Nearly 80 million U.S. households buy plant-based products, and the vast majority aren’t vegan, vegetarian — or even flexitarian. But knowing who are they and what motivates them is key
to winning their business.
A whopping 79 million U.S. households — 62% of the total — bought plant-based products in 2021, challenging the notion that only hard-core, hippie tree-huggers eat meat- and dairy-free foods. In fact, today’s plant-based shoppers are a diverse group that spans the generations, reports the Plant-Based Food Association (PBFA), San Francisco. While Millennials and Gen X are the largest purchasers, each representing about 31% of the total, Baby Boomers are right behind them, making up 30% of all plant-based buyers. However, the vast majority don’t identify as vegan (less than 1%), vegetarian (2%), plant-based (3%) or even flexitarian (9%), according to the PBFA. For a wide variety of reasons, most simply want to “eat a little better,” which means sometimes choosing plant-based.
“That’s what’s driving a lot of the growth in the category,” says David Israel, founder and CEO of Bellevue, Wash.-based Good Planet Foods. “So we’re not trying to convert people to a vegan diet. We just want to give them an alternative to [dairy] cheese so they can do a little better for themselves and for the planet — whether all the time or just here and there. Because even eating a little more plant-based has an impact.”
The folks at Sweet Earth Foods, Moss Landing, Calif., are tracking a similar trend. “We’re seeing more ‘veggie-forward’ consumers who focus on minimizing rather than removing [animal] meat from their diet,” reports Jennifer Barnes, vp and general manager. “Because of this shift, there’s a need to provide options for a wider range of plant-based eaters,” including frozen meals and other convenience foods with mass appeal.
In order to get to the right assortment, it’s important to understand the why behind the buy. But industry observers say consumers’ reasons for choosing plant-based are changing as well. “Health has always been the No. 1 driver that brings consumers to plant-based foods,” says Julie Emmett, senior director of marketplace development at PBFA. It’s still the biggest reason (though there’s an increased focus on immunity), “But planetary health as a motivation has grown the fastest — not surprising given the heightened awareness around global warming and the impact of industrial animal agriculture on greenhouse gas emissions.”
Israel isn’t surprised. “Young people in particular are suffering from climate anxiety,” he says. “They’re scared for their future, so they’re really starting to pay attention and do better.”
With all of the recent heat waves, “It’s top of mind for everyone,” agrees Pete Speranza, CEO at Minneapolis-based Wicked Kitchen. But in addition to concerns around planetary, personal and animal health, he believes more consumers are choosing plant-based for a fourth reason as well: ensuring there’s enough protein to feed the world’s burgeoning population. “Plants will be a big part of that solution,” he explains, noting that plant protein requires significantly fewer resources than animal protein.
HOW CAN RETAILERS HELP?
Knowing who’s eating plant-based and why can help retailers determine the best approach to the category. For example, since most plant-based shoppers are new to the segment — and aren’t vegans or vegetarians — they’re in desperate need of education in several areas. “Consumer confusion in this category is very high,” confirms Rick Stein, vp, fresh foods, at the Food Industry Association (FMI), Arlington, Va., whose new report “The Power of Plant-Based Foods and Beverages” looks at emerging consumer perspectives. However, he continues, “There is an opportunity for the food industry to support the 42% of shoppers who put either a lot or some effort into selecting plant-based foods or beverages.”
What can retailers do? First, says Speranza, “They need to celebrate these products more. Explain why you added them and exactly how they’re helping the planet.” Not only does it make you look good, it makes the shopper feel good about a purchase that may or may not cost a bit more (more on that later). Second, “We can’t pretend that consumers know how to prepare plant-based food,” says Speranza. But retailers can help teach them with information about swaps, cooking videos, demos, recipes and, perhaps most important, a knowledgable staff.
They can also make it easier for shoppers to find plant-based products. In fact, says Emmett, “Not making it abundantly clear where to find plant-based foods through signage, shelf tags and marketing efforts,” is one of the biggest mistakes retailers make. What’s on those signs matters, too.
Rather than calling out products as vegan or vegetarian (since most consumers identify as neither), “Retailers can appeal to more customers by using inclusive terms such as ‘plant protein’ or ‘plant-based,’ says Marika Azoff, a member of the corporate engagement team at the Good Food Institute (GFI), Washington, D.C. Or, they can take a page from Israel’s playbook and refer to plant-based foods as, simply, “planet-friendly.”
“I’d also like to move away from the word ‘alternative,’” which implies that plant-based is a less desirable choice, adds Speranza.
While some chains have successfully created dedicated plant-based sections for consumers seeking those items, the industry is moving toward integration with similar animal-based products. In fact, says Emmett, a PBFA study at Kroger in 2020 found that sales of plant-based meat jumped 23% when they were merchandised in the refrigerated meat set alongside their conventional counterparts.
Those findings were used as the basis for the launch of a plant-based cheese section in the dairy cheese aisle at approximately 2,000 Albertsons stores in late 2021, she continues. Early results reveal “exponential growth in units and dollars — far outpacing plant-based cheese sales prior to the reset.”
Azoff, for one, isn’t surprised, since 98% percent of plant-based meat buyers, for example, also purchase animal meat products. “By merchandising plant-based meat, eggs and dairy alongside their conventional counterparts…retailers can make plant-based more accessible to the many shoppers who purchase both.”
Adds Speranza, “Integration also shows that plant-based is mainstream, not a niche, and that it’s just as big and important.”
GETTING CLOSER TO THE REAL THING
Since so many plant-based consumers also eat real meat and dairy, most are looking for products that mimic their animal-based counterparts as closely as possible, says Ashley Lind, senior director of demand science at Chicago-based Conagra. In the frozen plant-based protein segment, for example, meat analogs have outperformed veggie-forward counterparts, she reports. “While health may entice some consumers to try plant-based meats, a sub-par eating experience will ensure that they don’t become repeat purchasers.”
That’s why manufacturers say innovation and continuous improvement are so critical to plant-based success. “Consumers are constantly raising the bar, expecting convenient options with bolder flavors, better textures and nutritional benefits,” says Barnes of Sweet Earth. But that’s also the beauty of plant-based.
For example, explains PBFA’s Emmett, “While animal meat is limited to products that’ve been in stores for decades, there’s no limit to what plant-based meat can be or made of. Each time a novel ingredient is used or a new technique is discovered, more ideas are sparked, allowing for continuous and exciting product innovation.”
“We have seen this with both Impossible and Beyond burgers,” adds GFI’s Azoff. “Both companies continue to tweak the components of their products in subsequent formulations.”
The same thing is happening in the dairy side, says Israel. “Since we launched in 2018, we have continuously improved our product,” he reports. “We learned a lot along the way, but there are also a lot more ingredients available today that allow us to make a better product,” including plant-based Smoked Gouda and Cheddar Cheese Wheels introduced earlier this year. He adds, “We want to create a true parody, so consumers aren’t giving anything up when they make this choice for themselves and the planet. If you want people to come back, just being plant-based isn’t enough. It has to be a quality product — a true cheese experience.”
In order to get to the next level, however, Speranza says retailers and manufacturers need to bring new and exciting products to market that don’t just mimic their animal-based counterparts but offer something different. Not just a plant-based “alternative” to an existing product but a great-tasting dish in its own right — that just happens to be made from plants. “For people to stay excited about plant-based it needs to be craveable like at restaurants,” he explains. “We need to offer experiential culinary experiences to really change the hearts and minds of consumers.”
NOT JUST ‘ALTERNATIVES’
To that end, continues Speranza, Wicked Kitchen’s in-house team of chefs developed three frozen pizzas and four frozen entrees that are anything but alternatives. The wood-fired pizzas are built on a hand-stretched, artisanal sourdough crust and feature the company’s own vegan motz and high quality toppings such as kale, sautéed mushrooms, olives, jalapenos plus plant-based pepperoni and sausage. Meanwhile, the single-serve entrees (two with Beyond Meat, two with tofu) come in globally inspired flavors not found in the frozen aisle currently (think Peng Panang Tofu Curry). “We really want to get away from commodity products,” says Speranza. “We want to offer meals that are unique — and so good that they compete not just with other plant-based frozen entrees but all frozen entrees.”
Sweet Earth is jumping on the international trend as well, says Barnes, citing its new plant-based Cacio e Pepe and Korean BBQ bowls. But the products also tap into growing demand for meat- and dairy-free products that also deliver on convenience since at least one survey showed that, on an average weeknight, 63% of plant-based consumers are cooking with ready-made ingredients. Manufacturers also note significant opportunities for plant-based products in the handheld segment, which caters to busy consumers who don’t have time to sit down for a meal.
“Our ‘plant-based intender’ consumer tends to be younger with a more active lifestyle,” explains Matt Williams, chief growth officer at Paramount, Calif.-based Tattooed Chef. “So providing handheld snacks and other foods that can be enjoyed on the go opens more avenues for reaching our consumer.” While the company debuted a trio of plant-based burritos earlier this year, it’s preparing to make its first foray into the refrigerated category with a line of adaptogen-powered oat butter bars that not only satisfy hunger but help consumers on their “journey toward wellness,” says Williams.
BETTER FOR THE PLANET…AND YOU
That shift in thinking is important because it underscores growing demand for plant-based products that aren’t just better for the planet but also better for the consumer. Many assume that plant-based products are inherently nutritious, evidenced by the fact that “healthy” was the word mentioned most frequently by shoppers asked what they think of plant-based products, according to FMI. But that isn’t always the case, and increasingly savvy consumers are catching on — and seeking products that offer true health benefits.
“Much like we saw with gluten-free and its evolution into free-from (dairy, allergens, etc.),” says Lind, “we’re seeing an increase in search terms like ‘energy’ ‘gut health,’ ‘keto,’ ‘gluten-free,’ ‘protein,’ etc. among those searching for ‘plant-based’ and ‘vegan,’ which suggests consumers of plant-based products are seeking multi-dimensional benefit bundles.”
“People are reading labels and they want what’s good for them,” confirms Israel. “In our category, they want taste and texture — those are the boxes we have to check first — but the next generation of products has to provide nutrients as well (protein, vitamins, etc.),” he explains, hinting at a “new and improved” product coming in 2023.
To help consumers find better-for-you plant-based products, Emmett says manufacturers are utilizing packaging to communicate not just their positive impact on the environment but other attributes such as organic and non-GMO. “We know through our research that consumers want as much information as possible about the product communicated on the packaging,” she reports. “We also know that consumers are increasingly interested in transparency and look to ‘shop their values.’” As a result, more companies are also seeking third-party certifications that make it easy for consumers to understand ingredients or attributes.
But retailers also play a pivotal role. They can help define key terms, teach consumers how to read labels and explain what various certifications actually mean. They can also act as gatekeepers, making sure that the plant-based products they carry are as healthy as consumers think they are —because if they find out they’ve been duped, the store that sold them the product will get part of the blame.
“There’s a lot of confusion and a knowledge gap,” says Krystal Register, FMI’s senior director of health and well-being. (For example, lots of consumers think plant-based is synonymous with organic, which is not the case.) “But where there is consumer confusion, there is also an opportunity for the food industry to better educate shoppers about plant-based foods and beverages, their attributes and development process.”
SALES UP 6.2% IN 2021
Even on the heels of record growth in 2020, retail sales of plant-based foods rose 6.2% last year — more than three times faster than total food sales — to an all-time-high
$7.4 billion, according to PBFA’s latest report. Except for the plant-based meat category, whose sales were steady after a huge jump in 2020, every category tracked by the organization registered gains in 2021, boosting plant-based dollar share of all food sales to 4% (though it’s as high as 17% of the milk category).
More recent Nielsen sales data from FMI covering the 52 weeks ended June 11 indicates that the segment, which it defines a little differently than PBFA, is still growing (+8% versus the previous 52 weeks), though it’s “leveling off quite a bit.” What’s slowing its progress? Industry observers say price is probably the biggest barrier — and record inflation sure isn’t helping. But plant-based manufacturers are caught between a rock and a hard place, according to Israel, who says Good Planet’s ingredients have gone up about 15%.
“We could do a lower-cost, lower-quality plant-based cheese,” he says, “but no one would like it. And those consumers might never eat plant-based again. So we’ve had to draw a line in the sand. We’re doing what we can to manage costs, but we have to maintain quality above all else.”
The good news is that price gaps are shrinking as plant-based manufacturers increasingly scale up products and achieve economies of scale, says GFI’s Azoff. “We’ve already seen it in more developed categories like milk and butter.” In fact, average retail prices for plant-based milk actually fell 2% in 2021, according to PBFA.
In other categories, however, extremely limited capacity remains a significant challenge, says Azoff. For example, GFI estimates the industry will need to operate at least 800 manufacturing facilities — at a cost of at least $27 billion — within the decade in order to satisfy “even modest growth in consumer demand for plant-based meat.” Needless to say, there are nowhere near that number of plants right now, highlighting the need for serious investment in infrastructure.
Funding is also needed to help drive the innovation that’s so critical to category growth, says Speranza. “I’ve had some plant-based steaks that are very close to the real thing, but in order to get to that next level, more investment will be needed,” he says.
SUBSIDIES PREVENT PRICE PARITY
The other barrier to price parity is government subsidies for the meat and dairy industries. “Animal-based foods are artificially low cost, thanks in part to the $38.4 billion in annual subsidies the industry receives,” says Emmett. But there are “significant environmental and social costs” associated with those lower prices, she adds. “So creating a level playing field for plant-based foods to compete with animal-based foods is a primary goal for PBFA.”
But until that happens, Williams says the frozen aisle is a great place for shoppers to find good values on plant-based foods. “Consumers have less buying power due to inflation, so they’re less likely to splurge on more expensive foods like fresh fruit and veggies,” he explains. “That’s where frozen products can be beneficial. Consumers can still find plant-based foods high in nutrients for a much more affordable price.”
Clearly, shoppers are catching on. In the plant-based protein category, for example, frozen has outperformed refrigerated in recent months, and the gap in performance continues to widen, says Lind. “Many other frozen categories have experienced significant growth in plant-based as well, including meals, pizza, appetizers, breakfast, seafood and sides,” she adds.
In fact, says Emmett, sales of plant-based frozen foods have risen 48% during the past two years. But there’s still plenty of room for growth. In plant-based meat, for example, burgers are still the top-seller but consumers are demanding more variety. In 2021, the fastest growers were plant-based meatballs; chicken nuggets, tenders and cutlets; and deli slices. “Seafood is also a growing category representing a [significant] opportunity in the coming years,” says Emmett. There’s also lots of white space in the refrigerated department, she reports. “Consumers want plant-based for all occasions, evidenced by growth of over 30 categories across the store.”
Retailers have good reason to give them what they want, says Azoff. Not only are plant-based consumers younger, more educated and more affluent, “People purchasing plant-based foods…spend 61% more than the average shopper.”
“These are valuable shoppers,” says Emmett. “By offering plant-based food, retailers can position themselves as a one-stop shop and a retailer they can count on to meet the needs of their entire family.”
