Decreasing Demand Sounds Death Knell For 2 Plant-Based Startups In San Francisco
It seems the growing challenges stacked against the plant-based meat industry have claimed two major casualties in late 2023. Within one week of one another, San Francisco startups Hooray Foods and Nowadays have both announced they will be permanently shuttering the brands and terminating operations.
While Nowadays co-founder Max Elder announced the end of the company via LinkedIn this week, it had already halted production of its signature plant-based fried chicken in August. In an interview with AgFunderNews, Elder stated that Nowadays was unable to gather sufficient venture funds in the declining plant-based meat market. At the time, he explained the Nowadays founders were looking for other options to continue developing their product with their awarded patents. However, as of Elder's LinkedIn post on September 13, the brand has officially been shuttered for good.
Hooray Foods's shutdown followed a similar story. The brand broke the news on September 7. Specializing in plant-based bacon, the company launched a WeFunder crowdfunding campaign in January of this year to help achieve profitability, price parity with regular bacon, as well as wider distribution across the country. Unfortunately, it seems the campaign funding wasn't enough to make up for production, distribution costs, and a slow sales growth rate. Hooray Foods apologized to its supporters in a social media post, saying that "the economics of running a company of this size simply do not match our revenue."
Is the plant-based meat industry in trouble?
The shutdown of Hooray Foods and Nowadays is the latest in a worrying downward trend in the plant-based meat industry this year. This past July, plant-based meal brand Tattooed Chef filed for bankruptcy after failing to generate enough sales revenue. Even the biggest contender in the industry, Beyond Meat, saw a 30% sales decrease — the company's second-quarter results reported a net loss of $53.5 million, and its 2023 maximum revenue outlook plummeted. Across the board, retail sales of plant-based meat in the U.S. have continued a steep decline throughout 2023.
As for the cause of the industry's decline, it seems food price inflation seems to be the main culprit. According to recent data from Circana, food inflation has continued to go up throughout 2023, and "consumers are continuing to trade down" product brands to save on costs. While Beyond Meat and other plant-based meat companies have been working towards price parity with conventional meat, the reality is that alternative proteins are still much more expensive on average. With food prices rising and alt-meat companies shutting down before they're able to lower prices, it doesn't seem as though consumer demand for plant-based meat will be improving anytime soon.