Global agribusiness giant Archer Daniels Midland (ADM) is rethinking its US$300M plan to expand production of alternative proteins due to decreasing interest in plant-based foods, Food Dive quoted the company’s CEO Juan Luciano as saying.

ADM has “re-scoped” its investment project “to better match the expected lower growth demand environment,” Luciano said during the earnings call on 24 October.

The company has seen market destocking as consumer demand drops, and expects headwinds to persist into next year, according to the 25 October report.

ADM’s nutrition unit’s profit totalled US$138M in the third quarter, a 22% decline from US$177M last year.

However, the company’s overall earnings exceeded analysts’ expectations driven by increased ethanol demand and growth in some parts of the nutrition and oilseeds businesses, Food Dive wrote.

Although consumers remain interested in the alternative protein category, higher prices compared to traditional meats have reduced repeat customers and lowered sales, according to a report from CoBank.

In addition to cost factors, ongoing perceptions regarding taste, value and versatility continued to be obstacles for the category, the report said.

ADM announced plans last year to expand its alternative protein production in Decatur to meet strong demand growth at the time, Food Dive wrote.

However, slowing sales were showing the market for plant-based meats could be reaching a tipping point, the report said.

To offset slowing demand, the company was focusing its portfolio on more “resilient categories” including specialised nutrition and dairy.

However, that transition had stalled to a degree following an explosion at the company’s Decatur processing complex that injured eight workers, the report said.

“We will work aggressively to restart operational capabilities at Decatur East to minimise the impact in 2024,” Luciano added.

Overall, ADM reported third quarter net earnings of US$821M, a 20% decline from last year. During the quarter, the grain trader reported reduced global soyabean crushing margins and a negative shift in export demand to Brazil.

Earnings were boosted by strong demand for biofuels that was expected to continue into next year, the report said.