Can Oscar Mayer’s plant-based ‘NotHotDog’ be a hit with consumers? Experts have doubts.

United States

Can a faux frankfurter cut the mustard? Oscar Mayer is making a big bet that plant-based hot dogs have a bright future, even as some experts sound notes of caution.

Ahead of the summer grilling season, the venerable brand, part of the Kraft Heinz Co. KHC, +0.99% portfolio, has launched a line of vegan-friendly hot dogs and sausages. It falls under the umbrella of a Kraft Heinz joint venture with TheNotCompany, which specializes in plant-based alternatives to animal-based products.

The Kraft Heinz Not Company, as that joint venture is called, has previously brought to market other plant-based items such as Kraft NotMac&Cheese and Kraft NotCheese Slices.

In a press release, officials with the Kraft Heinz Not Company said the plant-based “NotHotDogs” and “NotSausages” offer “the savory and smoky experience” that fans of the Oscar Mayer brand have “known and loved for more than 140 years.” They also point to data that project the U.S. market for plant-based foods will grow from $ 8.3 billion in 2023 to $ 19 billion by 2030.

Furthermore, officials told MarketWatch that the market for plant-based hot dogs and dinner sausage links remains “underdeveloped and underconsumed, largely due to consumers being disappointed in the taste and texture of existing offerings.”

But food-industry analysts are skeptical of such claims, saying companies making plant-based meat alternatives have struggled of late and the category is stuck in the doldrums.

“The growth potential right now is slim,” said Billy Roberts, a senior economist specializing in the food and beverage industry with CoBank, a national cooperative bank.

Indeed, the meat-alternatives category, which includes plant-based products, has seen annual U.S. grocery and related sales decline from $ 484 million in 2020 to $ 318 million last year, a 32% drop, according to data from Circana OmniMarket. Moreover, analysts point out that some restaurant chains have stopped offering certain plant-based meat items on their menus.

Then, there are the challenges that Beyond Meat BYND, +2.13%, a leader in the category, has faced. Beyond Meat’s stock, which once briefly topped $ 200, plummeted to under $ 10 as investors reacted to slowing demand, though there’s been a recent share-price rally seemingly tied to the company’s plan to cut costs.

Why has the idea of a faux-meat future not quite lived up to the hype and hoopla of a few years ago? (Remember when it seemed all the world was craving an Impossible Burger?) Experts point to two key factors.

First, the cost of plant-based meat products far exceeds that of the real animal deal. And given that not all consumers of plant-based foods are strictly vegan but rather adopt a “flexitarian” eating approach, they’ve been turning to real meat to save money, particularly as inflation has affected food costs in recent years.

As John Oh, an analyst with the global research firm Third Bridge, summarized it: “Consumers have largely traded back down to animal proteins.”

The meat-alternatives category, which includes plant-based products, has seen annual U.S. sales decline from $ 484 million in 2020 to $ 318 million last year.

The cost difference between plant-based and real meat is exemplified in the pricing of Oscar Mayer products. Its real-meat hot dogs, in the bun-length style, are $ 4.99 for an eight-pack, or about 62 cents per frank. By contrast, the plant-based ones are $ 5.99 for a four-pack, or $ 1.50 per frank. That’s a differential of 88 cents.

The other main issue affecting plant-based meat products is that people just don’t think they hit the mark qualitywise, experts say.

“There would probably be more consumers willing to trade up if they delivered that taste, texture and mouthfeel,” said Lynn Dornblaser, principal consultant with Mintel, the market-research firm.

Obviously, Oscar Mayer thinks it has cracked the code to making a faux frank that delivers on that front. But even then, Arun Sundaram, a senior equity analyst at CFRA Research, argued that Oscar Mayer is a legacy brand “struggling to resonate with the modern consumer” — in other words, the very consumer who might buy a plant-based hot dog.

Given all the issues, Sundaram added that he found it “quite perplexing” that Kraft Heinz “would want to introduce a plant-based meat product right now,” especially under the Oscar Mayer banner.

‘Why would I replace something that’s fabulous with something that’s less than fabulous?’

— Nate Rempe, Omaha Steaks

Meanwhile, America’s appetite for real meat seems to keep growing. Take Omaha Steaks, the privately held company synonymous with mail-order beef and other products. Nate Rempe, the company’s CEO, told MarketWatch that the business has grown by 52% since 2019.

Rempe noted that Omaha Steaks does offer a vegetarian burger for customers who might want that option, particularly for gifting purposes. But the company has no intention to add any other plant-based meat products, hot dogs or otherwise. Rempe said Americans simply love real-meat items too much.

“Why would I replace something that’s fabulous with something that’s less than fabulous?” Rempe said.

Still, experts say that plant-based products overall will find favor with many consumers in the long run, despite recent challenges with plant-based meat products. They point to the health benefits of a plant-based diet and the fact that plant-based items are considered more sustainable — that is, their production is less harmful to the environment.

As previously noted, plant-based foods already constitute an $ 8 billion business in the U.S. Plus, some would argue it’s a category in its relative infancy. At least that’s what Julie Emmett, vice president of marketplace development for the Plant Based Foods Association, a trade group, said.

“There is still a lot of opportunity to further meet consumer demand and improve the findability and accessibility of plant-based foods,” she said.