Food and Beverage Direct-To-Consumer — My curiosity quest begins!
I want to know what is going on in this space: what are the up and coming brands, what are the trends, what is working, and what is not working?
I have looked at a few F&B DTC brands in the past, such as Muddy Bites, Firebelly Tea, and Black Rifle Coffee. However, my curiosity has led me to looking into plant-based meat.
Stagnant Growth
“The refrigerated plant-based meat category grew at 59% in 2019, 75% in 2020, but in 2021, the category was essentially flat, growing at 1%, ”
“We believe the hyper exposure of the category early on drove a significant number of consumers to trial plant-based protein products.”
“In fact, trial rates were super high, penetrating 60% of US households, but consumers’ needs simply were not met, and they did not repeat purchases. As a result, the category did not reach expected levels of habituation, had very high lapse rates and very low buy rates.”
These quotes came from Curtis Eugene, president and chief operating officer of Maple Leaf Foods, during their February conference call discussing fiscal 2021 results.
Beyond Meat and Impossible Burger are probably the two most popular names in the plant-based meat category. In May 2019, both brands saw their brand name be searched over 600,000 times. That was up from about 100,000 searches in November 2018. Today, both brands see about 75,000 searches per month for their brand name.
You can see a similar peak and then die off in the search term “plant based meat”. Monthly search volume for this term starts to increase in May 2019, peaking in January 2020 at approximately 50,000 searches that month. Today, this term is searched approximately 12,000 times per month.
As stated by Curtis Eugene, it is clear that this category got some initial hype (led by Beyond Meat and Impossible Burger), but the hype did not last long, and interest in this category has died down. And according to The Plant-Based Foods Association, plant-based meat only accounts for 1.4% of total meat category sales in the US.
What Is Happening In The Direct-To-Consumer Space?
Impossible and Beyond both launched and DTC effort in 2020 (obviously, the pandemic forced this). However, both of these brands have since shut down these efforts. The prevailing thought is the revenue through their DTC channel was too little, and the delivery logistics of this type of product were too expensive.
That being said, there are still a few players in this space trying to make DTC work for plant-based meat. I took a look at Simulate (known for their product: Nuggs), Nowadays, Daring Chicken, and Deliciou. To my surprise, none of these companies are generating a ton of a sales through their websites:
Simulate – Averaging 17 orders per day in May
Nowadays – Averaging 25 orders per day in May
Daring – Averaging 12 orders per day in May
Deliciou – Averaging 35 orders per day in May
That means at most, these brands are doing well under $100K per month in sales (which means they are all likely doing less than $1M a year in sales through their website).
Simulate always had a DTC focus. However, I am no longer sure that is the case. You can find their Nuggs in almost any grocery store near you. In June of 2021, Simulate took on $50M of funding. 17 orders a day on their website does not justify that funding. They must be focusing on other channels of growth (grocery stores, restaurants, etc).
Well… Now What?
It does not look like plant-based meat is a good DTC play. We have already seen Beyond and Impossible exit this channel, and from the 4 brands I tracked, it appears they all are struggling to generate enough revenue from this channel to make it viable for them.
The question now is why? I hosted a Food and Beverage Direct-To-Consumer round table discussion yesterday, and three qualities were brought up as to what makes a good fit for a F&B DTC product:
- Is it lightweight?
- Does it have shelf stability?
- Is it an item that would have re-occurring purchases?
For plant-based meat, the product is not terribly heavy, but it is over 1lb, making shipping costs at least $7-$8 per order. The product does not have great shelf stability (only lasting 10 days when refrigerated). And lastly, the product could be re-ordered regularly, but as we saw from Maple Leaf Foods, they were not seeing customers return and purchase it again.
Plant-based meat is not a good DTC product based on those 3 qualities.
What Areas Of F&B DTC Interest You?
Are there any brands you are seeing that are catching your eye and making a DTC play? Are you seeing any trends that should be looked at? I am taking suggestions on where to look next in the F&B DTC space!
