By Tom Polansek
CHICAGO (Reuters) -Brazilian meatpacker JBS SA (OTC:JBSAY) is closing its U.S. plant-based foods business, Planterra Foods, after about two years, the company said on Monday.
The closure signals increasing troubles in the plant-based protein sector, where U.S. sales are flattening.
Colorado-based Planterra sold fake meat under the Ozo brand, but JBS will now focus on its plant-based operations in Brazil and Europe, said Nikki Richardson, spokesperson for JBS USA. European and Brazilian operations "continue to gain market share and expand their respective customer bases," she said.
The sector has come under pressure because meat alternatives do not taste good enough and prices are too high, said Gary Stibel, chief executive of the New England Consulting Group, which works on consumer products. He said JBS made a good decision to shut Planterra.
"Everybody and her sister thinks they can make money in this business and they can't," Stibel said. "Eventually it will be a good business for a few players. Today, it is a sinkhole for many folks that are throwing good money after bad, chasing too little demand with way too much supply."
This summer, Beyond Meat (NASDAQ:BYND) Inc lowered its revenue forecast for the year and announced job cuts as rising inflation hurt efforts to make its pricier plant-based meat more affordable.
Separately, Canadian pork processor Maple Leaf Foods has reduced the size of its plant-based business, Greenleaf Foods, by 25%.
The value of all meat alternatives sold in the United States - including fresh and fully cooked products and faux seafood – rose by 1.1% in the year ending Aug. 27 to about $963 million, NielsenIQ said. That compared to growth of 8.1% over the same period in 2021 and 44.8% in that period in 2020.
For fresh meat alternatives, U.S. sales dropped by 6.8% in the year ending Aug. 27 to about $254 million, compared to a year earlier, NielsenIQ said. Sales in the category climbed 28.9% over that same period from 2020 to 2021.