In early December the UK Court of Appeal ruled that Oatly, along with other producers of plant-based drinks, could not use the word “milk” or other dairy-related terms when marketing their products in the UK.

The ruling, which overturned an earlier High Court decision, was described as “victory for the integrity of dairy terminology” by Judith Bryans, CEO of Dairy UK and as being “out of touch with the direction consumers are moving” by Bryan Carroll, general manager for Oatly UK & Ireland.

Whatever the direction consumers are moving, it seems increasingly clear that investors have run out of patience with the most famous purveyors of plant-based alternatives to real meat and dairy.

Beyond Meat and Oatly shares were already way below the heady levels seen during 2021 at the start of this year, but even those huge falls couldn’t prevent further drops since January. In fact, shares in both companies are down more than 40% in 2024 (see Figure 1).

In looking at why investors have lost interest in the companies, there are a couple of things to look at.

Firstly neither company actually makes any money. Oatly itself projects a loss of between $35m and $50m (€33m and €47m) this year, while Beyond Meat lost $115m (€109m) in the first nine months of the year.

Secondly, the regulatory landscape is not necessarily in favour of the companies. The pushback from governments and regulators against fake-meat and fake-dairy products seems to have gathered steam in recent years, particularly in Europe where bans have been introduced on products without meat marketing themselves to sound like meat, and on non-dairy products associating themselves with dairy.

But thirdly, and most importantly, the companies have not lived up their own hype. Investors are always willing to look beyond short-term losses in companies as they spend bit to develop their products and grow their markets. They are willing to be patient as they wait for the promised returns to arrive.

However, there are limits to that patience and it appears that, for these two companies at least, that patience has run out. While the companies cannot make a profit on the product that they do sell, the size of the market they are selling into is also shrinking – particularly for fake meat in the key US market. This means there has been a failure to innovate enough to profitably bring their product to market and a failure to grow the size of that market.

This dual failure is a failure to deliver on both the key things that investors wanted from these companies.

This is not to say that the fake-meat and fake-milk markets will completely disappear – they will likely be around for years to come, but some of the biggest names in the industry, it is likely that they will continue to suffer from a sever case of first-mover disadvantage.