Have you seen the price of meat lately?
It’s not pretty. The average price of a pound of ground beef in the United States has jumped more than 20% over the past year and appears to be continuing to rise.
Meanwhile, the cost of a 12-ounce package of Impossible Soil has continued to drop and retails for less than $6 at some retail establishments, about the same price as a pound of beef. extra lean ground.
Not quite price parity…yet. But as Impossible and other plant-based meat suppliers continue to ramp up their volume, it’s worth asking: when meat alternatives reach price parity and eventually sell at a discount compared to animal meat, could customers start looking for plant-based meat to save a buck?
Meat prices are expected to remain high
Although meat prices may eventually peak as the COVID-related imbalance unwinds, much of the inputs needed to create a pound of meat – chemical fertilizers for animal feed, rising prices of labor for processors and distribution, etc. soon in an economy where inflation is at levels not seen since the 1980s.
And then there’s the demand side of the equation. Appetite for meat continues to grow around the world, and American farmers are one of the main beneficiaries, with exports of US-grown beef rising more than 20% last year. If demand continues to grow at double-digit percentages each year, prices could still rise even if labor and other input prices plateau.
Plant-based meat remains a premium product
For now, however, plant-based meat is even more expensive. Consumers are still being asked to pay a plant-based meat “tax” when replacing an alternative meat patty at many fast food outlets. Although found for $5.99 in some stores, a package of Impossible or Beyond Meat mince always costs significantly more at high-end grocers.
But all of that could eventually change. Back at CES 2019, Pat Brown made it clear that his goal was to drive the price of his company’s product down to where it was cheaper than the price of animal meat. Although he’s not quite there more than three years later, he and others are making strides to make up the difference.
So when the two types of meat reach price parity, and plant-based prices may fall even lower than conventional meat, it will be interesting to see what happens to demand for alternatives. One could imagine consumers opting for herbal products as a lower cost alternative in one scenario. But, on the other hand, there is also a chance that some will continue to prefer animal meat and are willing to pay a higher price for what they consider “the real thing”.
Either way, chances are we’ll see just how big a role pricing plays in the consumer’s calculus over the next two years as both types of meat continue on their current cost trajectories.