Editor's note:This article is part of our 2024 food and beverage industry trends series. Previously, we exploredhow technologies like artificial intelligenceandnew product innovationare driving change, and focused on theevolving alcoholic beverage landscape。

For the plant-based sector, the past year has been challenging. This category, which once grew rapidly driven by multiple factors, experienced a significant sales slowdown throughout 2023. Players of all sizes either exited the space, scaled back innovation efforts, or conducted layoffs.

Since the industry boom in 2019, two alternative protein pioneers—Beyond Meat and Impossible Foods—have dominated and become household names. However, similar to the broader category, both companies have encountered obstacles in maintaining growth and meeting consumer demand.

"It's important to remember that this industry is really just getting started," Impossible Foods' Chief Marketing Officer Leslie Sims said in a statement to Food Dive.

Both Beyond and Impossible made operational adjustments in 2023 (and 2024), including layoffs, consolidating production facilities, executive changes, and reprioritizing product lines.

"When your own operations are running smoothly, it's easier to translate that into how you interact with customers," Bloomberg Intelligence analyst Jennifer Bartashus told Food Dive. "The many efforts Beyond Meat, Impossible, and others have made over the past year to improve internal operations are crucial for laying the foundation for success and bringing consumers back to the brand," Bartashus added.

Need to cast a wider net

To gain momentum in the new year, Impossible Foods says it is seeking to expand its consumer base. "We want to continue reaching more meat lovers and flexitarians, but we have to get the messaging right," Sims said. "We want to be inclusive, not make people feel judged for loving meat, and show them they can contribute to the planet or their own health without changing their lifestyle."

Bartashus believes that plant-based companies' messaging has so far lacked inclusivity. "The core issue is that these companies are trying to spark consumer interest. When you're in a young and developing industry—and I still consider plant-based meat alternatives a relatively young industry—you have to cast a wider net."

Bartashus noted that companies need to refocus on their narratives. "There's a delicate balance between not alienating people and promoting potential health and environmental benefits, but you can't try to do everything at once, or the message becomes muddled."

Looking ahead to the new year, Sims said Impossible plans to attract more consumer attention by broadening its marketing strategy. "What we're really facing is a messaging problem, not a product problem. We have to challenge misconceptions, debunk myths, and we need to talk more proactively about the nutritional value of our products," Sims said. "We have to play both defense and offense, and that takes skill. That will be a focus for us next year."

Meati makes progress with new messaging

While household names like Beyond and Impossible seek to gain more customers as they grow, emerging brands like Meati Foods aim to capture that "big net" from the start. The Boulder, Colorado-based company has taken a different marketing approach, never simply positioning itself as "plant-based."

Meati Chief Operating Officer Scott Tassani said that when you think of "traditional players" like Beyond Meat and Impossible Foods in the alternative protein space, they've done well at getting consumers to try products but have underperformed at converting trials into repeat purchases. "They're attractive from a sustainability standpoint, but they don't necessarily see successful returns, which stems from the experience they offer," he said.

Meati also doesn't position itself as particularly "anti-meat," whereas some players have used language that denigrates the use of animal products in food. This allows Meati to offer consumers an experience not built on guilt or shame about choosing plant-based or not. "There's enough division in the world today; we don't need it in our food as well," Tassani said.

Bartashus added that to better connect with more consumers in 2024, companies need to return to their roots. "Consumers love stories, and the further you get from telling your own story, the harder it is to attract people, especially when there are so many alternatives."

Meati Foods also conducted layoffs last year to focus on profitability; the company hasn't been immune to industry headwinds, but its marketing strategy seems to be working. It is steadily progressing toward its goal of reaching 8,000 retail locations by summer.

Taste still trumps sustainability

Many plant-based founders are passionate about sustainability in the space—for some, it's why they started their companies—but the reality is that this passion hasn't resonated on the consumer side.

"Sustainability as a selling point is more attractive in markets outside the U.S.," Bartashus said. "Overall, sustainability isn't as embedded in the daily lives of U.S. consumers as it is in Europe."

In many foreign markets, people are willing to pay more if they see environmental benefits—whether in transportation, food, or overall lifestyle. "Companies need to recognize that this isn't the case everywhere," Bartashus said.

She noted that ultimately, taste, availability, quality, and health benefits—these attributes are the benchmarks for measuring U.S. consumer acceptance of these products.

"The actual initial market for plant-based foods was people following a flexitarian diet, trying to add more greens to their diet," said Sam Dennigan, CEO of Strong Roots, who specializes in growing small and international brands. "Everyone wants to be more sustainable. Everyone wants the planet to thrive, but not at the expense of taste. Many alternative protein companies focus on science rather than the nutritional value of food, and I think that's a major mistake."

Taste is the most commonly cited reason consumersrepeat consumption of plant-based foodsbut it's also the primary barrier to trial consumption in the industry.

Even the most established companies in the space face a significant challenge in achieving satisfying taste and texture while remaining price-competitive, which has become an obstacle to profitability.

In its latest earnings report, Beyond Meat posted negative sales growth for the sixth consecutive quarter, and CEO Ethan Brown told investors that the company needs to adjust its strategy, such as exiting certain U.S. markets. Beyond Meat declined a request for comment on its plans for the coming year.

Meanwhile, Impossible Foods, still privately held, claims itcontinues to outperform the category average at retailand plans to expand its foodservice business, CEO Peter McGuinness told AgFunder News.

The sector also faces resistance from consumers who want to see more whole, clean ingredients in alternative products rather than additives trying to mimic animal proteins. A Grandview Research reportpoints to rising demand for whole-food products high in fiber, vitamin C, and ironwhich echoes findings in a Whole Foods Market report stating thatplant-based companies need to clean up their labelsto reach consumers.

However, Impossible Foods is heading in a different direction with innovation. Competing with fruits and vegetables has never been its strategy. "We're targeting meat consumers seeking better options for themselves and the planet," Sims said. "However, there's a lot of noise about 'ultra-processed' and 'processed' foods that lacks nuance and misleads consumers, when in reality, processing doesn't inherently make food unhealthy."

In December, the company was testing a plant-based hot dog product with New York City street vendors.

Bartashus said that ultimately, it comes down to cultivating more loyal brand users. "You need consumers to embrace your story and share it with others through their own experiences, and over the past year and a half, we seem to have drifted away from that."

Today, consumers have higher expectations for innovation, ingredient quality, and taste, and companies must respond in some way.

Atypical plant-based

As more established legacy companies have built brand loyalty, the sector may see product innovation from some unexpected players.

Long-standing food companies like Kellogg Co. with Morningstar Farms, Maple Leaf Foods, and Conagra with Gardein are beginning to outperform alternative protein startups and pure-play plant-based brands like Beyond and Impossible with their own plant-based portfolios.

According to Grand View Research, these large companies can leverage their extensive consumer networksand offer products at lower costs。

Kraft Heinz launched a plant-based version of its beloved mac and cheese, NotMac&Cheese, in November 2023. It's the company's third innovation collaboration with NotCo, using itsAI platformto redesign traditional foods with plant-based ingredients.

So far, the alternative protein space has focused on recreating American classics with plant-based ingredients. For example, the Impossible Burger is marketed with typical burger accompaniments—lettuce, tomato, onion, and a toasted sesame bun—while Beyond Meat claims its Beyond Burger "looks, cooks, and satisfies like beef" while having the "juicy, meaty deliciousness of a traditional burger."

Bartashus thinks this could change in 2024 as companiesinnovate categories that no longer try to mimic other productsand the plant-based sector evolves into something with its own distinct identity.