Unilever faces challenges in reducing plant-based meat exposure

UK – Unilever is struggling to offload its plant-based meat business as demand for these products continues to decline, complicating its efforts to scale down its involvement in the sector.

The company had aimed to capitalize on the success of industry pioneers Beyond Meat and Impossible Foods, which entered the market in 2009 and 2011, respectively, and played a key role in growing the meat alternatives industry to a value of US$17 billion.

Unilever’s Vegetarian Butcher and Nestlé’s Garden Gourmet were launched to mimic the taste and texture of real meat using plant-based ingredients like legumes.

These products initially attracted consumers looking for healthier and environmentally friendly alternatives to meat, but a broader shift toward fresh rather than processed foods has led to a drop in demand over the past two years.

Critics, including U.S. Health Secretary Robert F. Kennedy Jr., have described plant-based meat as “ultra-processed,” contributing to its declining appeal.

Unilever Considers Selling The Vegetarian Butcher

As consumer interest wanes, Unilever is looking to sell The Vegetarian Butcher, a brand it acquired in 2018, according to two sources familiar with the matter.

However, securing a buyer at a favorable price may prove difficult, with two financial advisers in the food industry suggesting that market conditions are not ideal.

The Vegetarian Butcher generates about US$54 million annually but remains unprofitable, according to a consumer sector banker.

Potential buyers could include traditional meat producers seeking to expand into the plant-based market, another banker said.

Unilever has not commented on whether it intends to sell the brand or how much it hopes to get from a potential sale.

Both Unilever and Nestlé have been streamlining their operations, focusing on fewer, more profitable brands to improve their overall financial performance.

Market Struggles for Plant-Based Meat

Nestlé is facing similar challenges in the sector, with its CEO Laurent Freixe stating last November that the company had overestimated the potential of plant-based meat.

In response, Nestlé has scaled back its Sweet Earth range, now only offering plant-based bowls like General Tso’s tofu and bulgogi, while discontinuing plant-based chicken strips and bacon.

Sales of meat and seafood substitutes in the U.S. fell from US$1.7 billion in 2022 to US$1.6 billion in 2023, and projections indicate a further decline through 2026, according to Euromonitor International.

Analysts point to growing concerns over the nutritional value of plant-based meat, with some consumers viewing it as overly processed rather than a genuinely healthier alternative.

During the peak of the plant-based boom, brands in the sector were valued at five to ten times their annual revenue, but that multiple has now dropped to between one and three times, said John Spayne, chairman of financial advisory firm Spayne Lindsay & Co.

Beyond Meat’s current enterprise value, which factors in debt, stands at approximately four times its annual sales, based on data from LSEG.

Impossible Foods had considered raising funds through a public offering, but experts believe market conditions have made such a move more difficult.

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