Plant-based sales are up 27.1%, but a health halo that doesn’t cover all products could turn off some shoppers.
Retail sales of plant-based foods totaled more than $7 billion last year, up 27.1% since 2019 — nearly twice as much as the total U.S. retail food market (+14.6%), according to SPINS data analyzed by the Plant Based Foods Association (plantbasedfoods.org), San Francisco, and the Good Food Institute (gfi.org), Washington, D.C.
Being plant-based doesn’t necessarily mean a product is healthy or natural or unprocessed. It just means that it’s made from plants rather than animals, a distinction that’s lost on many consumers.
Of course, the segment was growing prior to 2020 as well, but the pandemic definitely provided a boost. In fact, a survey by the Cypress Research Group revealed that of the 77% of shoppers who purchased a plant-based product in the past six months, 30% said the decision to do so was a direct result of COVID — both a desire to increase consumption of immunity-boosting foods and more time at home to experiment with plant-based ingredients. And according to Mintel, 35% of U.S. consumers agree with the statement that “the COVID-19/coronavirus pandemic proves that humans need to eat fewer animals.”
‘Consumers are looking for simple ways to improve mealtimes and feel better about their health. And they don’t want to sacrifice great taste for convenience.’
— Darcey Macken
PANDEMIC PROVIDED ADDED BOOST
“When the pandemic started, it felt like we were sent to our rooms to reflect on ourselves and our impact as a community,” explains Alan Cohen, CEO of Mexico City-based Kokomio (kokomio.com). “We felt fragile, and I think that started to change consumer behavior.”
Whether concern for animal welfare, the environment or their own health and well-being, motivations for eating plant-based vary greatly between demographics, reports Julie Emmett, PBFA’s senior director of retail partnerships. “For example, when asked for the top three reasons to consume plant-based foods, 100% of Gen Z consumers listed environmental concerns as a motivating factor versus only 34% of Baby Boomers,” who are much more motivated by perceived health benefits. But among all consumers, 58% say they’re eating plant-based because it’s better-for-them, making it far and away the No. 1 driver.
“The threat of COVID drove and continues to drive consumers to eat and shop for their health,” confirms Karen Jobb, chief customer and consumer officer at Petaluma, Calif.-based Amy’s (amys.com). “It’s a trend we were seeing pre-pandemic, but it’s accelerated tenfold. As more and more studies are published about the health benefits of plant-based, we anticipate this movement will gain even more momentum.”
‘I’m not anti-faux meat. There’s definitely a place for those products. But we need to be transparent around the fact that they may not be especially healthy.’
But here’s the thing: simply being plant-based doesn’t necessarily mean a product is healthy or natural or unprocessed. It just means that it’s made from plants rather than animals, a distinction that’s lost on many consumers. A study by plant-based brand Gosh! found that a third of consumers believe plant-based products are artisan as opposed to highly processed while 40% think they contain only natural ingredients, neither of which is necessarily true.
Clearly, “There’s a health halo around plant-based meats in particular that isn’t always deserved,” says Adnan Durrani, founder and CEO of Stamford, Conn.-based Saffron Road (saffronroad.com). “They may be better for the planet, but people don’t realize they’re not necessarily better for them, too. I’m not anti-faux meat,” he adds, citing his own enjoyment of the occasional mock meat burger. “There’s definitely a place for those products. But we need to be transparent around the fact that they may not be especially healthy.” Durrani suggests clear, honest labeling that differentiates between whole plant-based proteins free from artificial ingredients and highly processed meat analogs, so consumers can make more informed choices.
“As plant-based becomes more prevalent, consumers will become more discerning about the quality and integrity of ingredients and the processes through which their food is made,” says Jobb, who believes manufacturers’ failure to recognize that shift in thinking could impede category growth. “People want to feel good about what they’re putting into their bodies…[which means] real, recognizable ingredients free of chemicals and additives.”
But is it possible to make a plant-based burger or chicken nugget that simulates “the real thing” without artificial ingredients or processing? Manufacturers are sure giving it their best shot. But why is that the goal anyhow? asks Jobb, underscoring a growing divide in the category. “There’s a growing misconception that plant-based should mimic meat or dairy and make consumers feel like they’re eating animal protein,” she says. “But Amy’s has been cooking plant-based for decades, and we’ve found that if you use real, high quality ingredients and develop recipes that taste really good, consumers will be satisfied in a different way. They’ll thoroughly enjoy the food and won’t miss the meat.” Food for thought…
FLEXITARIANS PREFER PLANT-BASED ‘SUBSTITUTES’
While there are plenty of plant-forward products built around veggies, legumes and grains that don’t pretend to be anything other than what they are, many of the newest frozen and refrigerated offerings are best described as plant-based “substitutes” for real meat or dairy that do, indeed, try to imitate their taste and texture. That’s because much of the growth in plant-based is being driven not by the 5% of Americans who identify as vegan or vegetarian but by the 47% actively seeking to reduce their consumption of — but not eliminate — meat and dairy, says Emmett. Those folks are still buying real hamburgers and dairy-based ice cream, so plant-based manufacturers need to offer true alternatives that don’t feel like a sacrifice.
86% of current plant-based users are looking for additional health benefits from the products they buy.
‘Private brands’ ability to cross categories and departments allows for one brand to be there for many consumer needs and occasions.’
— James Hedges
That’s a tall order in some categories, but manufacturers have made significant strides recently. For example, although almost 10% of total yogurt sales are represented by plant-based varieties, plant-based alternatives to Greek yogurt (which owns almost half the category) are practically non-existent due to manufacturers’ inability to match Greek’s signature thickness and texture. That changed last month with Denver-based
Danone’s launch of Silk Greek Style Coconut milk Yogurt Alternative (silk.com). The result of a “herculean effort” to deliver the taste, texture and high protein of Greek yogurt sans dairy, “This product is a game-changer,” says senior director of marketing Lia Stierwalt. According to PBFA, plant-based yogurt sales jumped 20.2% (to $343 million) in 2020 — a little short of the 27.1% gain for all plant-based — but the Silk team believes its new entry has the potential to drive up to 20% incremental growth in the category.
Cheese is another underdeveloped segment where latent demand is being met with new innovation. Household penetration of plant-based cheese is only 3% (versus 39% for plant-based milk), highlighting a significant opportunity, explains Bart Adlam, co-CEO of Bellevue, Wash.-based GOOD PLANeT Foods (goodplanetfoods.com). “Taste has been a barrier that really held the segment back,” he continues. But newer products use better ingredients and improved processes to deliver the same “joy” as dairy cheese. Manufacturers are also offering plant-based cheese in more convenient forms and formats. For example, GOOD PLANeT just rolled out “first-to-market” individually wrapped plant-based cheese wedges for on-the-go snacking. The allergen-free product is also keto-certified, highlighting strong demand for plant-based products that offer other better-for-you attributes as well.
In fact, says Stierwalt, 86% of current plant-based users are looking for additional health benefits from the products they buy. Beyond attributes such as non-GMO, organic and preservative-free that suggest clean labels, consumers are looking for callouts like high protein, reduced sugar, low sodium and whole grains as well as diet-specific claims (keto, gluten-free, allergen-free, Whole30, etc.). Verification of those claims is also important.
“Research shows that consumers are actively looking for third-party certifications to bring trust and credibility to the brands they support” says Sotheary Hom, marketing manager at New Barn Organics (newbarnorganics.com), now owned by Denver-based NestFresh. That includes B Corp and other certifications around things like fair trade, regenerative agriculture and charitable giving that give shoppers a sense of a company’s values. (Hom notes that the newest addition to New Barn Organics’ lineup, Organic Coconutmilk, is Non GMO Project-verified, Whole30-approved and made with ethnical coconut sustainably grown on small farms using regenerative farming techniques.)
“We’re seeing evidence that consumers care almost as much about who makes the product as what goes into it,” confirms Dianna Haugen, senior vp of sales for Christian-sted, Virgin Islands-based Yaya’s Garden (yayas.garden). “We’ve had a lot of success sharing our authentic and genuine story with consumers and the fact that our products are made from Yaya’s family recipes.”
IT STILL HAS TO TASTE GOOD
However, no matter the claim, certification or brand promise, “The one attribute consumers won’t compromise on is taste,” says Alex Dzieduszycki, CEO of Brooklyn, N.Y.-based Julian’s Recipe (juliansrecipe.com), which is developing plant-based breakfast sandwiches featuring its new Cauli-Wafels.
“They’re full flavor products that just happen to be plant-based,” he adds, echoing a familiar refrain among manufacturers in the segment.
“Since most of the growth in the category is due to the entry of ‘new’ consumers, it’s especially important for plant-based products to taste great,” agrees chef Sarah Galletti, founder of Paramount, Calif.-based Tattooed Chef (tattooedchef.com). Otherwise, there won’t be a repeat sale. “Consumers also want to try products and flavors they’re familiar with,” she says.
As a result, some mainstream manufacturers like Chicago-based Conagra are easing their way into the segment with plant-based takes on well-known products. For example, the company introduced a cauliflower crust version of its classic Marie Callender’s pot pies as well as a pair of SKUs with Gardein inside. According to Conagra director of demand science Ashley Lind, the strategy has proven very successful. Although plant-based represents only 2.1% of the company’s portfolio, sales during the most recent 52 weeks are up 27.1 % versus two years ago, and Conagra claimed four of the top-selling vegan/vegetarian single-serve meal innovations in fiscal 2021.
Other companies are gaining entry into plant-based by leveraging the power of well-known plant-based brands like Beyond Meat, which is popping up in everything from frozen pizza to pocket sandwiches. Whatever their approach, though, manufacturers are bringing their A game.
“No longer do consumers equate ‘healthy’ with ‘bland’ or ‘lacking in flavor,’” so expectations around plant-based are high, says Meghaan Blauvelt, vegan innovation consultant at Nestlé-owned Sweet Earth Foods (goodnes.com), Moss Landing, Calif. Global flavors are especially hot. In fact, among the ethnic flavors featured in the company’s newest frozen products are Korean Style BBQ, Spicy Kung Pao, Pesto and Seasoned Chipotle, just to name a few.
Many of those global flavors are popping up in plant-based frozen entrées, whose sales shot up 28.5% last year to $520 million. Emmett says plant-based breakfast entrées are doing even better, especially lately, jumping 59.2% during the 52 weeks ended July 11.
In response to increased demand for convenient and flavorful plant-based options in those two categories, Sweet Earth recently debuted a trio of plant-based Breakfast Bowls and added new flavors to its frozen pizza, burrito and entrée bowl lineups, says Blauvelt. Before that, the company expanded its Mindful Chik’n portfolio with three new recipe-ready strips and shreds. “Those products are all ready to eat or can be used in cooking, which is a key differentiator as it gives consumers the opportunity to eat plant-based at a variety of different occasions,” she explains.
“Consumers are looking for simple ways to improve mealtimes and feel better about their health. And they don’t want to sacrifice great taste for convenience,” continues Darcey Macken, CEO of Lafayette, Colo.-based Planterra Foods (planterrafoods.com), citing the company’s OZO Mexican-Seasoned Ground as an example. “It has been our best-selling item because it’s already seasoned with delicious flavors and it’s easy to prepare, taking the stress out of cooking something that will taste good.” This summer, the company upped the convenience factor another notch with the introduction of a full line of frozen plant-based proteins that consumers can keep on hand for easy meals anytime. Macken says she expects the plant-based meat category, whose sales jumped 45.3% to $1.4 billion in 2020, to continue to evolve to include whole muscle products like chicken breasts and steak as well.
RETAILERS PLAY KEY ROLE FOR PLANT-BASED
What can retailers do on their end to help drive continued growth in plant-based? Industry observers say price remains an obstacle for some consumers, especially young adults. And it’s only getting worse. “The rise in mainstream popularity of plant-based protein, for example, is related to innovations in taste, texture and convenience, all of which can push those products to a higher price point,” says James Hedges, senior manager of category solutions at Stamford, Conn.-based Daymon. To convince consumers still on the fence to make plantbased products a regular part of the shopping list, manufacturers should strive for affordability, he continues. “But retailers can help meet consumer need for value by offering private brand plant-based options” — which will also earn them points for helping shoppers meet their health and wellness goals.
Hedges adds that “only a retailer’s private brands can flex to provide the differentiated solutions I consumers are looking for, and private brands’ ability to cross categories and departments allows for one brand to be there I for many consumer needs and occasions” | creating opportunities for the development of mega-brands like Kroger’s Simple Truth Plant Based and Simple Truth Emerge. Clearly, consumers are comfortable buying plantbased private label, says Hedges, citing 17% growth for plant-based own brands during the most recent 52 weeks versus 2.6% for the segment as a whole. The news is even better in the frozen department where plant-based private labels are up 35% compared to the same period a year ago, he reports.
Proper merchandising is another key driver of plantbased growth controlled largely by retailers. Hedges says there’s no one right way to merchandise plant-based foods, and the right approach depends on store layout and depth of items within individual categories.
However, a PBFA study at Kroger found that merchandising plant-based meats in the same section as their animal-based counterparts resulted in a 23% increase in plant-based sales, according to Emmett. “Shoppers expressed surprise and delight to see the wide variety of options,” she adds.
“[Poor] merchandising has led to missed opportunities to sell plant-based offerings to flexitarian consumers,” who may not think to visit separate plant-based sections but are open to the segment if alternatives are right in front of them, says Adlam. “The end point is clear,” he continues, citing plantbased milk as the gold standard. Placing it alongside dairy milk “normalizes” plant-based alternatives, he says. “The same needs to happen with meat and cheese.” And frozen foods.
“Historically, better-for-you frozen products were merchandised in a separate section,” says Galletti. “That’s great when you’re looking to create a better-for-you destination.” But given the momentum around plant-based frozen foods, “We encourage retailers to offer plant-based solutions in every door of the frozen aisle.” To make plant-based options easier to find, however, manufacturers suggest simple shelf tags.
Beyond merchandising, many retailers are running integrated shopper marketing events that combine digital offers, signage, educational content, displays and recipes across multiple categories at the same time, creating a lot of excitement and awareness, says Emmett. “The results of such programs are outstanding.” A knowledgable staff can go a long way, too. She adds that not only is the plant-based segment outperforming total food and beverage, plant-based consumers tend to be more educated and more affluent than average. “So they’re valuable shoppers. Retailers want to build loyalty with them by stocking and featuring plant-based foods in categories across the store.”
‘Retailers really need to look at their freezer doors and ask themselves whether they’re over-SKUed in plant-based.’
PROCEED WITH CAUTION
That said, Durrani says chains should resist the temptation to go too far too fast. Yes, sales of plant-based have skyrocketed recently, and there’s still plenty of runway. “But plant-based proteins, for example, are still only 1% or 2% of the category,” he says. If you look at some frozen sets, however, you’d think they own a much bigger share. “So retailers need to look at their freezer doors and ask themselves whether they’re over-SKUed. My concern is that many are, and there will eventually be fallout as those doors lose sales.”
Durrani also suggests retailers act as gatekeepers by insisting on transparency from manufacturers. Not all plant-based products have to be healthy, he says, but it shouldn’t be difficult for customers to determine whether or not they are. If you’re selling plant-based products that are highly processed or loaded with preservatives and shoppers can’t tell, they’ll blame you for not having their back. “Retailers need to ask questions,” says Durrani. “They definitely have an important role to play”