Just a few years ago, Tattooed Chef was making waves in the plant-based food industry. Known for its diverse range of frozen, ready-to-cook vegan meals, from bowls to pizzas and burritos, the California-based company had secured prime shelf space in major retail chains. However, the promising trajectory of Tattooed Chef took an unexpected turn, culminating in a Chapter 11 bankruptcy filing this summer.
In a recent press release, CEO Sam Galletti acknowledged the difficult decision, stating, “Despite (colleagues’) commitment to our mission and our best efforts to maintain the operations of Tattooed Chef, our business has continued to be impacted by a challenging financing environment and an inability to raise additional capital.” This announcement confirmed Tattooed Chef’s intention to file for voluntary Chapter 11 bankruptcy protection and pursue a sale of its assets, seeking bids to expedite the process.
The Plant-Based Paradox: Skepticism and Market Realities
Tattooed Chef is not alone in facing headwinds in the plant-based sector. Several companies have experienced similar struggles this year. The Meatless Farm, another plant-based brand, was compelled to sell to VFC Foods after failing to secure additional funding, and The Very Good Food Company also faced collapse earlier in the year. This trend raises questions about the sustainability and profitability of the plant-based food market, despite its initial hype.
Tattooed Chef’s financial difficulties are evident in its first-quarter net revenue, which declined by 12.7% to $59.1 million, as reported by Just Food. Adding to its woes, the company received a NASDAQ non-compliance notice in 2021 for aggressive pricing strategies that led to gross revenue losses. While a distribution partnership with Walmart in 2022 increased product accessibility, it also further compressed prices, negatively impacting the company’s profitability, according to Tasting Table. This suggests that the pressure to compete on price in the crowded frozen food aisle may have undermined Tattooed Chef’s financial stability.
Beyond pricing pressures, the plant-based category itself has faced increasing scrutiny. Concerns have been raised regarding the highly processed nature of some plant-based products. Furthermore, some industry experts argue that the environmental benefits of plant-based production may be overstated. Morgan Gold, a regenerative farmer from Vermont, pointed out to The Food Institute that plant-based brands’ reliance on “large-scale, monoculture farming can have negative consequences for the environment,” including soil depletion, extensive water usage, and habitat destruction. These criticisms may be influencing consumer perception and purchasing decisions within the plant-based market.
Growth Potential Remains in the Plant-Based Meat Market
Despite the challenges faced by Tattooed Chef and others, the global plant-based meat market is still projected for significant expansion. Verified Market Research forecasts a compound annual growth rate (CAGR) of 13.3% through 2030. This indicates that while some companies are struggling, the underlying market demand for plant-based alternatives remains strong.
Lindsey Cunningham, CEO of RollinGreens, highlights the inherent consumer interest in plant-based options, noting that “One-third of U.S. consumers want to reduce or eliminate meat from their diets, and 22 percent of all consumers identify as flexitarians.” This substantial consumer base provides ample opportunity for innovation and growth within the market.
Reesav Niraula, team leader at Plants Craze, emphasizes key success factors for plant-based brands, citing companies like Beyond Meat as examples. These factors include prioritizing taste and texture, continuous product innovation, and effectively communicating brand values. Niraula concludes that success in the plant-based industry hinges on “creating appealing products, effective marketing, accessibility, and a commitment to continuous improvement.” For Tattooed Chef and other plant-based companies, adapting to these market demands and addressing consumer concerns will be crucial for future viability and success.
