Just five years ago, plant-based foods were all the rage. Beyond Meat, a US-based maker of plant-based vegetarian burgers and sausages, listed in a blockbuster initial public offering (IPO) and started producing the McPlant for McDonald's. Rival Impossible Foods launched a meatless version of the Whopper for Burger King; bakery chain Greggs rolled out a much-vaunted Quorn-based vegan sausage rolls and consumer-goods giant Nestlé created a faux-meat line of burgers.
Plant-based meat alternatives mimic the taste and texture of meat using high-protein plant sources such as soy and peas, or wheat gluten. As these became more readily available, they were added to menus and pure-play vegetarian and vegan restaurants popped up on high streets. Consumers were embracing healthier lifestyles and seeking environmentally friendly, sustainable alternatives to meat; they had also become more concerned about animal welfare. Most plant-based meat alternatives produce lower greenhouse gas emissions and water footprints than the meat industry produces. They also have fewer calories, lower saturated fat and higher fibre levels on average than their meat counterparts.
Plant-based foods go from boom to bust
Investment funds focused on sustainability took an interest. “Several thematic strategies, including dedicated funds and exchange-traded funds [ETFs], were launched to capture [the] opportunity, and sustainable food systems were increasingly incorporated as a core theme within broader ESG [environmental, social and governance] and climate strategies,” says Tara Irwin, senior ESG analyst at investment platform Hargreaves Lansdown.
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The market for plant-based protein was estimated at $14 billion in 2024 and was expected to grow more than 7% annually to reach $20 billion by 2029, says data-analysis group Research and Markets. But the buzz around plant-based foods has died out lately. Restaurant chains have cut back on plant-based options. Apart from the McPlant, McDonald's has got rid of its vegan options; Pret has closed its vegetarian-only branches, and Impossible Food's rumoured initial public offering has failed to materialise.
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Meanwhile, Beyond Meat, a market darling when it became the first firm offering a plant-based alternative to meat to list in 2019, raising $240 million and achieving a $1.5 billion valuation, has yet to turn a profit. Sales have slid since 2022 and debts are high. It launched a debt-for-equity swap in October to stave off a credit default. Its woes mirror the waning sales of plant-based foods and shifting sentiment among consumers. In Britain, sales fell 4.5% to £898 million in the fiscal year to January 2025, according to the Good Food Institute Europe. US plant-based meat sales declined for three consecutive years to $1.1 billion in 2024, according to data from Circana.
Consumers have become more sceptical about ultra-processed foods and have focused more on other protein sources, such as chicken, beans and pulses. A US study concluded that ultra-processed foods “share more characteristics with cigarettes than with minimally processed fruits or vegetables and therefore warrant regulation commensurate with the significant public health risks they pose”.
The increasing prevalence of GLP-1 weight-loss drugs, such as Ozempic and Mounjaro, has also hastened the collapse in demand by suppressing appetite, while not all consumers want to eat food that has been artificially designed to taste like real meat. According to food and drink research firm Lumina Intelligence, pubs and bars have been reducing the vegetarian and plant-based dishes they offer and doubling down on higher-margin meat dishes, while restaurants have been expanding menus with mostly meat options in the first quarter of 2025, compared with the same period a year earlier.
Although sales are declining, some analysts have attributed this to demand normalising after an initial boom amid changing tastes and inflation for food producers, hospitality businesses and consumers. Veganism is no longer considered niche and has become mainstream. Pret A Manager said that it only closed its standalone Veggie Pret branches because people were buying vegan options at all its outlets. “Every Pret is a Veggie Pret shop,” it has declared. “Plant-based foods are far from a passing trend, but the landscape is evolving,” says Seyi Oduwole, head of food and drink at strategic consultancy The Future Laboratory.
Amid a growing “counter movement” of renewed interest in a carnivorous diet and animal-based foods, some consumers are opting for “more flexible, balanced diets rather than committing exclusively to plant-based or animal-based extremes”. This year's Veganuary, where people commit to a vegan diet for January, saw a record-breaking 30 million people take part globally, up from 25.8 million last year. The buzz around plant-based foods has not totally fizzled out.
What is lab-grown meat?
In the meantime, the more novel area of cultured food – lab-grown meat could replace vegetable beef-burgers from cells initially extracted from a living animal – is gaining traction and could be a new frontier in the food industry. It could resonate with younger, ethically conscious consumers. “The key to broader adoption will be marketing these products not just as alternatives, but as the next stage in sustainable, high-quality foods that are accessible, ethical and even indulgent,” says Oduwole.
Lab-grown meat could help address global food insecurity amid climate change, overfishing and shrinking resources. Britain imports half of its food and geopolitical conflicts and climate change can disrupt energy and food-supply chains.
A growing global population will need to produce around 50% more food, feed and fibre by 2050 compared with 2012, putting further pressure on land and water systems, according to the UN's Food and Agriculture Organisation. Global meat consumption is expected to increase 14% by 2030 compared with the average level between 2018 and 2020.
Lab-grown meat has a lower environmental impact than traditional livestock do, as it uses less water and land. It reduces carbon emissions by up to 92% compared with beef production and 44% for pork production, according to environmental consultancy CE Delft. This is a big selling point for companies, says Oduwole, “especially as sustainability becomes an even more urgent priority for consumers and investors”. But the difficulty for outfits such as Steakholder Foods, which is developing technologies such as 3D-printed seafood, lies in expanding: start-up costs are high.
Lab-grown meat – from petri-dish to plate
Lab-grown meat, dairy and sugar are set to enter the UK market in 2027, with the Food Standards Agency reportedly expediting the approval process. They are already available in the US, Australia and Singapore. Although there is scepticism over whether Britons will develop an appetite for laboratory-grown food, they could accept it if it's marketed as a “premium, ethical indulgence”, reckons Oduwole – witness fine dining's early backing of cultivated meat.
Australian food-technology start-up Vow plans to provide cultured quail dishes to upmarket restaurants, and San Francisco-based Michelin-starred restaurant Bar Crenn served laboratory-grown chicken to diners in 2023. Northern-Irish food manufacturer Finnebrogue and Oxford-based biotech firm Ivy Farm Technologies are to create cultivated wagyu beef burgers for the UK market. Real wagyu beef costs up to £165 per pound. This suggests that laboratory-grown food will probably be adopted in high-end markets before entering the mainstream.
It will probably also take time for the industry to become lucrative for investors. “While plant-based and laboratory-grown foods can offer long-term potential, both sectors face structural challenges that limit their near-term investment appeal,” says Jeneiv Shah, global equities portfolio manager at London-based asset manager Sarasin & Partners.
Where to look now for fat profits
There are few publicly listed plant-based and lab-grown meat companies for investors to consider and the ones that are listed, such as Beyond Meat, are struggling. Although laboratory-grown foods could address some of the limitations of plant-based food with respect to taste, texture and a feeling of authenticity, says Shah, they may struggle to find their feet.
Potential obstacles include “regulatory constraints, labelling challenges, uncertain consumer adoption” and high costs. Nonetheless, with plant-based, vegan food losing momentum, laboratory-grown food could be the next trend. But no clear front-runner has emerged to take advantage of the shift in how food could be produced.
Where does that leave investors? Hargreaves Lansdown's Tara Irwin says investors see plant-based and lab-grown meat as important for decarbonising food systems, but they are treading carefully, rattled by the firms' volatile performances and consumers' unexpectedly slow adoption of the products in some markets. Investors are placing greater emphasis “on scalability, cost competitiveness and commercial viability, rather than sustainability credentials alone”.
Irwin points to the Pictet Nutrition fund, which invests across the food-value chain and focuses on improving the sustainability and resilience of food systems. The Schroders Global Sustainable Food & Water fund “emphasises food-system resilience beyond alternative proteins”. Impax's Sustainable Food Strategy fund, meanwhile, invests across supply chains, targeting resource efficiency and nutrition, thereby reflecting a “wider shift away from concentrated exposure to alternative proteins towards more balanced, system-level opportunities”.
A more focused alternative
Agronomics (Aim: ANIC), co-founded by veteran investor and MoneyWeek favourite Jim Mellon, skews more heavily towards alternative proteins. The firm has invested in more than 20 cellular-agriculture businesses that aim to make the food industry more sustainable. Investments include Good Startup, an early-stage investment fund backing companies developing sustainable protein and food technologies for fermentation and alternative proteins, and Bond Pet Foods, which produces animal proteins through fermentation.
Mellon has also founded the private-investment vehicle New Agrarian, which also focuses on cellular agriculture companies, but is mostly intended for Middle Eastern investors. New Agrarian's investments include Meatly, which develops cultivated pet food, and Onego Bio, a maker of egg-protein powder produced via fermentation. Amid cooling demand and capital flows to the alternative protein market, New Agrarian is focusing more on dairy and egg proteins – areas where “the consumer probably doesn't have a significant resistance to [alternative protein]”, Mellon told the publication New Private Markets.
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