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Understanding how shoppers select channels and specific retailers for plant-based products may be the key to your success.

In our last article, we introduced Cadent’s consumer/shopper journey to help maximize plant-based sales for retailers and manufacturers. The primary focus was on demand generation targeting triggers and drivers of demand. In this article we will focus on the next step, Retailer Selection, as part of the pre-shop process.

Perhaps shoppers are beginning to equate healthy not just to plant-based but to the actual ingredients in the products. ‘Real food’ may be the missed opportunity here.

First, it’s worth commenting on demand generation since one-year dollar growth, as estimated by The Plant Based Foods Association, The Good Food Institute and SPINS Natural and Conventional Multi-Outlet data, indicates that consumers have tapped the brakes on plant-based. The total segment grew to $7.4 billion nationwide, up by 6% vs. the previous year. That was a significant drop following the 27% increase the previous year. While double-digit increases are not sustainable forever, there were a number of compounding factors that influenced the slowdown.

—Production capacity/scaling.

—Ingredient shortages, especially yellow peas.

—Other supply chain disruptions.

Without proper product development and marketing, it’s clear that plant-based may not achieve its lofty, global aspirations. And that’s despite its being driven by critical health, environmental, and ethical trends.

Traditional retailers are losing out to mass, deep discount, dollar, convenience and drug outlets.

If we analyze the key elements of growth in 2021, plant-based milk (+4%) and plant-based meat (0%) were the key constraints. Smaller but related categories posted strong gains. For example, “other” plant-based dairy —cheese and yogurt grew and creamers jumped 33%. Plant-based eggs skyrocketed 42%, and plant-based meals also had healthy gains.

But the elephant on the table is plant-based meat, which was flat in 2021. This category has experienced intense proliferation from both national and private label, although it’s still dominated by the primary burger offerings of Impossible and Beyond. Perhaps shoppers are beginning to equate healthy not just to plant-based but to the actual ingredients in the products. “Real food” may be the missed opportunity here.

GROCERY & NATURAL CHANNELS OFF

In the chart, we see significant declines in traditional grocery and natural grocery channel penetration for plant-based. This is partially offset by growth in smaller-format retailers as well as the mass channel. The wide array of retailer merchandising techniques and locations for plant-based products, especially in larger-format retailers, creates a challenge for shoppers.

While 64% of plant-based milk shoppers expect to purchase from a traditional retailer in-store, only 49% of plant-based meat buyers expect to follow suit. If we follow the trajectory of overall plant-based buying pre-pandemic to the projected future, we find that traditional retailer buying declined from 62% pre-pandemic to 50% during the pandemic to 52% post-pandemic.

Traditional retailers are losing out to smaller formats such as deep discount, dollar, convenience, and drug. This is a clear callout for traditional retailers to step up their plant-based game in terms of selection, merchandising, and education.

Why is a specific retailer chosen for plant-based products? The top 5 reasons are convenient location (27%), best price (24%), best value (22%), easy to find the plant-based product (17%), and easy to get in and out of the store (16%). As anticipated, price and convenience play critical roles in choosing a retailer for plant-based purchases.

Of note, however, is the sharp difference between ease of finding plant-based meat versus plant-based dairy. While 17% of shoppers note that ease of finding plant-based products was a top reason for selecting that retailer, only 9% agreed for plant-based meat, while 21% agreed for plant-based dairy. Locating plant-based meat in the store remains a critical challenge. Inconsistency of placement and poor merchandising appear to be factors in consumers’ retailer choices. Industry studies prove that placing plant-based meat adjacent to their conventional analogs can drive sales more than 20% higher.

There has also been significant growth among online retailers, but this has tapered in 2022. Shoppers of plant-based products typically choose to purchase online instead of in-person for the following reasons:

—Free shipping (20%)

—No lines (18%)

—Can shop at any time (18%)

—Fast shipping (16%)

—Easier to search/find (15%)

The prevalence of stock-up or large trips (36%) and “plant-based specific trips” (25%) indicates the power of plant-based products to drive basket ring and incremental trips. By comparison, fill-in trips (20%) and quick trips (19%) both trail trips driven by shoppers seeking plant-based products. Realizing the importance of these key trends can help you optimize your store as the destination for plant-based purchases. n

Don Stuart is a managing partner at Cadent Consulting Group (cadentcg.com), with offices in Wilton, Conn., and Evanston, Ill. He can be reached
at [email protected]).