Beyond Meat costs more than traditional meat, but data show consumers are willing to pay the premium price - for now
- Data from Nielsen analyzed by JPMorgan show that Beyond Meat retail takeaway sales remain high - but so do its prices.
- Industry watchers say that the premium prices of plant-based meat alternatives could be a problem for the industry going forward.
- But so far, consumers have been willing to pay more for the plant-based products.
- Read more on Markets Insider.
Beyond Meat has had a blockbuster year. Its soaring IPO performance and its first public earnings release have created a lot of buzz around both the company and the industry growing for plant-based meat alternatives.
The latest release of data from Nielsen, analyzed by JPMorgan analysts show that while Beyond Meat's takeaway sales remain high, so do its prices. This could be a problem for the company - and the plant-based meat market - going forward."We hear that the premium on these products isn't that bad, but when I go to the grocery store and I see the alternative product at $12 or $11 per pound and then I can go into the meat case and find a ton of traditional meat products under $3 per pound, that's a big ask for the US consumer to realize that kind of differential," said Will Sawyer, the lead economist of animal protein at Cobank.
But so far it doesn't seem that the price has deterred consumers from putting Beyond Meat's fare in their grocery carts, confirming that there is indeed consumer demand for meat substitutes, even with the US on track for a record year of animal protein consumption.
In June, Nielsen data showed that Beyond Meat takeaways - a measurement of retail sales - had increased 189.1% in four weeks. In July, that number had increased to 208%.
It also showed that Beyond Meat's takeaway numbers were gaining over those of main competitors in the plant-based food space such as Conagra, Kraft Heinz, and Kellog. But prices are also up, the data show. The percent change in price per unit has gone up much more than that of competitors, perhaps illustrating the premium consumers are paying for the plant-based products.
Over time, it's likely that prices of Beyond Meat's products will decline. Part of the reason that plant-based meat alternatives are expensive is that the supply chain for the ingredients used - such as yellow pea protein - are much less established than supply chains for traditional animal protein, said Larry Praeger, the CEO of Dr. Praeger's Sensible Foods, which recently launched its own plant-based burger called the Perfect Burger.
"Price point will play a big role in converting people that are currently eating meat to meat alternatives, " Praeger told Markets Insider.
He also noted that, as the industry grows and supply chains develop further, it's likely that the cost of plant-based products will go down. Increased competition in the field could also push competition down, as consumers will be looking for the lowest priced items or discounted items to try.
But for now, there is evidence that consumers are willing to consistently pay more for plant-based meat alternatives. Fatburger, a chain owned by Fat Brands, was an early partner of Impossible Foods, a major competitor of Beyond Meat, and has Impossible Burgers as an option in restaurants.
Sales of the plant-based burgers have grown, Andy Wiederhorn, the CEO of Fat Brands, told Markets Insider. And even though the products are more expensive, consumers are paying the elevated price for the product.
"Consumers that want it don't seem to be fazed by the price," he said. "They just seem to be willing to pay for what they want."
Shares of Beyond Meat are up a whopping 575% year to date.