Sunfed, and the alternative meats market.

The latest sad news is that “chicken-free chicken” start-up Sunfed is closing its doors. But… they (and others in the alternative meat industry) were the future of sustainable eating. Right?

Certainly, they captured the imagination and enthusiasm of consumers and investors that they could be, raising $9.4 million in 2018. But imagination and hype are short-lived, which is reflected by the fact that Sunfed aren’t alone in their struggles.

First, I am very sad for Shama and her team - I can imagine how gutted they are after years of incredibly hard work and belief in a great mission. The product was delish and the dedication to creating a "hunky, tasty chunk of meat" from plant proteins has contributed to technical advancements in this field, alongside creating important conversations about food and our future. But creating a great product is just one part of a successful business.

There has been a bit of anger vented at investors bailing too soon and sinking Sunfed and other companies with similar missions. (And peculiarly, lots of meat eaters seem to be celebrating the demise of something that clearly deeply personally offends them, but we'll ignore them.)

There is a much broader ‘cooling off’ within the plant-based meat sector. From 2017 to 2020, sales doubled from $670m to $1.4B (USD). Then, they flatlined. Alternative meat sales in US grocery stores declined by 1 percent in 2022, after zero growth in 2021.

Beyond Meat is in a tricky spot where demand for its products is diminishing... and they're not profitable yet. Impossible meats are in the same boat, Unreal Food bailed out of looking for the eggless egg. It's a similar story all over the show.

It certainly seems that the day of reckoning has come for the alternative meat industry.

Surveys indicate a growing dissatisfaction with taste and texture, leading 40% of previous buyers to return to traditional meats. That is what happens with hype - short lived flashes that don't lead to habit change. (You can see this in most influencer brands that don't last the distance.)

The expectation that consumer habits can change quickly and easily, especially when it comes to something as personal and culturally embedded as food is naive. The idea that people will buy something just because it’s “good” for the planet is (depressingly) incorrect.

I know a few investors, I invest myself (hello, have you met Insprie ), I have spent time with venture capitalists (VCs) and private equity firms and most of them are reasonably realistic about the time frames they can expect when working with FMCG companies. This is especially true of those at the forefront of new innovation. But they do need to see some traction, or yeah, they will lose faith in a business.

And I reckon that's the problem here. Sunfed had hit $4m in revenue, was ranged in supermarkets in Aotearoa and across the tasman, but that clearly wasn't enough to demonstrate product market fit.

As Shama herself said, the bubble has burst and the surety in the industry has gone.

Less than 2% of NZers are vegetarians, less than 0.75% are vegan (so says the latest NZ health survey). So, the success of these products depends on meat eaters picking them up and incorporating them into their diet.

The barriers are significant, and price is a huge one.

Consumer NZ compared the price per 100 grams of Sunfed Chicken Free Chicken Wild Meaty Chunks with bog standard chicken breast. Sunfed was $4.33 compared to $1.47 - almost three times the price. In a cossie living crisis (am I saying that right?) it's just not gonna fly for most families.

They need to be convenient, available where the majority of customers shop, and most crucially taste like the rival traditional options. Especially in the case of alternative meats where they’re positioning themselves as a replacement to something most people have spent their life consuming, perhaps daily.

At the end of the day, those of us outside don't know what went on within Sunfed, so it's all just conjecture, but there are some lessons that FMCG businesses should be mindful of in Aotearoa.

Don't jump on a bandwagon because everyone is. Is it a trend, or a revolution? Do you have the resources to weather the inevitable ebb and flow of consumer demand?

Be mindful of who you take money from. Are they in it for the long term, or are they looking to take advantage of a flash in the pan trend?

It also shows those of us building businesses to change the world, the necessity for realistic market assessments and valuations, and diehard attention to your customers and what they truly want. Not hype. Don't drink your own Koolaid.

Plant based foods aren't going anywhere though, we need them and I look forward to seeing what is next.

In the meantime though - eat more beans! They're great for you, and the planet.