Plant-based meat alternative products are extremely price-elastic, to the point where they could take huge bites out of the animal-proteins market if they achieve price parity, according to a new study by Kearney.
According to the study, for every 1% drop in the price of meat alternatives, sales go up 3%. If alt-meat were ever to attain price parity, it has the potential to grab 22% of the overall animal protein market.
The report claims that marketing and R&D costs are largely responsible for the price difference between alternative and animal-derived meat, which ranges from 50% to 300%. “Lowering the price is hard, especially for venture-backed companies that—because of constant shareholder demands for returns—find themselves forced to maintain higher price points while continually investing in R&D,” the report says.
However, because big players, including some traditional meat companies, are getting into production and because the cost of traditional meat is going up, that price difference may soon disappear. The Kearney report notes that Beyond Meat has promised to underprice animal protein in at least one category by 2024.