Kellogg touts ‘excellent prospects’ for plant-based even as sales and distribution shrink

Retail sales of Kellogg’s plant-based meat brand MorningStar Farms continue to plunge in 2022 – dropping nearly 15% from the previous year, which was also down several percentage points despite a slight uptick in the overall vegetarian and vegan meat category in both 2021 and 2022, the company acknowledged during a call Thursday to share third quarter earnings results.

Cahillane attributed the “pause”​ in growth in part to consolidation in the frozen plant-based segment by retailers following a surge of innovation in the space in 2020 led by new entrants, new technologies and new spaces in stores for plant-based offerings.

In the past, Cahillane lamented​ that in the rush to meet consumer demand for plant-based meat alternatives during the pandemic, many suboptimal products came to market – putting off newcomers to the space who judged the category as a whole by poor first experiences.

The sharp drop-off also reflects ongoing supply disruptions with a key co-manufacturer, which have yet to be resolved and are forcing Kellogg to prioritize SKUs, Cahillane said.

Despite the sales drop, Cahillane remained bullish about the space and the long-term potential of MorningStar – an iconic player in the plant-based meat space – and Incogmeato – a newer entrant that came to market in 2019 with a ‘next-gen’ plant-based burger, chik’n nuggets and chik’n tenders designed to compete head on with more meat-like competitors, including Beyond Meat and Impossible.

He explained his confidence is based on strong consumer engagement with the brands despite their struggles and growth in products not impacted by supply challenges.

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