In February 2021, Complete Meals’ former co-chief govt Walter Robb described customers’ gradual shift from meat to plant-based options as a “megatrend akin to digitisation” — doubtlessly “the most important single pattern within the historical past of meals”.

It has been a painful two-and-a-half-year journey for buyers within the sector since then. An index monitoring 46 plant-based meals firms has halved in worth since peaking weeks after Robb’s daring name, hit by lacklustre gross sales and rising rates of interest.

Shares in California-based Past Meat, the poster youngster for the sector whose early backers included actor Leonardo DiCaprio and the Invoice & Melinda Gates Basis, rocketed after flotation in 2019. It briefly loved a market capitalisation of greater than $14bn however since then the shares have fallen about 95 per cent. The corporate has additionally been hit with class-action lawsuits. Shares in Oatly, one other vegan different, have dropped 90 per cent since itemizing in early 2021.

Regardless of a growth in ethically-focused investing and rising issues concerning the meat trade’s carbon footprint, customers haven’t developed a style for plant-based options, which nonetheless solely account for a fraction of a single per cent of the worldwide meat market.

Till they’ll match meat on flavour, texture and value, plant-based substitutes are unlikely ever to win a considerable chunk of the market, say analysts. On all these fronts, a rival expertise — cultivated options grown from animal stem cells — might pose an even bigger long-term menace to legacy meat firms than their plant-based friends. 

Amongst advocates is Arik Kaufman, chief govt of Israel-based Steakholder Meals, which feeds cuts of meat grown from stem cells into its “bioprinting expertise” to squeeze out steaks and fish fillets.

“As time goes by the individuality of our printers will come to the fore, flexitarians will change into our merchandise and we are going to finally produce ‘actual’ meat, although it received’t occur in a day,” stated Kaufman, whose firm’s backers embody Renaissance Applied sciences, one of many world’s most profitable hedge fund corporations.

However Steakholder’s shares haven’t escaped the broader sector’s sell-off, tumbling 92 per cent over the previous two years. Nonetheless, Kaufman pointed to Israeli prime minister Benjamin Netanyahu’s obvious endorsement of the corporate’s grouper fillet in an April go to as proof of the expertise’s potential.

Others tentatively agree. Jeneiv Shah, portfolio supervisor at Sarasin & Companions, stated cultivated meat “can be the silver bullet environmentally”, given how a lot land and water are required to develop plant-based meat merchandise.

“Meals safety is one other driver for this expertise,” Shah stated, including it was no coincidence that Singapore, which imported 90 per cent of its meals provide in 2021, was the primary nation to approve cultivated meat merchandise for business sale.

Shah estimated the choice meat trade’s complete market might hit roughly $300bn by 2035, with lab-grown meat consuming up an ever-increasing share. Within the US, gross sales of plant-based substitutes fell 13 per cent in April on the identical month final yr, based on information supplier Spins.

“I don’t assume Past Meat might be purchased by an organization like JBS or Tyson,” Shah stated, referring to 2 of the most important legacy meatpacking firms. “Solely a few of them are realistically considering their enterprise is about to get disrupted and those which might be will take a look at personal teams in [meat] fermentation and cultivation as a substitute.”

The cultivated meat trade raised $896mn in enterprise capital funding in 2022, down from $1.3bn in 2021, a barely smaller fall than the 35 per cent common year-on-year decline throughout international enterprise funding, based on Barclays. The proportion of complete funding within the meat-alternative house going in direction of lab-grown merchandise rose over the identical interval.

Legacy meatpacking firms have additionally suffered. Shares in Tyson Meals are near their lowest ever degree and JBS has greater than halved in worth over the previous yr. Throughout first-quarter earnings calls Tyson’s chief govt blamed “adversities in virtually all nations the place we function”, whereas the pinnacle of JBS stated he couldn’t keep in mind one other time when “beef, pork and rooster [had experienced] market challenges on the similar time”.

Past Meat, in the meantime, has extra to take care of than its $366mn annual loss final yr. In early Could its shares have been hit after it introduced it could promote as much as $200mn in frequent inventory in an effort to quickly increase financing.

It additionally faces class-action lawsuits: the newest, filed on behalf of buyers in California, accused the corporate of overstating its manufacturing capability and the success of its product assessments with retailers together with McDonald’s, Starbucks and Taco Bell.

The go well with additionally alleges Past Meat executives took half in a scheme to deceive the market by promoting shares at artificially inflated costs. The submitting mentions former chief monetary officer Mark Nelson, who offered 440,000 of his personally held shares for $58.3mn between Could 2020 and October 2022. Nelson introduced in March 2021 that he would retire from the corporate, however continued to seek the advice of for the corporate till final month.

“The corporate believes the claims are with out advantage and intends to vigorously defend all claims asserted,” stated Past Meat.

Nevertheless, for one group of buyers, the sector’s woes have offered an opportunity to revenue. Hedge funds betting towards Past Meat’s inventory raked in additional than $1.6bn since January 2021, based on information supplier Ortex.

“One brief vendor used to classify his shorts as frauds, fads and fades — [plant-based meat] seems like a fad,” stated Barry Norris, chief funding officer at hedge fund Argonaut Capital, who profited from bets towards Past Meat.

“Loads of firms type of reinvented the bean burger, and there’s no financial moat behind bean burger making,” he stated.