformed plant-based meat into a popular alternative rather than a niche product enjoyed only by vegans and vegetarians. But yet, the price tag is still higher than real meat.
Turning a Profit
Wouldn’t the higher demand lower plant-based meat prices? Well, much like any company operating in the free market, plant-based meat producers like Beyond Meat and Impossible Foods want to turn a profit and that might involve charging consumers as much as they are willing to pay. Despite the higher demand, it would not make sense to charge customers less at this time since lowering the supply/demand curve wouldn’t allow them to sell more products.
Supply chain and ingredient optimization is another factor. Plant-based meat represents only about one percent of the US meat market, and companies that produce it are not nearly large enough to optimize supply lines. The lack of scale limits companies’ abilities to negotiate the price of raw materials.
Right now, many companies use ingredients that are side-streams from other industries. The basis for the Impossible Burger, for example, is soybean protein, a byproduct of the soybean oil industry. The same goes for peas. Until companies reach a certain size where they can purchase raw materials optimized for making their products, ingredients will remain more expensive, thus keeping plant-based meat prices higher.
The current scale of plant-based meat companies also limits their infrastructure. This includes manufacturing capabilities, facility design, equipment and other technologies. The largest plant-based meat players’ facilities resemble boutiques when compared to the scale of manufacturing facilities for animal-based meat products. Much like raw materials, until production methods evolve, plant-based meat will command a premium.
Lastly, the most commonly held belief as to why plant-based meat is more expensive: research and development (R&D) costs. Like any other field in food tech, plant-based meat innovators have significant R&D costs that they need to recoup. Most companies in the field have been largely funded by venture capital so far, which only magnifies these costs.
How to Lower Plant-Based Meat Prices
As it stands, the average cost of ground beef is around $4 per pound, according to the US Bureau of Labor Statistics. A pound of Beyond Meat’s Beef burgers carries a price tag of $6.25, Vox reported. This price disparity may be holding the meatless industry back from reaching a wider consumer base. So, what will the industry have to do to reach price parity in the coming years?
There have been countless new entrants into the plant-based meat market over the past few years, but even the biggest players still struggle with scale. There is no secret to making mass-manufactured meatless meat cheaper; instead, it’s more about making every aspect of the supply chain, manufacturing and distribution processes work more efficiently.
As companies scale up, prices will naturally decline for them, and in turn, the consumer. Expensive equipment, for example, can be purchased more easily since it would be used to make a massive amount of products. The same goes for distribution centers — if there are more centers across the world, transportation prices will go down.
Scaling up could create a prosperous cycle in which lower costs attract more consumers, who make further cost savings a reality.
Sourcing Cheaper Protein
While animal agriculture makes use of some of the cheapest crops available to feed livestock, plant-based meats are generally derived from more expensive, novel proteins. Proteins like peas and mung beans tend to be considerably more expensive, so sourcing them more cheaply is a critical step in lowering costs to consumers.
Another option would be to completely abandon novel proteins and reformulate recipes with wheat or soy proteins. Plant-based foods in China and Europe have adopted this approach with success.
Perhaps one of the costliest expenditures for plant-based meat companies is also the key to making products better and cheaper for consumers. By positioning themselves as tech companies, rather than solely as food companies, investors would be more inclined to push for R&D. Therefore, instead of cutting R&D, companies should invest more into it and look to lower costs in other areas of the manufacturing process.
Learning From the Experts
Though it still has a long way to go when compared to the real meat market, Beyond Meat has become a leader in the plant-based world. It has opened factories in several countries and landed deals with wholesalers such as Costco to make its products more affordable and widely available. Beyond Meat has even committed to selling at least one product that is the same price or cheaper than animal meat by 2024.
While Beyond Meat is well on its way, developing operational efficiency takes years, if not decades. The animal agriculture industry has had a multi-decade head start on this. In the end, it’s about the numbers: the more products Beyond Meat produces, the more it will be able to drive operational efficiencies.
How Long Will Price Parity Take?
While these shifts will not happen overnight, plant-based meat prices could certainly drop in the coming years. As the market continues to grow, the production of raw materials will be optimized and it will also
attract different consumer bases. Long gone are the days when plant-based meats were exclusively for vegans and vegetarians — flexitarians, too, are always looking for more plant-based options.
However, there will always be some plant-based brands that will command a hefty price tag for their novelty or special ingredients. Nature’s Fynd, for example, derives its fungi-based meat from a microbe from Yellowstone National Park. And Juicy Marbles, another alt meat brand, sells a two-pack of its raw, unseasoned plant-based filet mignon for around $80. Much like the market for specialty meats, there will always be a market for their plant-based counterparts.
All in all, it likely won’t be long until the tipping point is reached and plant-based meat becomes cheaper than, or at least on par with, regular meat, as long as progress and innovation continue at the same pace we have witnessed over the past decade.