What’s next for Australia’s plant-based meat market? Four predictions from Food Frontier’s State of the Industry report
Where once investment in plant-based meat innovation seemed unstoppable, it seemed the glaze had started to wear off. However, the Food Frontier 2023 State of the Industry report into the Australian industry paints a picture of evolution, growth and — ultimately — a strong future.
The Australian sector is maturing, beyond the buzzwords and bold promises, settling into the rhythm of a functioning industry. But change is afoot.
Food Frontier’s third industry report reveals sales of plant-based meat products in Australia is increasing.
Bringing together insights from Deloitte Access Economics and industry data by Food Frontier, the report shows sales of plant-based meat products in Australia increased by 47% between 2020 and 2023 and consumption per-capita increased by 28%.
This growth, however, is almost entirely attributed to the wholesale market and food services industry. Here, compound annual growth rate (CAGR) for plant-based meat products was 59%. For retail sales, CAGR was -1%.
The price of plant-based meat is creeping down, but there is still a 33% premium (compared to 49% in 2020).
Dr Simon Eassom, CEO of Food Frontier, suggested the retail results were partly due to inflation and the rising cost of living.
Products are still viewed as ‘premium’ and ‘non-essential’, Dr Eassom said. They’re not always viewed as being value for money.
“Some products were not meeting consumer expectations around taste, and the higher price point compared to conventional counterparts has reduced repeat purchases,” Dr Eassom said.
In 2019, Deloitte Access Economics estimated the plant-based meat market would be worth $2.9 billion by 2030.
Today, the economic environment and market dynamics mean its projections are a little more conservative — a value of $1.65 billion by 2033.
In a restaurant setting, plant-based options are more likely to be offered at a similar price point to traditional meat.
There are challenges to overcome, but as Dr Eassom notes: “It’s evident that the industry is here to stay.”
Four key developments we can expect to see:
1. Market consolidation
The time for consolidation in manufacturers and brands, and the range of products on the shelf, is here — something we have already seen in comparable markets overseas.
Between 2019 and 2023, the number of plant-based brands in Australia increased from 10 to 23.
The number of products on the market peaked at 350 in 2023. In January 2024, this had already dropped to 275.
As ranges evolve beyond the classic veggie burgers and mince-style products, increasing demand doesn’t necessarily translate to sales across the board.
Manufacturers, retailers and consumers alike are in the process of figuring out what will stand the test of time, and what will fall by the wayside.
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That said, demand and sales remain strong. So, while some brands re-evaluate their strategies, or exit the space altogether, a clearer path is expected to emerge for those that remain.
2. Food service opportunities
The food service industry represents the biggest opportunity for plant-based meat brands, globally, according to the report’s findings.
That’s especially true in Australia, where there is still a relatively low market penetration in food service, compared to the US, Asia and Europe.
Locally, sales within hospitality are largely limited to fast food and ‘quick service’ restaurants, and offerings are lacking compared to what can be found overseas.
But in a restaurant setting, plant-based options are more likely to be offered at a similar price point to traditional meat.
Changes in plant-based meat products formats available in retail in Australia. Data collected January 2021 and January 2024. Source | 2023 State of the Industry report.
Equally, people dining out are more likely to try something new, opening opportunities for repeat business and brand recognition for producers.
The report noted that the quality of products is only improving, and plant-based meat is starting to appear on the menus of high-end restaurants around the world.
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Finally, Alejandro Cancino, Co-Founder and CEO of The Aussie Plant Based Co, said plant-based producers are fast catching up with the “lean production process” of conventional meat.
“This will see it eventually scale to compete in the mass market food industry where manufacturers operate on a volume-driven tight margin business model,” he said.
3. Values in the spotlight
Research from 2021 — cited in the Food Frontier report — found the number one reason people first tried plant-based meat was the perceived health benefits.
Of consumers surveyed, 70% said they chose plant-based options for health reasons; 54% named environmental concerns; and 44% cited ethical reasons.
Today’s manufacturers are mindful of these drivers and are shaping their marketing and communications accordingly.
There is space for plant-based brands to educate consumers on the health benefits of going meat-free, as well as the nutritional value of products, and the impact on the climate, compared to traditional meats.
Increased consumer awareness could drive behavioural change and increased demand.
4. Quality control
The report notes that flexitarian and carnivorous consumers are not yet won over by plant-based meats. For many, the products simply aren’t stacking up in terms of quality.
If plant-based meat companies are to survive they need to focus on profitability, efficiency, and returning value to the consumer, Alejandro Cancino said.
“Key to this equation is the importance of taste,” Alejandro said.
The report acknowledges that the industry as a whole must improve on the three key elements of price, taste and texture – and do it within a difficult economic environment, and a dip period in investment in innovation across the board.
However, these are “not insurmountable challenges”, the report suggests.
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The key lies in collaboration throughout the industry, and the entire food sector. It’s partnership on research and development (R&D), investment in local supply chains and processing infrastructure, and continuing government support.
In tough circumstances, the Australian sector has maintained a solid performance. And plant-based meat still represents a huge economic opportunity.
“Australia can still capture this opportunity, but only if governments, investors, farmers, retailers, foodservice operators and food manufacturers collaborate to supercharge the growth of the Australian plant-based meat industry,” the report concludes.
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