How retailers can help shoppers get to the other side of plant-based foods.
It wasn’t that long ago that plant-based foods – veggie burgers, soy milk and the like – were reserved only for the crunchiest of consumers: hard-core, Birkenstock-wearing, PETA members out to save the world. But in less than a decade, things have changed considerably. Today, almost everyone is eating plant-based at least some of the time, with more than a third of Americans self-identifying as flexitarian.
A new report from The Good Food Institute (gfi.org), Washington, D.C., in conjunction with Chicago- based SPINS (spins.com), reveals dollar sales of plant-based foods that directly replace animal products jumped 11.4% during the past year – and 29% since 2017 – to more than $5.0 billion across outlets. That’s more than five times faster than total food sales (up only 2% in 2019), making plant-based foods a key driver of total growth.
Representing about 40% of all plant-based food sales, plant-based milk (+5% last year to $2.02 billion) remains the largest, most well-developed plant-based category, followed by plant-based meats (+18.4% to $939.5 million), plant-based meals (+8.3% to $376.97 million) and ice cream/frozen novelties (+5.7% to $335.55 million), according to the report. But the fastest- growing plant-based categories include eggs (+191.7% to $3.0 million) and plant-based dairy spreads, dips, sour cream and sauces (+53.7% to $12.54 million).
Compared with plant-based milk, which owns 14% of all retail milk sales, “Many plant-based foods still have between a 1% and 5% share of their respective categories,” says Julie Emmett, senior director of retail partnerships at the Plant Based Foods Association (plantbasedfoods.org), San Francisco. “But that just highlights the tremendous growth potential of these products.” Are plant-based milk-type shares really realistic across the supermarket? Manufacturers we talked to think it’s not only possible, but probable. Why are they suddenly so bullish on a segment that’s languished for, literally, decades?
FLEXITARIANS DRIVING PLANT-BASED GROWTH
Industry observers say we have the flexitarians to thank. While the number of vegans and vegetarians has remained fairly steady at around 6%, the number of consumers simply looking to incorporate more plants into their diet and/or cut back on the amount of meat they consume has skyrocketed, giving manufacturers of plant-based foods a much wider audience.
“One key insight that’s come out of our focus groups is that people want to make small changes that make them feel like they’re making a difference,” says Darcey Macken, CEO of Boulder, Colo.-based Planterra Foods (planterrafoods.com), maker of the new OZO plant-based meat lineup. “They don’t want to cut out meat altogether. That would be overwhelming. But they want to do their part.
“Maybe they’re not 100% plant-based,” continues David Israel, founder and CEO of Bellevue, Wash.-based Good Planet Foods (goodplanetfoods.com). “But if consumers can help the environment, support animal welfare and improve their own health just by making a few better choices each week, then they’re willing to try. It’s a much more balanced approach that doesn’t require them to give anything up.”
Israel also thinks newer, more inclusive terminology is bringing more consumers to the category. “When people see a product labeled ‘vegan’ or ‘dairy-free,’ they assume it’s not for them because they don’t identify as vegan or dairy-free. So that’s a barrier. But calling a product – or a set – ‘plant-based’ opens the door to everyone.
It also helps overcome one of the biggest obstacles to category growth: the belief that vegan and vegetarian products don’t taste good, says Swathi Rai, vp of finance and operations for Nate’s Meatless (natesmeatless.com), part of South San Francisco-based ADF Foods. Fortunately, products labeled plant-based aren’t saddled with that baggage.
The irony is, manufacturers of plant-based foods have made incredible strides in product quality, especially flavor. “That’s really the biggest misperception,” says Israel. “People are often stunned at how closely new plant-based offerings replicate the real thing. They just weren’t aware the choices are as good as they are. Once they taste them, they realize they’re really not giving up much at all.” And with new technological advances, ingredients and processes becoming available every month, many plant-based manufacturers – often smaller and more nimble than their conventional counterparts – continue to make improvements not just around taste but texture, consistency, aroma, performance, etc. In fact, says Israel, “We’ve modified our cheeses probably three or four times over the past year in order to get as close to dairy cheese as possible.” As a result, “Consumers can’t always tell the difference.”
NEW ENTRIES EVERY DAY
In addition, says Emmett, manufacturers are rolling out plant-based alternatives to more and more foods every day, including consumers’ favorite comfort foods such as pizza, mac and cheese and chicken nuggets. Plus, “Many retailers are innovating within their private label programs, rapidly expanding their own brand plant-based food offerings,” which are often priced lower than national brand items, opening the category up to value shoppers as well.
The advent of plant-based alternatives also presents an opportunity to bring some innovation to categories such as butter and shredded cheese that have become highly commoditized.
“There’s just a whole new breed of plant-based alternatives,” says Jaime Athos, president and CEO of Hood River, Ore.-based Tofurky (tofurky.com). “So there’s really this perfect storm of more solutions being available combined with rising awareness around the benefits of plant-based.”
While Baby Boomers are more likely to go plant-based for health reasons, millennials and Gen Z consumers are generally more motivated by concern over animal welfare and the environment. But it’s growing awareness around how food choices impact the latter that’s really pickedup steam recently, says Athos, citing carbon emissions produced by animal agriculture. And while he thinks it’s probably too soon to talk about the relationship between consumption of animal proteins and the coronavirus pandemic, Athos admits that he does wonder.
And then there’s the question of whether animal agriculture is a sustainable way to meet the planet’s future nutritional needs. New research from IDTechEx finds that feeding a population expected to hit 10 billion by 2050 will require a whopping 70% increase in global food production. Currently, says the company’s new report, 77% of agricultural land worldwide is used for livestock, but only 33% of global protein intake comes from meat and dairy. Add 2 billion more mouths to feed in 30 years, and the numbers just don’t add up. In fact, one study found that in order to adequately nourish the growing global population, consumption of red meat, sugar and refined grains will have to be cut in half (and then some), while consumption of plant-based foods will have to more than double.
Even in the short term, says Macken, “It’s not about taking sales away from animal meat. It’s about finding other ways to meet rising demand for protein and offering more solutions. We want to be incremental to the category.”
INNOVATION, NOT KNOCK-OFFS
Manufacturers like Tofurky are also dedicated to growing the plant-based category by rolling out not just me-too products intended to grab a share of existing sales, but truly differentiated, ever-better items that bring new users to the segment, says Athos. So with its new Moo-cho shredded cheeses, for example, the company set out to create a cultured product that mimics dairy cheese in every way – from mouthfeel to meltability to flavor. And with its new Tofurky burgers, it created a product designed for merchandising in the produce department rather than the meat case alongside Beyond Burger. “We’re not trying to create competition for competition’s sake,” says Athos. “We really want to attract new consumers to plant-based with compelling alternatives at an attractive price point at places where they’re already shopping, i.e. big banner stores and Walmart, not just Whole Foods and co-ops.”
The folks at Battle Creek, Mich.-based Kellogg’s took a similar approach with the company’s new Incogmeato by MorningStar Farms (morningstarfarms.com) collection, says Sara Young, the brand’s general manager of plant-based proteins. “There’s still a bit of skepticism around taste,” she confirms. “But when we really dug into the consumer research, we discovered that consumers ‘taste’ with all of their senses. So it includes everything from how the product looks coming out of the package, how it feels in their hands, how it juices and sears, how it comes out the pan, how it smells, etc. It’s way more than just that first bite. It’s the total experience. We took all of that into account when we created the next generation [of plant-based meats.]” But beyond that, “To overcome barriers to consumer trial, we knew we had to have a positive nutrition story,” says Young, checking off some of the highlights of Incogmeato’s nutritional panel.
While taste is paramount, good nutrition along with clean ingredients, sustainable sourcing and a strong mission statement are all increasingly important in the plant-based space as well, continues Darcey Howard, global marketing director for dairy-free ice cream supplier Coconut Bliss (coconutbliss.com), Eugene, Ore. “Plant-based is in its third year of real growth, so consumers are getting smarter and choosier,” she explains. “Being plant-based alone is no longer enough.”
MORE THAN JUST PLANT-BASED
Macken couldn’t agree more. “We know we have to win nutritionally,” she says. But even that’s not enough anymore, she continues, adding convenience to the list of in-demand attributes as well. While the OZO lineup is already differentiated by its proprietary clean label blend of rice and pea protein fermented by shiitake mushrooms (for superior taste, better nutrition and improved digestability), its makers opted to create several value-added formats. While patties are the cost of entry for fresh, plant-based meat analogs, the collection also includes both regular and Mexican-seasoned grounds and Italian- style meatballs. “We want to be about solutions,” explains Macken. “Whether taco Tuesday or Italian night, we want to be part of consumers’ everyday family meals.”
The folks at Nate’s have a similar goal, says Rai, citing its recipe-ready heat-and-eat Meatless Swedish Meatballs.
While innovation is important, she adds, the product’s similarity to conventional meatballs makes the new plant-based option more accessible and easier for consumers to integrate into their diet. But it’s likely next-generation items will have to go further.
Another thing consumers are looking for from plant-based brands in particular is a mission that aligns with their personal values – especially around issues such as environmental protection and sustainability, humane treatment of animals, fair wages, etc. Manufacturers say that if you’re gonna talk the talk, you had better walk the walk because green washing will not be tolerated by consumers who hold brands in the plant-based space to a higher standard. That’s one of the reasons so many large, conventional companies entering the segment have done so through the acquisition of existing plant-based brands that consumers already know and trust. While there was some trepidation early on that the arrival of “Big Food” on the scene would mean putting profit ahead of principle, many companies learned (some the hard way) that taking a hands-off approach and allowing plant-based brands to operate somewhat autonomously is the way to go.
As a result, says Athos, the net effect of Big Food’s entry into the space has been positive, partly because it’s helped “legitimatize” the plant-based segment. “Seeing some of these big players re brand themselves as protein rather than meat companies has been a real confidence builder,” he explains. “They’ve got a lot of really smart people working for them, and they’ve come to the same conclusion we have: that there’s been a foundational change in how we feed the world and it’s here to stay.”
Macken says having the backing of one of the world’s largest food companies, parent company JBS USA, allows start-up Planterra to offer retailers the best of both worlds. “We’re all about that entrepreneurial spirit and trying new things and staying nimble. But having access to [JBS’s] suppliers and procurement and capacity allows us to do the blocking and tackling very well, too: being on time, keeping everyone in-stock, answering the phone when customers call, just being a reliable, accessible partner.”
BIG BRANDS PUSH CATEGORY FORWARD
Being part of a larger organization also gives plant-based brands the wherewithal to help retailers drive long-term category growth, says Incogmeato’s Young. Traditionally, she explains, most plant-based brands were produced by small- to mid-sized companies without the budgets to fund a plant-based revolution. “To build a sustainable category for the future will require a different level of partnership between brands and retailers,” and companies like Incogmeato parent Kellogg’s are positioned to provide it, she says.
So what’s needed to take the category to the next level? “Shoppers are hungry for information,” says PBFA’s Emmett. “They’re aware that plant-based foods exist, but they still want to know more about ingredients, how they taste, the impact on the environment, etc. So brands and retailers need to continue to find new ways to educate them, including social media and shopper marketing.” Educating store personnel is key, too, she says, as shoppers often rely on them for information.
“Retailers have an incredible opportunity to educate consumers in-store,” agrees Rai, citing shoppers’ trust in their local supermarket.
But one of the best ways to boost awareness and gain trial is to let consumers try plant-based foods for themselves via demos and sampling, though Emmett suggests retailers consider allowing companies to use their own brand ambassadors.
“A lot of people who tried plant-based foods before the introduction of today’s newer, better products were turned off by the taste and unwilling to buy them again,” creating an additional hurdle new items have to overcome, says Israel. The only way to change their minds is to get the product in their mouth. Tasting is believing, he says. “So we always try to support our launches with demos.”
INTEGRATION, PROPER SIGNAGE KEY
Another obstacle to growth in the plant-based segment is inconsistent merchandising. A product like plant-based cheese, for example, might be in the deli section, the dairy department, the produce aisle or a separate plant-based set somewhere else in the store. “We have to make it easier for consumers to find these products,” says Israel. PBFA will release the results of a plant-based meat control store test in Q2 that’s expected to shed some light on where items should be merchandised. But until then, Israel leans toward integration with similar conventional items rather than a segregated plant-based set. Although it depends on the retailer, “Our plant-based cheese does very well in the dairy section alongside dairy-based cheese. Dedicated vegans on a mission to buy plant-based cheese will find it wherever it is in the store,” he explains. “But the guy coming in for regular cheddar won’t see the plant-based alternative unless it’s right there beside the dairy cheese. If he sees it, he might decide to give it a try.” It’s the same approach most retailers are now taking to organic products, Israel says.
But integration isn’t without its risks, making signage and shelf tags that call out plant-based options critical. “In areas where plant-based products have already been integrated like yogurt and ice cream, for example, products often blend together,” says Emmett. So it’s important to create well-signed plant-based sections-within-sections to help differentiate the offerings.
Although best practices around merchandising are still being established, says Athos, there’s a clear opportunity for retailers to increase shelf space for plant-based foods by eliminating slow movers in adjacent sets. “There’s just so much growth in the segment and so many compelling brands that should be on the shelf,” he says. “I think bolder, risk-taking retailers that see the potential and take this opportunity will really benefit.”
“Consumers are starting to view plant-based foods as staples,” continues Israel. “If you don’t have them in your store, shoppers will go elsewhere to find them.” That would be a real loss because according to PBFA, plant-based shoppers spend 61% more than average shoppers. So this is a customer you want in your store.
“Consumers are voting with their wallets,” says Young. “If you want to win with millennials and Gen Z in particular, you need to have the right, forward-thinking offerings in this space. This is more than a trend; it’s how consumers want to eat now.”
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