Plant-Based 3.0: From Hype to Doubt to Long-Term Durable Value

In the early 2000s, plant-based foods were generally relegated to natural food stores and associated with vegetarianism, counter-culture, and black bean burgers (i.e., the vegan penalty box). With the launch of a handful of buzzy brands with large R&D and marketing budgets, the category was propelled into the mainstream. The look and feel of these products ran counter to existing stereotypes about alternative products, with indulgent messaging and memorable marketing that promised to replicate the taste, texture, and functionality of conventional meat and dairy. Burgers that sizzled, milks that foamed, cheeses that melted: these products invited consumers to swap animal-based staples without changing how they cooked or ate, and feel better about the impact of their choices on their health and the planet.

U.S. retail sales of plant-based foods grew 6.2% from 2020 to 2021, reaching $7.4 billion and then climbing to roughly $8 billion by 2022. New product and marketing strategies brought new consumers into the category, helped normalize flexitarian eating patterns, and drew attention to animal agriculture’s climate impacts. However, excitement around the category and the steady stream of investment into the space was not long-lived. 

This unsteadiness was driven by multiple macro factors, with the most notable being a shortfall in sustained consumer demand relative to expectations. For many consumers, the taste and eating experience did not consistently match expectations set by marketing, which limited repeat purchases and long-term loyalty. The products were priced above conventional animal products, which further dampened consumer interest. This price gap became more salient as inflation mounted in 2021 and shoppers traded down from premium products towards cheaper alternatives, including private label brands, whose dollar sales grew nearly 5% in 2023. 

While plant-based sales initially benefited from a bump driven by trial and marketing, many products did not achieve substantial repeat purchases and sustained velocities. Retailers, which had allocated shelf space and placed purchase orders expecting a fast ramp in sales, were disappointed when revenue expectations were not met. Destockings and reduced retail space followed, with plant-based SKUs moved back to the in-store health foods section. Household penetration for plant-based meat and seafood in the United States dropped from about 19% in 2022 to roughly 15% in 2023. 

At the same time, diet trends like Whole30, paleo, carnivore, and keto; social media discourse about food additives; and consistent messaging from meat and dairy industry groups culminated in a wave of scrutiny of processed food products and a surge of interest in high-protein, animal-based diets. Prominent health and wellness influencers argued that plant-based products were highly processed, recommending that consumers return to animal-based products instead. Many alternative ingredient companies, from high-tech ingredients startups to established consumer brands, struggled to sustain sales and funding momentum. Investment in alternative protein startups peaked at $5 billion in 2021, then fell by more than half by 2023. According to some estimates, more than 40 alternative protein companies either shut down, merged into other entities, filed bankruptcy or were acquired at discounted valuations in the trailing twelve months from August 2025.

Though the plant-based space has experienced a market correction, the challenges that the industry faces are not an indication of the long-term viability of these products in our food system. Protein demand continues to rise globally, natural resource constraints are intensifying, and institutional buyers are under growing pressure to future-proof and diversify their supply chains. BCG projects that alternative proteins from plants, fermentation, and cultivated systems could supply at least 11% of global protein consumption and reach around $290 billion in market value by 2035 if they achieve parity on taste and price. In our view, the question is not whether there is room in the market for better plant-based foods, but what those products need to look like to win.

From 2.0 to 3.0

At S2G, we believe the plant-based sector is entering a new chapter. The early years of 2.0, roughly 2015 to 2023, delivered rapid distribution gains, ambitious category projections, and significant capital formation, but those dynamics also set the stage for a challenging reset. With the industry now shifting into a 3.0 phase defined by commercial rigor, nutrition, scale, and sustainable economics, we see an opportunity to apply the lessons from that period. Drawing on more than a decade of investing across plant-based, alternative protein, and adjacent food system categories, we are aligning our thesis around companies positioned to build durable value in this next phase. The experience of 2.0 highlights several lessons that now guide the path forward:

Taste & Performance

Many 2.0 plant-based brands emphasized ​“like real meat” or ​“like dairy” formats. High marketing spend drove trial, but the eating experience for consumers often fell short. Products that looked good in ads sometimes missed on flavor, aroma, mouthfeel, or cooking performance. When consumers expected a certain sizzle, melt, or creaminess and encountered something different at home, they were less inclined to repurchase. Slowing velocities and soft repeat purchase gave retailers and investors pause, reducing the likelihood that they included plant-based products on store shelves or invested in the companies that produced them.

The lesson: Success in the plant-based sector begins and ends with the consumer experience. Products must deliver reliable taste and predictable performance to achieve lasting consumer adoption. 

Consumer Perception of Health & Nutrition 

In the 2.0 era, the media and many companies positioned plant-based products as healthier alternatives to animal-based foods, and the communication around the category as a whole often was confusing. Many vegan and wellness influencers promoted extreme diets that weren’t nutritionally balanced and dismissed concerns about protein as irrelevant. A plant-based lifestyle was positioned as the key to glowing skin, weight loss, longevity, and a slew of other benefits, some of which were grounded in research and others which were exaggerated versions of reality.

At the same time, some of the most visible brands targeted indulgence categories: burgers, cheddar cheese, full-fat milk substitutes for lattes, and other recreations of animal formats rather than focusing on whole-food simplicity. These products tried to differentiate themselves from the tofu and black bean burgers of the vegetarian movement, emphasizing taste rather than nutrition as a key value proposition. To achieve their promise of recreating an animal-based eating experience, ingredient lists for many products leaned on isolates, gums, vegetable fibers, seed oils, and other ingredients. Consumers had been pitched plant-based as a health trend, but the products that received the most buzz and PR were intended to be used as a replacement for burgers and bacon, not smoothies and salads.

Inflexible and overzealous messaging about vegan diets eventually led to a sharp swing in the opposite direction. As popular opinion in 2020/2021 turned against food additives, ​“less processed,” ​“clean label,” and ​“anti – seed oil” messaging became more prominent. Plant-based products were posited as unhealthy and nutritionally inferior to their animal-based counterparts. Increasing scrutiny on processed plant foods coincided with substantial momentum towards a high-protein, animal-centric diet, the culmination of years of related fads including paleo, keto, carnivore, and others. 

As brands, media, influencers, and consumers placed greater emphasis on protein content, products with lower protein levels compared with dairy or meat lost momentum. The comparison was often framed simply: a beef burger or cheese slice was seen as familiar and protein dense, while a plant-based analog was perceived as processed and less nutritionally robust.

The lesson: Clear messaging to consumers about the function of various plant-based products is critical. If products have ​“healthy” positioning, companies must either educate customers why their products are nutritionally superior or adhere to the prevailing diet trends with ingredient lists (no seed oils, high fiber, etc.). As many consumers today look for functional benefits in the food they buy, products that can credibly demonstrate sought-after features like gut-friendly, protein-rich, or clean label products will succeed. 

Strategic Pricing Decisions

Price has been a key challenge across the plant-based, alternative protein, and overall sustainable food sectors. In the post-COVID era, inflation and sluggish wage growth have squeezed the middle and lower class while record-breaking stock market performance and asset value appreciation have generated more wealth for high-earners. This increasing inequality has led to a market bifurcation with an increased number of premium, high-priced products and affordable, value-driven options, while the traditional middle ground struggles. 

This strategy addresses the polarized consumer base, where some consumers are highly price-sensitive, and others with higher incomes are willing to pay for value-added features like health benefits and quality ingredients. Market activity reflects this shift, with private label products seeing historic levels of demand while acquisitions like Flowers Foods’ $795 million purchase of Simple Mills point to strong performance in the premium sector. Coca-Cola’s Fairlife brand has seen tremendous growth in recent years, despite its higher price point, in part due to its high protein content, ​“clean” positioning, and indulgent attributes.

Plant-based products have historically been priced at a premium relative to their animal-based counterparts. U.S. plant-based meat is 25% more expensive than beef and even more expensive than meat overall. This price gap is driven by smaller production scales, fewer subsidies, high embedded R&D costs, complex supply chains, and less time for learning-by-doing benefits to fully materialize. However, this premium was not adequately justified to consumers with corresponding advantages in taste or nutrition. Cost-conscious shoppers that did not have consistently positive experiences with plant-based alternatives couldn’t justify spending additional wallet share and returned to familiar animal-based products. Households with more spending power chose to allocate dollars towards premium animal-based products like A2 milk or regenerative bison. 

A recent study found that achieving price parity with conventional meat did not strongly shift consumer choice; however, if the plant-based product was cheaper than meat, its selection share doubled. At the same time, research has demonstrated that consumers in North America and Europe generally show willingness to pay a premium for functional foods (high-protein, gut-healthy, etc.). Plant-based foods must either present cost advantages relative to meat or functional benefits, or both, all while tasting great. 

Fast-growing, premium plant-based brands that offer functional benefits such as Malk’s clean label milks or No Cow’s high-fiber, high-protein bars demonstrate the ability to win in this sector with thoughtful price and brand positioning. Transactions such as The Simply Good Food Company’s $280 million acquisition of plant-based shake brand OWYN further underscore the ability to create value as an alt-protein product.

The lesson: Plant-based brands must earn their price. In a market split between value and premium, products can’t charge more without delivering clear advantages in taste, nutrition, or functionality (ideally all three). Companies that succeed will either compete on cost or justify a premium with real, felt benefits — not just the plant-based label.

Scaling Ahead of Demand 

Throughout the plant-based 2.0 era, many brands operated under a ​“build it and they will come” mentality. Flush with venture funding and encouraged by aggressive category-growth projections, companies built large teams and expanded production capacity ahead of proven demand. The assumption that capital would remain abundant and that retailers would continue expanding shelf space obscured the need for disciplined unit economic and operational rigor. 

Many investors and brands assumed cost curves would fall quickly enough to justify early overbuilding, mirroring the optimism that fueled early cleantech 1.0. Some cost curves have begun to decline across alternative protein ingredients and processing technologies. Unfortunately, the timing was off, as efficiencies materialized years later than teams had projected, and not at the scale required to support the infrastructure built during the hype cycle. As capital markets constricted due to rising interest rates, many companies were left with unsustainable cost structures.

This dynamic created a cycle of overextension. Retailers, responding to strong early trials and the broader hype around the category, placed orders and allocated space well ahead of sustained consumer velocity. When repeat purchases failed to keep pace with those expectations, inventories ballooned, discounting accelerated, and resets and delistings followed. Many brands then found themselves burdened with fixed costs, excess capacity, and insufficient demand to support the infrastructure they had built.

The lesson: Rather than scaling in line with verified consumer pull, plant-based 2.0 scaled on optimism and available capital. Disciplined growth and demand-led scaling are a key path forward for this next chapter. 

Defining the 3.0 Era

The experience of plant-based 2.0 showed that these products must compete on performance and economics in an environment where traditional meat and dairy portfolios are sophisticated, culturally embedded, and optimized for price and convenience. We believe the next phase will be shaped by companies that take those realities seriously and design for them from day one, guided by the following principles.

1. Nutritional performance and clarity of value proposition

In the 3.0 era, nutrition must lead. Products need to match the expectations consumers carry into the category, especially around protein density, digestibility, and clean label profiles. Allergen-free credentials and ingredient clarity matter more now than at any point in the last decade. Roughly 30 – 50 million American adults are estimated to have some degree of lactose intolerance, which creates a large addressable base for dairy-free options if those options meet expectations on nutrition and taste. We believe companies that win will offer clear use cases, align with modern health narratives built around protein and metabolic health, and avoid the assumption that plant-based alone signals health. A successful product should answer a simple question: for this specific occasion, is the nutrition profile meaningfully better or at least equal to what consumers already know and trust?

2. Ingredient and processing models that enable cost-efficient scale

The next generation of plant-based companies must build models that scale with predictable costs and stable supply chains. That means relying on ingredient systems that are compatible with existing food manufacturing infrastructure, using fewer isolates and more functional seed- or crop-derived proteins, and adopting processing steps that reduce complexity. Scalable ingredients also need to align with consumer expectations for clean labels and sustainable sourcing, including regenerative practices where possible. A company’s processing model is no longer a novelty engine. It is a cost, margin, and reliability engine, and those that treat it this way will have an advantage.

3. Strategic channel focus and tighter SKU architectures

Companies entering the 3.0 phase need to concentrate on high-volume, high-repeat use cases rather than broad SKU expansion. Successful companies will design their channel strategy around anchor customers in foodservice, frozen meals, and co-branded product lines where volumes are steady and margins are more predictable. Retail should follow only after a product proves its velocity in channels that require less trade spend. A tight SKU set improves forecasting, simplifies production planning, and increases the odds that a product becomes part of routine consumption patterns, such as pizzas, sandwiches, and ready meals.

4. Brand and messaging rooted in function and taste

The value proposition should center on performance. Consumers want products that melt better, cook more reliably, digest comfortably, or deliver higher protein for the same portion size. Brands must speak to these functional advantages rather than rely on the plant-based label as the lead message. The shift in health culture toward protein, clean ingredients, and metabolic stability is an opportunity for companies that can substantiate those benefits. Product stories that highlight measurable improvements in performance, rather than philosophy or novelty, will land best with today’s food and agriculture buyers.

5. Operational rigor, manufacturing discipline and unit economics

The transition to plant-based 3.0 requires companies to operate with the discipline of mature CPG businesses. That means building capacity that matches demand, controlling yields and waste, and designing supply chains with resilience and cost predictability in mind. In our view, the companies that win will understand that manufacturing is central to margin performance and that unit economics need to work early, rather than relying on long-term cost curves that may never materialize. Disciplined operations will separate the companies that can scale from those that remain stuck in the pilot or niche stage.

6. Moats built through platform technology and anchor partnerships

Defensibility in this next phase will come from platform ingredients and early anchor customers. Companies that can offer a differentiated ingredient system or processing method that improves cost, performance, or sustainability will have a meaningful advantage. Pairing that platform with committed customers creates volume stability and accelerates scale. These moats matter now because the sector no longer grows on category buzz alone. Companies need structural advantages that will hold up as competition increases and buyers become more selective across their protein portfolios.

Why This Matters Now

We are entering a phase where consumer signals provide an opening for future success in the plant-based category. GFI reports that 7% of U.S. households accounted for 82% of U.S. retail plant-based meat dollar sales in 2022. At the same time, nearly 60% of U.S. households purchased plant-based foods in 2024, and over 70% of U.S. adults report trying to increase their protein intake. These data points suggest that there could be upside for plant-based companies that can engage and convert occasional buyers into repeat purchasers. 

Plant-based milk reached ~15% of all retail milk sales in 2022, far higher than plant-based meat penetration (~1.4% of total meat). Oat and almond milks are now chosen by consumers in roughly 40% of North American foodservice coffee transactions. Subcategory adoption was turbocharged by the widespread launch of oat barista blends in 2018, which offered consumers superior taste, texture, and performance, and addressed some of the shortcomings of other plant-milks in coffee applications, such as bitterness, lack of body, and sub-par latte art. This demonstrates that a superior plant-based product in a killer application can drive consumer adoption quickly and become part of routine habits. The contrast between a large non-purchasing population in some subsegments (e.g. 85% of households don’t currently purchase plant-based meat) and broad consumer adoption in other subsegments suggests fertile ground for growth, provided products perform relative to expectation in specific use cases. 

Simultaneously, consumer and institutional priorities are trending toward allergen-free options, clean label ingredient lists, regenerative sourcing, and cost-competitive supply chains. The missteps of the plant-based 2.0 era are well known. This creates an opening for businesses that can deliver credible value, reliable performance, and unit economics aligned with mainstream food manufacturing and retail expectations.

Furthermore, although protein currently dominates wellness discourse, the reality is that most Americans already consume more than enough protein, with average intakes exceeding the Recommended Dietary Allowance across all age groups. What the U.S. diet is actually deficient in is fiber, as over 90% of Americans fail to meet daily fiber recommendations. This shortfall is associated with increased cardiovascular risk, metabolic dysfunction, and lower overall diet quality. Decades of epidemiological research, including large cohort studies, consistently show that plant-forward eating patterns rich in whole grains, legumes, vegetables, fruits, and nuts are associated with longer lifespan and reduced incidence of chronic diseases, including heart disease, type 2 diabetes, and certain cancers. Meta-analyses published in JAMA Internal Medicine further reinforce that higher adherence to plant-based dietary patterns built around fiber-rich, minimally processed plant foods is linked to lower all-cause mortality and improved healthy aging. These findings suggest that the opportunity for these products is not simply to offer more protein, but to align with genuine nutritional gaps.

Additionally, the rise of GLP‑1 drugs is reshaping consumer demand in ways that may unexpectedly benefit the next generation of plant-based products. As patients on GLP-1s report eating smaller portions, prioritizing protein, and seeking foods that are satiating, nutrient-dense, and easy to digest, the market is shifting away from indulgent, high-calorie formats and toward lighter, functional, ​“better-for-you” options. This dynamic may create space for plant-based brands that can offer clean labels, protein density, and fiber-rich formulations aligned with metabolic health. 

In an environment where consumers are more selective about what they eat and more focused on health outcomes, we believe plant-based products that meet modern nutrition expectations are positioned to win. This convergence makes now an opportune moment for 3.0 to redefine the category around real nutritional value.

Case Study of 3.0 in Action: Bettani Farms

Bettani Farms, an S2G portfolio company, is a technology-enabled food business focused on delivering protein-rich, dairy-free cheeses. Its platform centers on Caseed™, a proprietary, patented, seed-based protein that mimics the melt, stretch, texture, and taste of dairy casein while remaining non-GMO and free of dairy, soy, and nuts. The company’s ​“Better with Bettani” positioning reflects its focus on superior taste, texture, nutrition, and performance in real-world applications.

Along with its recent rebrand, Bettani has also strengthened its leadership team to support this next stage of growth, including CEO and Chairman Sandeep Patel, formerly CFO of Califia Farms, and senior leaders with experience at companies across the food and beverage landscape.

Existing dairy-free cheese options have historically struggled to gain widespread adoption because of suboptimal texture, teeth adhesion, poor melt and stretch performance, and lack of protein. Bettani is positioned to redefine the dairy-free cheese category with cheeses that couple 12 – 20g of protein per 100g of product with functionality that meets the needs of foodservice operators and CPG brands. 

We believe Bettani Farms offers a compelling example of a company built for the 3.0 era. Here is how it aligns with the success criteria outlined above.

• Focus on high-volume category and anchor channels: Bettani is now targeting mainstream formats such as mozzarella, which accounts for 44% of U.S. cheese consumption, and cold cheeses built on a common platform such as feta and cream cheese. Its go-to-market strategy emphasizes foodservice and B2B channels, such as frozen pizza makers, pizzerias, and salad/​bowl chains seeking high-protein, allergen-free options for their consumers, instead of launching a wide range of branded retail SKUs. This focus on high-volume, repeat-use applications aligns with the 3.0 playbook.
   
• Nutrition, messaging and alignment with consumer trends: Bettani addresses contemporary consumer priorities: higher protein content, allergen-free (dairy, soy, nut, gluten-free), sustainable sourcing (regenerative crops) and functionality (melt/​stretch). The company’s tagline ​“Better with Bettani” emphasizes taste, nutrition, and performance rather than just plant-based.
   
• Operational orientation and business discipline: With experienced leadership, including executives who have scaled plant-based and CPG businesses, Bettani is organized around commercial execution. The company emphasizes partnerships with manufacturers and co-manufacturers rather than building capital-intensive in-house capacity too early. This approach supports more disciplined use of capital, better risk management, and a clearer path to attractive unit economics.
   
• Moat potential and portfolio alignment: Plant-based cheese remains an underpenetrated category, with alternatives representing a small share of the total cheese market. A platform that combines patented functional performance, higher protein content, allergen-free status, and regenerative sourcing has the potential to build meaningful moats as adoption grows.

From our perspective, Bettani exemplifies the kind of company we want to back for the next phase: clear value proposition, large addressable market, credible execution plan, ingredient and platform advantage, and alignment with macro trends. 

Looking Ahead

The shift to plant-based 3.0 requires a mindset change. We believe investors, executives, and founders need to think less in terms of ​“plant replaces animal” and more in terms of ​“plant enables better systems, products, and economics.” Our take is that the old playbook of novelty, premium pricing, broad SKU expansion, and heavy trade spend needs to give way to disciplined commercial execution, nutrition-first innovation, cost parity or advantage, and anchor-customer strategies.

If the industry executes on these tenets, the 3.0 era can deliver outcomes beyond modest substitution: measurable climate benefits, more food choices, accessible protein at scale, and more resilient business models. The companies that succeed will not rely on the plant-based label alone, but will compete and win on product performance, nutrition, economics, and sustainability.

We believe we are entering this phase now. Companies like Bettani Farms and Ripple Foods illustrate how the next wave of plant-based innovation can integrate smart ingredient engineering, commercial discipline, and aligned agriculture. At S2G, we see significant opportunities for food system transformation through the 3.0 lens, and we are investing alongside entrepreneurs and companies committed to building the infrastructure of the future.