Unilever is facing difficulties in selling its plant-based meat business because of shifting consumer preferences and declining market valuations impacting the sector. Once-promising brands like The Vegetarian Butcher are struggling with profitability, as consumers opt for less processed foods and traditional meat remains competitively priced.
The company had aimed to capitalize on the success of industry leaders Beyond Meat and Impossible Foods, which initially dominated the $17 billion meat alternatives market. Brands like Unilever’s Vegetarian Butcher and Nestlé’s Garden Gourmet were designed to replicate the taste and texture of real meat using plant-based ingredients, appealing to consumers seeking healthier and environmentally friendly alternatives. However, a growing preference for fresh over processed foods has led to a decline in demand over the past two years.
Unilever is now exploring the sale of The Vegetarian Butcher, a brand it acquired in 2018, but industry experts suggest that finding a buyer willing to pay an attractive price may be challenging. The brand generates approximately 50 million euros in annual sales but remains unprofitable. Potential buyers may include meat producers looking to diversify into plant-based alternatives.
Both Unilever and Nestlé are refocusing on fewer, more profitable brands. Industry observers note that these companies initially expected their plant-based meat ventures to become billion-dollar businesses, but the market has not expanded as anticipated. Unilever had previously invested heavily in The Vegetarian Butcher, opening a “Vegan Butchery” in Rotterdam and securing partnerships with Burger King and Subway. However, declining consumer interest has led to a strategic reassessment.
Nestlé faces similar challenges. CEO Laurent Freixe acknowledged last year that the company overestimated the market potential for plant-based meat. In response, Nestlé has scaled back its plant-based offerings under the Sweet Earth brand, now focusing only on select products such as General Tso’s tofu and bulgogi, while discontinuing items like plant-based chicken strips and bacon.
Market data reflects this downturn. According to Euromonitor International, U.S. sales of meat and seafood substitutes fell from $1.7 billion in 2022 to $1.6 billion in 2023, with projections indicating further declines through 2026. Analysts attribute this trend to the perception that plant-based meat is “ultra-processed” and may not be as healthy as previously thought.
Valuations for plant-based food brands have also dropped significantly. Once commanding multiples of five to ten times their annual revenues, these brands now see valuations averaging between one and three times revenue. Beyond Meat, for example, has an enterprise value approximately four times its annual sales. Meanwhile, Impossible Foods, which had considered a public offering, faces a more challenging funding environment.
Pricing remains a key issue for plant-based meat brands, with many struggling to compete against traditional animal protein. Beyond Meat recently revised its revenue forecasts downward as budget-conscious consumers shift toward cheaper alternatives. Some investors believe that plant-based meat will only reach its full potential when the cost of traditional meat increases to reflect its true production costs.
While the trend toward alternative proteins continues, the plant-based meat sector is experiencing a significant market correction, forcing industry leaders to reassess their strategies and realign their focus.