Power Plants Enliven a Burgeoning Category
If there’s one thing we’ve learned by now, it’s that people want to eat plants in all sorts of ways. An illustration of that key fact: For the 52 weeks ending December 2019, U.S. retail sales of plant-based foods rose 11.4%, bringing the total plant-based market value to $5 billion, according to a report released earlier this year by the Plant Based Foods Association (PBFA) and The Good Food Institute, featuring commissioned data from SPINS.
Key Takeaways
- Health and environmental concerns are driving more consumers to opt for plant-based food products.
- Innovation is occurring not only within the plant-based meat sector, but also in a range of items across the store, including plant-based seafood, eggs, beverages, soups and sauces.
- Grocers must be ready to evolve their assortments to meet shifting consumer demands regarding plant-based foods.
Responding to this solid trend, some grocers, among them Albertsons Cos. and The Kroger Co., have even introduced own-brand plant-based food lines, while many tout their plant-based offerings in sections called out with prominent signage.
“Growing environmental concerns around the impacts of animal agriculture and the need to feed 10 billion people by 2050 are shifting consumer preferences, thrusting plant proteins into the spotlight,” explains Thomas Hayes, an analyst at New York-based Lux Research. “Companies like Impossible Foods are looking to capitalize on this opportunity, pushing the envelope to create plant-based products with sensory profiles as similar as possible to their animal-derived counterparts.”
Beef-less Burgers
Speaking of Redwood City, Calif.-based Impossible Foods, the company recently raised $200 million in its latest funding round, led by new investor Coatue, for a highly impressive total of about $1.5 billion raised since its founding in 2011, and introduced pre-formed 4-ounce patties of its popular Impossible Burger product, available at retail in a 2-pack.
Impossible Foods is hardly the only game in town, however. One of its major rivals in foodservice, retail and now the direct-to-consumer channel, Los Angeles-based Beyond Meat, the No. 1 brand in the refrigerated plant-based meat category, according to SPINS data for the year ending July 12, has its own plan for success — and product development is a crucial part of it.
“We expect the plant-based meat category to continue to grow within the overall plant-based foods industry,” says Chuck Muth, Beyond Meat’s chief growth officer. “At Beyond Meat, we have a very specific goal — to perfectly build delicious, nutritious meat from plants that’s indistinguishable from its animal protein equivalent. We have three core platforms for innovation — beef, pork and poultry — and we’ll continue to innovate across these platforms, both by renovating existing products as well as by introducing new product offerings. We’re proud of our products in-market today and are committed to a rigorous approach of rapid and relentless innovation to improve our products in terms of taste, nutrition and price.”
Another important element of the plan is merchandising.
This approach is borne out by a study undertaken in late 2019 and early 2020 by PBFA and Kroger, in which plant-based meat sales increased by 23% when those items were sold in the meat department. The study, which placed all plant-based meat in a 3-foot set within the meat department, ran for 12 weeks at 60 stores in Colorado, Indiana and Illinois.
Ready to Crumble
In the realm of innovation, Austin, Minnesota-based Hormel Ingredient Solutions has been working hard, releasing a new line of plant-based ingredient solutions available to food manufacturers across the country.
“These new products are designed to help food manufacturers incorporate more plant-based foods into their offerings for the growing number of consumers interested in adding these items to their diets,” explains Paul Sheehan, director of sales for Hormel Ingredient Solutions, part of Hormel Foods Corp.
Made with various types of pea protein and a small amount of mushroom to provide a taste of umami, the offerings include fully cooked crumbles and uncooked ground products, with the former available in options ranging from traditional and Italian, to breakfast and chorizo-style flavors. According to Sheehan, the advantages of pea protein include its superiority as “a platform that [drives] some quality flavors.”
Adds Amy Thielking, marketing manager at Burke Corp., a wholly owned subsidiary of Hormel, as a “custom formulation house,” Hormel Ingredient Solutions can “custom create any kind of flavor customers want,” such as Asian or Mediterranean. The company has also developed blended products — 70% meat, 30% veggie — for flexitarians interested in reducing meat consumption in response to consumer health needs, notes Thielking.
The Joy of Soy
While Hormel Ingredient Solutions and Beyond Meat are formulated from pea protein, Impossible Foods is created with soy protein, which also appears in a plethora of other plant-based foods, including Battle Creek, Michigan-based Kellogg Co.’s recently released MorningStar Farms Incogmeato products.
According to culinary dietitian Pam Smith, from a nutrition perspective, one of the advantages of soy protein is that it’s a complete, high-quality protein on par with animal protein — that is, it provides a sufficient amount of each of the nine essential amino acids that humans need in their diet.
“We know from [the United Soybean Board’s] research that 88% of consumers prioritize ‘complete’ protein sources when choosing plant-based foods, so formulating with soy fits this consumer preference,” says Smith, who’s part of Soy Connection, a collaboration of health, nutrition and food industry experts and U.S. soybean farmers under the auspices of the Chesterfield, Missouri-based United Soybean Board. “Knowing this, companies should be encouraged to label and promote soy protein ingredients as ‘high quality’ and ‘complete,’ key motivators for all consumers.”
Observing that “findings from the United Soybean Board ‘Plant-based Protein Study’ showed that consumers across all demographics reported eating more plant-based foods, meaning there is opportunity for innovation across many product categories,” Smith goes on to note, “Breakfast and snacks ... which are built with high-quality complete plant proteins, including soy, are a particularly exciting area for development.
As Smith points out, “Environmental sustainability is a priority to U.S. soybean farmers, who have reduced energy usage by 42% since 1980 and follow sustainable farming practices.”
Sunny Side Up
While a lot of innovation is taking place in the alt-meat area, plant-based counterparts of other animal proteins exist across the store. New York-based Gathered Foods, whose Good Catch plant-based seafood, made from a proprietary six-legume blend of peas, chickpeas, lentils, soy, fava beans and navy beans, has captured the attention (and sales, distribution and logistics know-how) of traditional seafood purveyor Bumble Bee, in August opened a 42,500-square-foot dedicated production facility in Heath, Ohio, constructed specifically for high-tech production of Good Catch products.
Another example is San Francisco-based Eat Just Inc., a maker of such products as Just Egg and the recently launched folded Just Egg, one of PG’s 2020 Editors’ Picks.
“Eat Just Inc. continues to explore plant types from around the world to identify proteins and new functionality,” says Matt Riley SVP, global partnerships at the company. “As plant-based food continues to improve in quality, taste and price, I believe we will see more and more categories offering plant-based products.”
Explaining the success of Eat Just’s plant-based egg offerings, Riley notes:
This attention to quality is paying off: “While burgers get a lot of buzz, dollar sales of plant-based eggs have surged 192% in the last year, and we own about 99% of the category,” asserts Riley.
Moreover, the company’s not done innovating. “Eat Just has several exciting new product launches planned for 2021 that leverage the ubiquitous nature of the egg and build off our success in the breakfast category,” reveals Riley, adding that these new items will be sold in the frozen breakfast aisle.
No Longer a Niche
For some manufacturers, plant-based products of various types are embedded in their DNA, dating back to well before the concept was a conscious dietary choice.
“Campbell Soup Co.’s key strength has always been around plant-based food innovation, shown by the strength of a variety of our soups, pasta sauces (Prego), plant-based beverages (V8 and Pacific), and salsas (Pace),” notes Jennifer Moss, VP R&D meals and beverages at the Camden, N.J.-based company. “As our consumers continue to look for more plant-based options, we are innovating to meet their needs. Of the recent new product launches over the past year across our entire portfolio, 60% were vegetarian and 30% vegan.”
Adds Moss: “Delivering plant-based options continues to be top of mind as we look at our innovation pipeline over the next 12 months. The macro trend of plant-based is growing among consumers and is no longer a niche diet requirement. V8 is the original plant-based beverage, and as we look to appeal to the Millennial and Gen Z audiences, our plans to expand and reposition the line for the next generation is top of mind.”
Something for Everyone
What do consumers and retailers have to look forward to as plant-based foods continue to evolve?
“Realizing this goal is the critical piece to further broaden the consumer appeal of plant-based products, and will be necessary to generate any interest from lifetime nonvegetarians and those not already interested in flexitarian diets. As the market grows, economies of scale will also help plant-based products move towards price parity with animal-based products.”
Price is indeed a major consideration for plant-based manufacturers across the board, along with health and sustainability.
“We know that to be successful long term, we have to win on taste, win on nutrition, and ultimately win on price,” acknowledges Beyond Meat’s Muth. “As we grow and achieve economies of scale, we’ll look to drop our pricing as quickly as possible and have set an internal goal to have at least one product in one meaingful category that achieves price parity with its animal protein equivalent by 2024.”
“Our focus at Eat Just is on building a food system that nourishes human and plant health,” says Riley. “As availability and quality continue to improve and costs continue to drop, I believe that traditional proteins could be replaced by plant-based offerings in time.”
While the factors noted above could combine to usurp animal proteins entirely, as he speculates, other manufacturers take a more inclusive view.
“Beyond Meat isn’t telling consumers not to eat meat; we think that would be the wrong approach,” counters Muth. “We’re simply providing another delicious meat option for consumers to enjoy — no compromise required. We believe if we can create a product that tastes delicious, is better for you and is cheaper than animal meat, we see tremendous opportunity to transition consumers from animal-based to plant-based meat.”
“The consumer’s demand for a more plant-based diet is all about choices,” observes Campbell’s Moss. “These choices may be driven by views around health, sustainability or moral choices, but the macro trend is growing. Today, regular users of plant-based alternatives such as almond milk, tofu and veggie burgers do not actually consider themselves vegan or vegetarian. This is a major macro consumer shift, and both food companies and retailers need to ensure they have products and solutions for this consumer need.”
In the end, grocers must be ready to evolve their assortments to meet shifting consumer demands regarding plant-based foods.
“Retailers, if [they’re] not already, will need to rethink their definitions of ‘meat,’” counsels Hayes. “The future of meat is a diverse mix of proteins, and plant proteins will be a significant portion of that future landscape.”
