Why Fake Meat is Failing (Part 2 of 4)

Some original research from our startup studio about how consumers think about meat

Photo by Mike on Unsplash

This is the second in a four-part essay about the future of meat & dairy. In the first part, I described why we need to eat less meat and dairy in order to keep the planet liveable. 

But what about Fake Meat, and “plant-based” everything, wasn’t that supposed to be the answer?

Well, after a few years of promising growth, sales seem to be stagnating or declining.

Industry data shows that fake meat sales are struggling to pass ~1.5% of the meat market in the US:

Bill Gates and other investors are now counting on “cell-based meat” to be the next wave of innovation that truly breaks open the market for alternatives to meat.

Will it work?

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Some insights from our research: customer preferences are complicated

At Imagination Machine, my startup studio, we thought about creating an alternative proteins startup two years ago. In 2021, a team led by the talented Sophie Roybon-Jaeger and Martijn Verpaalen looked into the subject. They started, as we always do, with some deep research into consumer psychology.

We learned three things that help explain a lot about the current state of the industry.

#1: People have different mental-models of how “nutrition” works

Our decisions about what to eat – at restaurants and at the supermarket – are complicated. We consider taste, quality, price, convenience of cooking (or not), religious restrictions, sometimes environmental impact, our mood, and the food choices of people around us. 

But the most important consideration for most people is our health, the desire to stay (or become) healthy and feel good during the day.

And our health considerations are, themselves, complicated. Most people, we learned, have a multi-variable calculation in their heads about how food impacts their health, a “mental model” of how nutrition works. 

• Some people think about optimizing blood sugar levels throughout the day;

• Some measure protein intake, finding the right balance between protein, carbs and fat;

• Some look at the number of ingredients to try to get the least-processed food;

• Some care most about salt, or cholesterol, or certain specific kinds of fats;

• Some care primarily about number of calories;

• Many are trying to conform to a diet related to an illness or a health condition or a workout regime.

Is a particular food healthy, or not? The answer is all about how that food fits into your particular nutrition-mental-model.

And while there are not an infinite number of nutrition-mental-models out there, there are probably dozens, not one of which is true for a majority of people, or even a significant minority. The “mass market” of food consumers is actually made up of dozens of subgroups, each one with a different (and often opposing) idea of what “good nutrition” means to them.

#2: Most people think fresh meat is healthy

One thing that surprised us in our research is that most people, with a wide variety of different “nutrition-mental-models”, consider fresh meat to be one of the healthiest things they can buy or eat, and for various (often contrary) reasons. Some people see meat as the most efficient way to get protein, which they believe is a necessary centerpiece of every meal. Some people see meat as a low-carb, low-fat food that is important for their strength and stamina. Some people see meat as an unprocessed ingredient, and therefore healthier than any kind of packaged food.

Even those people who say they want to eat less meat still think of fresh meat – the kind you buy at the butcher, or the butcher-counter at the supermarket, even if it is pre-packaged – as very healthy. 

There is also a paradox at play: some people believe that eating less meat overall is healthy for them (for various reasons), which is one of the main reasons people say, in surveys, that they’d like to eat less meat. But for any individual meal, they still believe that certain meats are healthy options. So the overall desire frequently gets forgotten at the moment of meal-time.

It’s also true that most people love the taste of meat. So most people, for various reasons, think meat is healthy and delicious.

#3: People are frequently playing meal-planning “tetris” for their families

When we see the statistic that 30% or 50% of people want to eat less meat, that does not mean that 30% or 50% of households want to eat less meat. 

Choosing what to eat is frequently a kind of meal-planning-tetris game for families. When shopping at the market, or picking a restaurant, you need to find meals that will please everyone.

What often ends up happening is that one person in the house wants less meat (disproportionately women), one wants the same amount of meat (disproportionately men), and the kids want food that is familiar and relatively bland, which is often meat. Planning a non-meat meal is therefore a challenge. 

Usually, the people in the family who want meat (the men and children) have strong preferences, but the people who want less meat (the women) have weak preferences. So the strong preferences win. In our team we started to call this the “meatiest common denominator”, and we found that it is a major factor in consumer choice.

It helps explain why barbecues are one of the best sales opportunities for fake-meat burgers (and fake-meat sales spike in the summer): at a barbecue, everyone can eat something different without increasing the complexity of cooking. 

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Fake Meat’s disappointing sales are not because of taste

So why is fake meat failing? Bill Gates, a major investor in Beyond Meat, the most well-known fake meat company, claims that “The big question on artificial meat comes down to taste.” 

Our research suggests otherwise. One big question comes down to health, and qualifying as “healthy” means different things to different people. Another big question comes down to meal-planning for family members with diverse preferences.

Add all these factors together, and the efforts to compete head-on with some fresh meat products, like ground beef, seem perhaps misguided. If the goal is for people to choose fake meat instead of real meat, and real meat seems both tasty and healthy, then why choose fake?

Even if a fake-burger tasted exactly the same as a real burger, it would still be considered less healthy by most subgroups of people (which is, indeed, what the surveys show).

Novelty has a limited lifespan in the market, and environmental considerations are rarely enough to drive a decision about what to eat except for a small niche of consumers.

Gates and other investors are now counting on “cell-based meat” to be the next wave of innovation that truly breaks open the market for alternatives, because it will taste just like real meat. I am skeptical for the same reasons: will the market perceive it as healthier than natural meat, even if the taste is exactly the same? I doubt it. 

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Long live fake dairy

These insights also help explain why fake dairy is seeing so much success. Sales have not slowed down, recently passing 15% of the milk category in the US market. People do not consider cow-milk, or cheese, to be nearly as healthy as fresh meat – though of course this varies based on the nutrition-mental-model of the eater. Plant-based milks can effectively position as healthier alternatives, and increased scale is helping prices come down. 

I believe the market for plant-based dairy will continue to grow as new products win over more sub-segments of the market. The dairy category includes so many different products and use-cases, many more than the meat category: not just milk but cheeses, creamers, yogurts, ice creams, butters, spreads… 

So there are almost certainly more startups to build that develop new plant-based dairy products for until-now-unaddressed consumers and use-cases. If you have a great idea for a startup like this, let me know, I’m interested.

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In the next essay in this series, I’ll describe a few ideas we had within the Imagination Machine team about potential solutions, and a few leads for potential startups to build.