Demand for Plant-Based Meat Alternatives and the Role of Habit Formation and Variety Seeking

Novel plant-based meat alternatives (PBMAs) have the potential to disrupt traditional meat industries, but only if consumers substitute PBMAs for meat over time. This study uses weekly household scanner data from 2018 to 2020, to estimate demand for PBMAs in the ground meat market. We use a basket-based demand approach by estimating a multivariate logit model (MVL) to determine cross-product relationships between PBMAs, ground turkey, ground chicken, and ground beef, while simultaneously exploring the role of prior consumption habits and demographics on demand. The only demographic characteristic affecting PBMA demand is the household education level of having a college degree when controlling for other factors. We found no significant seasonal difference in purchasing patterns, after controlling for cross-product effects, prior purchases, and demographics. Demand for PBMAs is driven by habit formation rather than variety seeking, as higher past purchases of PBMAs lead to a higher likelihood of current PBMA purchases. Consumers with higher past ground beef purchases are less likely to choose PBMAs, suggesting growth of this new product is coming from consumers on the margin rather than from heavy beef buyers substituting away from their traditional purchases. PBMAs and ground beef are utility complements with all meat products, suggesting that traditional meat and PBMA companies, along with retailers, should explore synergies in product marketing and offerings.