Plant-based affordability: Industry needs to bring down costs for better uptake, flags report

20 Feb 2024 --- Despite a string of innovations and NPD in the plant-based meat space, price remains a major obstacle preventing consumers from switching to plant-based products — particularly as the sector has been affected by inflationary pressures and the cost of living crisis, says a New Food Innovation report by UK-based food scientist and chef Anthony Warner.

From 2017 to 2021, the overall annual growth of meat and dairy launches with plant-based claims was 19%, indicates Innova Market Insights’ data. Moreover, the total amount of meat substitute launches spiked globally, featuring a +39% year-over-year growth when comparing 2019 and 2020 launches.

But 2023 proved challenging for plant-based meat formulators, with a dip in sales, calling for a change.

Food Ingredients First catches up with Warner, the author of a report titled “Plant-Based Meats –The Battle for Price Parity,” to dive into the present state of the plant-based meat industry, the reasons behind its associated cost complexities and the proposed measures to tackle them.

Plant-based meat formulators must reduce the level of processing and create cleaner labels, says Warner.“Plant-based food grew very rapidly from 2018-2021 and it was widely thought that growth would continue to grow exponentially, taking significant market share from meat. But 2023 was an incredibly tough year for plant-based, especially in the UK, where several brands and manufacturers went out of business due to declining sales and spiraling costs,” he tells us.

“The main pushback has been because of the cost-of-living crisis, with consumers switching to cheaper options and less willing to take risks.” This is further exacerbated by plant-based products generally being “more expensive than meat equivalents.”

He also points out that despite “massively” improving in quality over the past few years, “there is a lot of variability out there.”

A complex picture
A price survey from late 2023 by Hannah Richie from Sustainability in Numbers mentioned in the report indicates that even for the “cheapest” plant-based options, prices are generally higher than meat equivalents and exceed the market average.

“It seems that it is cheaper to feed soya to a chicken and make a nugget out of that chicken’s meat than it is to form the same crop into a similar sized coated snack,” highlights the report.

Even the cheapest plant-based options are costlier than meat equivalents.Warner sees this as a complex picture. 

“There are a lot of brands that have high margin expectations and high marketing costs, whereas the majority of meat is sold under its own label. Although protein costs are generally lower per kg than meat, plant proteins require lots of additional processes and ingredients to make them delicious, which drives additional cost,” he explains.

The report explains this with the example of a burger made using dried textured vegetable proteins (TVP) versus a beef burger. 

“Whereas a beef burger can be made by combining little more than beef, rusk, salt and pepper, hydrated soya protein requires a lot more work to make it delicious and functional,” highlights the report.

“TVPs require hydration, which can be a time-consuming process. In many formulations, several flavors and colors must be weighed separately and added at different stages, taking up the time of skilled operatives and reducing efficiency.”

Costly ingredients
The report sheds light on the drivers of flavor costs in a typical burger formulation — a savory base element, a top-note meat flavor, a grill flavor and a masking flavor.

Plant proteins have an intrinsic flavor that needs to be masked for creating realistic meat analogues, adding to costs.Additionally, a protein source accounts for around 20% of the ingredient cost, along with flavorings to mimic beef’s taste and mask the unpleasant flavors of the protein (40%), followed by hard fats and oils required to replicate beef tallow (20%).

Further costs are added by emulsions and gelling agents (15%), such as methylcellulose (to hold all the ingredients together), colors, preservatives, crumbs and seasonings.

“Plant proteins such as soya, pea and fava have an intrinsic flavor and if you want to create realistic meat analogues, you need to mask that flavor,” asserts Warner.

Monetarily, he says masking flavors can account for 10-15% of the total recipe cost, adding that potential savings are possible by analyzing the off notes and optimizing the flavors used.

What can be done?
The report brings up a few ways by which manufacturers can gain control over formulation costs.

Flavor-wise, molecular analysis can identify appropriate masking solutions and reduce manufacturing complexity by consolidating into a single supplier for up to 40-60% savings. For gelling and emulsification, using enzymic solutions to reduce dependency on methylcellulose, which accounts for nearly 10-15% of formulation costs, can provide clean label benefits and cost savings.

Formulators must think beyond burgers and sausages to leverage existing extrusion methods that create fibrous structures.Exploring buffered vinegars, fermented acids, natural sorbate sources and targeted research for shelf life extension are also needed.

Formulators must also think beyond burgers and sausages and focus on utilizing existing extrusion methods to produce fibrous structures resembling specific meats to formulate chicken, beef, lamb or pork-like chunks from air-classified plant protein concentrates.

In addition, the carbohydrate and fiber-rich fractions left over after plant protein concentration — known as sidestream — can be utilized for food production or feeding meat and dairy livestock to increase overall protein yield.

Manufacturers can also target local protein sources like fava bean (in the UK) for cost savings.

The “ultra-processed” tag
Thoughtful work on the perception of ultra-processed food is required to understand how to counter the negative image of many plant-based products, observes the report.

Further, increased adoption of less processed ingredients such as protein concentrates, which may have lower overall protein content but enough benefits for health and sustainability, make them compelling propositions.

“We need to think about how we can reduce the level of processing and create cleaner labels, and we need to have less acceptance of poor-quality products,” asserts Warner.

Consumers can switch to plant-based burgers and sausages if they are better than meat in quality, health and price.“When the market was largely vegan or vegetarian consumers, manufacturers could get away with poor quality because consumers had less choice. But if we are targeting the flexitarian market, we need to up our game.”

He adds that plant-based sausages, burgers and nuggets can be better than meat in quality, health and price and have the potential to drive considerable switching.

Price parity
Asked if plant-based meat can ever achieve price parity with conventional meat, Warner responds that it is possible.

“In a few cases, it already does, but we need to ensure this is genuinely driven by lower cost, not just a cutting exercise to increase market share.”

He further points to cost savings by rationalizing the flavors used, switching from protein isolates to cheaper protein concentrates and exploring different approaches to achieving gelling and structure. 

“We can extend the chilled shelf life of products and further rationalize product ranges to create longer production runs and leverage economies of scale.”

Meanwhile, Warner is also working on some strategies for plant-based cheese improvement, using data and AI-driven approaches to product development.

By Insha Naureen