Expo East 2016: Plant-based a powerful force in the food industry
Sept. 27, 2016
by Monica Watrous
BALTIMORE — A number of innovative plant-based food and beverage offerings debuted at Natural Products Expo East, underscoring a growing demand for meat- and dairy-free options among vegans, vegetarians and omnivores alike. The plant-based food and beverage market now exceeds $4.9 billion in U.S. sales, growing 3.5% since last year and outpacing the total food and beverage industry, said Kora Lazarski, strategic alliance manager of SPINS, a Chicago-based industry tracker.
“This is very promising because when you look at the total food and beverage landscape, the growth is only about 1.7%,” Ms. Lazarski said during a panel presentation at Expo East, which was held Sept. 21-24 in Baltimore. “So it’s fair to say that plant-based foods are growing at twice the rate of the rest of the industry.”
Driven by health, environmental and animal welfare concerns, more than a third of Americans eat at least one vegetarian meal per week, and just over a quarter of consumers say they ate less animal meat in the past year, said Michele Simon, executive director of the Plant Based Foods Association.
Additionally, more than half of consumers say they want to eat more plant-based foods, a trend that has caught the attention of the Kroger Co., said Mathis Martines, who leads the retailer’s Emerging Brands, Innovation and Merchandising Solutions segment.
“One of the biggest things that we have to go after is the plant-based foods industry because it’s important for the health of our customer, and it’s important to the health of our company,” Mr. Martines said during the presentation. “As we move forward, we see this only growing.”
Daiya Foods produces non-dairy cheese substitutes, pizzas, 'cheezecakes' and more.
The movement is propelling strong growth at Daiya Foods, a maker of non-dairy cheese substitutes, yogurts and more, which sells its products in 35,000 stores and expects to generate more than $100 million in revenue this year, said Michael Lynch, vice-president of marketing.
“People now know the benefits of plant-based; they either embrace plant-based because they feel it’s good for them from a health perspective or from the planet, climate, environmental perspective, or it’s good for animals,” Mr. Lynch said. “We very much believe that this is not a trend, this is not a fad. This is a fundamental consumer shift, and for those who haven’t made the shift yet, unfortunately, there are climatic changes at play that are going to force that.”
The plant-based market is driven by refrigerated and frozen meat alternatives, refrigerated and frozen non-dairy beverages, tofu and cheese alternatives, which collectively account for more than 90% of sales. Smaller categories contributing growth include meat alternative dishes, other dairy alternatives, meatless jerky and snacks, and vegan mayonnaise and similar products.
Smaller categories contributing growth to the plant-based market include meat alternative dishes and vegan mayonnaise.
While conventional retailers drive the bulk of sales volume, the specialty and natural channels are posting the fastest growth of plant-based foods, up 6.8% and 11.6%, respectively, over last year, Ms. Lazarski said.
“If you take a look at the cheese alternatives as well as refrigerated meat alternatives, they’re really small … only about 2% of dollar sales in this almost $5 billion category, but they are punching way above their weight class,” Ms. Lazarski said. “We see 6% of contribution to growth from cheeses as well as 5% growth of refrigerated meat alternatives. It shows that even though it’s a much smaller category it really is driving a lot of the growth, and there’s a lot of potential in those categories to expand even more.”
Non-dairy beverage sales rose 3.1% to $4.1 billion in the past year, led by growth in refrigerated milk alternatives that offset declines in shelf-stable, soy and rice milks. New ingredients, technologies and formats of milk and dairy replacements are moving the segment forward, Ms. Lazarski said.
Nut milks made from pistachios, walnuts, tiger nuts and macadamia nuts are on the rise.
“Macadamia and tiger nuts are a few of the non-dairy beverages we see having a lot of potential and coming out quickly,” Ms. Lazarski said. “There’s also walnut milks and pistachio milks are on the very leading edge that we don’t have much data on but expect to see more happening with those sources.”
An example at Expo East was NuMoo, a line of organic plant-based beverages, including cold-brew cashew nut latte, pistachio nut milks, pecan nut milks and almond nut milks.
“Some of the claims we see … vegan claims sharing a package that also has paleo claims,” Ms. Lazarski said. “That has good insight into why this is growing so quickly. This category really feeds a couple of different masters. People all across the spectrum are picking this up and finding it suitable for their lifestyles.”
A rise in ready-to-drink milk alternatives also is contributing to the segment’s success.
A rise in ready-to-drink formats also is contributing to the segment’s success, Ms. Lazarski noted.
“We often think of the almond milks and coconut milks in the big refrigerated cases that we take home and use for cooking,” she said. “Now they’re in ready-to-drink sizes and being shelved next to the cold-pressed juices and really meant to be drunk on the go.”
Sales of meat alternatives increased 3.8% in the past year to $595.6 million in sales, with refrigerated products growing faster than frozen options. Such ingredients as mushrooms and jackfruit continue to gain momentum, and new seafood alternatives, such as kelp caviar, are being launched, Ms. Lazarski said.
Though a small subcategory, meatless jerky substitutes are growing seven times faster than traditional meat snacks. Examples at Expo East include Lightlife Smart Jerky and Go Umami baked tofu bars.
“That’s an exciting one we have our eye on,” Ms. Lazarski said.
Kite Hill offers frozen ravioli stuffed with a cheese substitute made from cultured almond milk.
Cheese alternatives grew 13.3% to $96.1 million in the past year, led by growth in spreadable varieties.
“Growth is positive for all the different types of formats and is basically falling or stagnant for the same category counterparts,” Ms. Lazarski said. “There have been a lot of cheeses that have been difficult to replicate in the past, and new products and brands are coming out and doing a fantastic job of mimicking dairy-based cheeses … and we’re seeing cheese alternatives showing up in other categories where cheese is not the main ingredient but one ingredient of many.”
An example is frozen ravioli from Kite Hill, which produces a range of products made with cultured almond milk.
Founding board members of the Plant Based Foods Association include Daiya Foods, Follow Your Heart, Miyoko’s Kitchen, The Tofurky Co. and Upton’s Natural.
“When a retailer or brand is looking to get into this space, it’s important to look at not just the category you’re in but really the department the product will be selling in … drilling down into the product types to get ideas for new innovation and also different flavors and forms,” Ms. Lazarski said.
To cultivate further growth in the market, the Plant Based Foods Association was established in March with the mission to educate and lobby on behalf of the plant-based food industry. Founding board members of the association include Daiya Foods, Follow Your Heart, Miyoko’s Kitchen, The Tofurky Co. and Upton’s Natural. In addition to the association’s five founding board members, 47 food companies have joined as charter members.
“Our strategic vision is pretty ambitious,” Ms. Simon said during the presentation. “We want to increase consumer acceptance of plant-based foods, increase availability, establish clearer labeling guidelines, have a positive impact on the next round of Dietary Guidelines in 2020, level the playing field to make plant-based foods more competitive, and be recognized as the trusted resource for the plant-based foods industry.”