Meat shortage gives opening to plant-based alternatives
A shortage of meat products in the U.S. due to coronavirus outbreaks at processing plants is prompting many Americans to give plant-based alternatives a try, allowing a previously marginalized industry to quickly expand.
Coronavirus outbreaks at meatpacking plants, where thousands of workers have tested positive for coronavirus and several have died, forced several facilities to close, which in turn led to meat shortages at grocery stores and fast food chains.
That’s created an opening for companies like Beyond Meat, Impossible Foods and Tofurky.
“We knew that people were turning towards plant based for a number of reasons but mostly for health reasons. I think now we can safely say that’s still the number one driver, but there might also be the perception of meat shortages,” said Michele Simon, executive director at Plant Based Foods Association.
Simon said all of the association’s 175 members have been feeling the increase in demand right now, building on growth from before the outbreak.
Beyond Meat this week reported first quarter net revenues that were up 141 percent from the same period in 2019, to more than $97 million compared with $40 million last year.
The company’s stock surged 26 percent.
Beyond Meat, which sells to restaurant chains like TGI Fridays and Denny’s, also got a boost from some high-profile praise on CNBC.
“We can’t trust the food chain anymore … it’s dirty, broken, and sinful. So we have to buy Beyond Meat, the plant-based burgers that don’t involve COVID-filled slaughterhouses,” Jim Cramer wrote Thursday.
CEO Ethan Brown told Cramer, “I think we are reaching a tipping point” for plant-based foods due to the COVID-19 impact on the U.S. meat supply.
The pandemic and its effect on food has allowed other firms to accelerate their growth.
Impossible Foods, which makes the Impossible Burger, has increased from selling to 150 grocery stores nationwide to 2,700 grocery stores in April alone. It plans to have its products sold in more than 10,000 stores by the end of the year.
“We make a burger and our competitor is ground beef from cows. The burger is really the most recession resistant, bullet proof product in America. In good times and bad times, people eat burgers,” Chief Communications Officer Rachel Konrad told The Hill.
The Impossible Burger is on the menu at fast food chains like Burger King and White Castle.
But with restaurants either closed or slowly opening, companies are looking to grocery store sales to pick up the slack.
“We definitely have felt the restaurant industry decline but the retail demand surge is something that we’re working really hard to meet,” Konrad said.
The looser restrictions for grocery stores, almost all of which have stayed open during the pandemic, has helped companies that focus almost exclusively on retail sales.
Tofurky has seen 40 percent growth in grocery stores in the past 12 weeks compared to the same period in 2019. Sales of its plant-based ham roast grew by 631 percent and its Holiday Roast Combo by 126 percent around Easter.
“Nothing like that has happened in the time I’ve been in the company for the last 15 years or so. It’s a great time for people to try stuff and to realize this is great stuff,” said Jaime Athos, CEO of Tofurky.
A relative newcomer, Before the Butcher entered the retail business just six months ago and its products are now in about 1,000 locations, a number the company is looking to double by the summer.
Plant-based brands are also looking to big K Street firms to help with their growth.
Impossible Foods has BGR Group on retainer, including lobbyists Remy Brim, former senior health policy adviser to Sen. Elizabeth Warren (D-Mass.), and Robb Walton, who held the same position under Sen. Bill Cassidy (R-La.). The company spent $170,000 on lobbying in 2019 and $60,000 so far this year.
Meanwhile, major meatpacking companies JBS, Smithfield Foods and Tyson Foods are being questioned by lawmakers about working conditions following coronavirus outbreaks at their plants.
But it’s not clear whether the surge in sales will last beyond the pandemic or the current meat shortage.
President Trump issued an executive order last month requiring processing plants to stay open in an attempt to head off future disruptions, and Agriculture Secretary Sonny Perdue on Wednesday predicted that U.S. meatpacking plants will fully reopen in the next seven to 10 days.
“It certainly has focused attention on the problems meat causes in the food system: factory farming, concentration in the meat industry, brutal working conditions for meatpacking employees, and meat industry control of USDA policy,” said Marion Nestle, professor of food studies at New York University.
The plant-based industry has also been caught up in legislative fights at the state level over whether their products can use the term meat. Missouri became the first state to restrict the use of the term for these companies, passing a law in 2018.
The Plant Based Foods Association argues that such measures violate freedom of speech, and Simon said the policy fight has “quieted down with governments otherwise occupied with more important matters” during the pandemic.
But one thing meatpacking companies and their plant-based competitors have in common is the need to ensure workplaces are revamped to prevent the spread of COVID-19.
Benjamin Chapman, food safety specialist at North Carolina State University, said food production plants overall, regardless of the product, create a difficult setting for social distancing.
“What we’re seeing right now with these clusters aren’t about the meat part of the meat plants, it’s much more about plants in general and essential food workers being close to each other because of the process and the challenges to implement social distancing. That can happen in many food settings, not just meat,” he said.
Impossible Foods and Tofurky are among those who say they have implemented strict rules and practices regarding social distancing and disinfecting.
But the industry is optimistic that once the pandemic subsides, the recent growth in sales will become the norm.
“The long-term trend is unquestionably moving towards a plant-based food system,” Konrad said. “This is happening no matter what. Does the current glimpse into the sausage factory accelerate that?”