Alternatives at the forefront of innovation
June 2, 2015
Imitation is often described as the sincerest form of flattery, but in the food and beverage category it is also a source of inspiration, innovation and, on occasion, salvation. A global supply chain combined with advancements in ingredient technologies have encouraged many companies to focus on developing alternative forms of traditional ingredients and finished products in an effort to capture share and grow.
It is the manufacturers of replacement ingredients that sometimes become the center of attention in the wake of a crisis. As the U.S. egg market continues to be roiled by the incidence of highly pathogenic avian influenza and increased price volatility, the providers of egg replacers are experiencing greater interest in their ingredients and solutions.
But eggs are only a small part of a much larger trend. Meat substitutes are an example that have been on the market for many years and have gained additional interest. Once solely targeted at the market for vegetarian and vegan foods, meat substitute makers now are blending with meat protein to create a product perceived as healthier. Pulmuone Foods USA is one such company that is combining chicken and vegetable protein in a fully cooked frozen hamburger patty.
Another example is the acquisition by Pinnacle Foods of Garden Protein International, manufacturer of the Gardein branded meat alternatives, this past November for approximately $153.8 million. Bob Gamgort, chief executive officer of Pinnacle, said he expected the market for meat substitutes to have the same potential as the market for alternative milks.
While milk substitutes have been around for decades, it is in this arena where the trend has gained the greatest traction in recent years. A report by the market research company Packaged Facts shines a light on the dairy alternative category and says U.S. retail sales for dairy and dairy alternative beverages reached $24 billion in 2014, representing a 4% increase from 2013. Sales have increased for both segments, the past few years have seen the dairy alternative sector increasing its share of the overall market to now account for 20% of the industry, up from 14% in 2010.
The single biggest market trend in the dairy and dairy alternative beverages market has been the growth in almond milk. From 2013 to 2014 dollar sales of almond milk increased 40% on unit and volume increases just slightly below that figure. Coconut milk sales likewise have grown by double digits.
One may see a similar trend evolving in grain-based foods as many manufacturers are working to remove gluten from some product varieties. In the same vein that the market for alternatives to fluid milk began in an effort to reach those consumers who could not drink the beverage due to allergies or an intolerance to lactose, so did the gluten-free movement begin. Today, both the categories are blossoming as consumers who do not require such products are buying them.
But Packaged Facts says the success of alternatives will push traditional suppliers to further innovate in response to the competition. The market researcher forecast that during the next few years the industry will see the introduction of new fluid milk products testing the waters at the premium level. The Coca Cola Co.’s new fairlife brand is one example, and the introduction of the a2 Milk Company’s a2 brand in the United States is another.
Consumers are interested in new food and beverage products, but there are limits to how far they are willing to go with experimentation. Many new flavors are introduced via such traditional applications as pizza, soups or sausages. It is clear a similar process is taking hold in product development and the market may look forward to a dynamic back and forth as traditional and alternative ingredient and finished product manufacturers compete to improve their positions in the marketplace.