Is the plant-based fish market swimming upstream?
In the past couple of years, the plant-based meat industry has unveiled the widest variety, highest quality, and most realistic meat substitutes that have ever been available. This has taken the industry far beyond veggie burgers — so far, in fact, that some plant-based patties even “bleed.” And fast food chains have challenged consumers to tell the difference between their traditional offerings and the plant-based alternative.
This was particularly good timing as the pandemic caused global meat shortages and increased prices — leading consumers to try new alternatives when they otherwise may not have. And as a result, U.S. retail sales of plant-based foods grew 27% last year, bringing the total market to roughly $7 billion. Thus far, the industry’s success has been largely driven by alternative meat and milk, which grew 45% to $1.4 billion in 2020, and 20% to $2.5 billion, respectively.
But this may not be a passing trend, as consumers are developing a liking to the alternatives. Even celebrity chefs and Michelin-starred restaurants began incorporating plant-based ingredients into their dishes.
However, the market for plant-based fish is floundering by comparison. While U.S. sales grew 23% in 2020, it only accounted for $12 million — representing just 0.1% of the US seafood market. For reference, plant-based meat currently makes up 1.4% of U.S. meat sales.
So why has it been so hard for plant-based fish products to find their sealegs? In large part, because fish is already considered a healthy food. Doctors even recommend Omega-3 from fish to improve heart health. And, until recently, there has been less public discussion of the animal welfare and environmental impact of the seafood industry. Both of these factors have been major selling points for other plant-based meats.
But the tides could be changing. Last year, more than $80 million was invested in alternative seafood companies — four times the amount invested in 2019. Even traditional seafood producers are getting involved. For example, the parent company of Chicken of the Sea plans to launch a plant-based shrimp by the end of the year, joining its existing plant-based fish and crab products.
It is interesting to note that, despite an earlier announcement, neither Impossible Foods nor Beyond Meat — the two biggest names in alternative meat products — have waded into the “seafood” market. At least, not yet.
There are a few factors that have some investors weary of plant-based foods at the moment. First, plant-based meat producers are not immune from the pandemic-related supply chain issues that are impacting other food markets. For example, stocks for Beyond Meat dropped by 22.1% in July because of anticipated disruptions to distribution and the potential impact of the Delta variant on the company’s booming foodservice division.
There is also mounting pushback from traditional meat producers and farmers, particularly around plant-based products being labeled as “meat.”
However, it is clear to me that we are only in the infancy of the impact that plant-based meats will have on the food and restaurant industries — which isn’t even taking into account the potential of other alternatives, like cultured meat.
And it looks like plant-based seafood could be the next great catch.
Danilo Diazgranados is an investor, collector, and lover of fine wines and a member of the prestigious Confrérie des Chevaliers du Tastevin, a fraternity of Burgundy wine enthusiasts.
