Beyond Meat sales slumped because people are eating less fake meat, and the company says it gets why

• Beyond Meat's sales have slumped. Q4 revenues were down 20.6% and it posted a loss of $366 million in 2022.
• CEO Ethan Brown attributed it to "persistently high inflation" and trading down by consumers.
• Brown said the industry's biggest obstacles are taste, awareness of health benefits, and price.

Beyond Meat's sales slumped at the end of 2022 as consumers turned away from plant-based meat substitutes.

Net revenues were down $20.7 million, or 20.6%, in the quarter to December 31 year-over-year. The company said it sold around 3,300 fewer pounds of its fake meat products over the time period, a drop of about 17%.

"The fourth quarter of 2022 ends a challenging year for our business and category, one marked by persistently high inflation and trading down by consumers among proteins, slowing economy in key markets, and increased competitive activity," CEO and founder Ethan Brown said at the company's earnings call Thursday.

Despite the huge slump in sales, Beyond – which sells products including fake jerky, chicken, and sausage – still beat Wall Street sales estimates.

"It seems reasonable that consumers may retreat from protein that can be 2x the price of its animal-based equivalent during periods of intense inflation and reduced buying power, and that a reduction in price given this dynamic would spur increased consumption," Brown said.

In the year to January, the price of food for at-home consumption increased 11.3%, according to data from the US Bureau of Labor Statistics. Meat prices weren't hit as hard as other grocery categories.

In the US, sales of Beyond's products to restaurants took the biggest hit, falling 30% year-over-year for the fourth quarter. Restaurants made up 25.8% of its US fourth-quarter sales, compared to more than half of its sales in international markets. It supplies chains including McDonald's, where it provides its McPlant patties and nuggets, and some Pizza Hut restaurants.

The US accounted for 72.5% of Beyond's sales in 2022 by revenue. Beyond posted a net loss of $366 million in 2022, compared to $182 million in 2021. The company previously announced plans to cut costs, including layoffs.

According to Brown, the three major obstacles faced by the plant-based meat industry are taste, understanding of health benefits, and price.

"My belief is that as we continue to get taste right and continue to get the health message right and then reduce that price barrier, it will grow the category," Brown said.

Consultancy giant Deloitte noted in a September report that plant-based meat sales were dipping. "With inflation, fewer people are willing to pay a price premium," the report said, adding that its research found willingness to pay a premium for plant-based meat dropped 9% over a year. Information Resources Inc data cited by Bloomberg shows that sales by volume of refrigerated meat alternatives at retailers fell 10.5% in the year to September 4.

Meat-alternative companies are increasingly venturing beyond sausages and burgers to develop substitutes for other types of protein. Beyond introduced plant-based steak in October, but it can be a difficult product to create because of issues with replicating the texture of steak. 

Beyond also offers some plant-based chicken products, including tenders and popcorn chicken. Andre Menezes, the CEO of plant-based chicken maker Tindle, previously told Insider that that the market has huge potential because of a lack of major global players combined with the huge potential market of chicken eaters.

The UN notes that meat consumption "has been shifting towards poultry," which is expected to represent 41% of all protein from meat sources in 2030.