KANSAS CITY — Plant-based eating has become a mainstream movement. U.S. retail sales of plant-based foods significantly outpaced overall grocery sales in the past year, surging 11% to $4.5 billion, according to data from the Good Food Institute and the Plant Based Foods Association.
The leading drivers of plant-based sales continue to be meat and dairy alternatives, including milks, cheese, yogurts and ice cream. Sales of plant-based milks grew 6% over the past year and now make up 13% of the entire milk category, while cow’s milk sales declined 3%.
Emerging plant-based dairy categories experienced the most rapid growth. Spreads, dips, sour cream and sauces grew more than any other category, expanding by 52%. While other plant-based categories experienced similar growth, sales of conventional animal products stagnated or declined. Plant-based yogurt sales grew 39% while conventional yogurt declined 3%. Plant-based cheese grew 19% while conventional cheese was flat. Plant-based ice cream and frozen novelty grew 27% while conventional sales grew 1%.
The plant-based meat category grew by 10% and is now worth more than $800 million, according to the report. Plant-based meats equated to 2% of retail packaged meat sales, with refrigerated plant-based meat growing 37%, the report said. Sales in the conventional meat category, in contrast, grew by 2%.
“This is just the beginning of a massive growth period for plant-based foods,” said Caroline Bushnell, associate director of corporate engagement for The Good Food Institute. “Consumer appetite for plant-based foods is surging as consumers increasingly make the switch to foods that match their changing values and desire for more sustainable options. This growth will continue as more companies bring next-generation innovations to market that really deliver on the most important driver of consumer choice: taste.”
Meat alternative market sizzles
The market for meat alternatives has amassed a number of new players but also a greater investment from new players. Kellogg Co., Battle Creek, Mich., in September introduced Incogmeato by MorningStar Farms, including the company’s first ready-to-cook plant-based burger to be sold in the refrigerated meat case, which Steven A. Cahillane, chairman, president and chief executive officer of Kellogg, described as “a real meat-like experience.”
Add Conagra Brands, Inc., Chicago, to the roster of food companies that see significant upside in the market for meat alternatives. Innovation on tap from the company includes a meatless burger, meatless hot dogs and sausage products.
The Kroger Co., Cincinnati, is extending its Simple Truth brand into the meat and dairy alternative category. The new products include meat alternatives like fresh burger patties, ground applications, sausages and deli slices as well as cream cheese, French onion dip and queso.
Top restaurant chains are serving plant-based patties developed by Impossible Foods, Redwood City, Calif., or Beyond Meat, El Segundo, Calif. The Impossible Burger has been adopted onto menus in more than 17,000 locations, including Burger King, White Castle, Little Caesars, Qdoba, Cheesecake Factory and Red Robin restaurants. The Beyond Burger is available in more than 26,000 food service locations, including Hardee’s and Carl’s Jr., Tim Hortons, TGI Friday’s, Dunkin’, Del Taco and a test in McDonald’s restaurants in Canada.
Plant-based burger orders at quick-service restaurants were up 10% from last year, reaching 228 million servings, according to The NPD Group, Chicago. The strong year-over-year growth of plant-based burgers is primarily due to increased availability at restaurant chains, generating trial on the part of beef burger buyers.
“Plant-based burgers allow consumers to substitute without sacrifice,” said Darren Seifer, food and beverage analyst at The NPD Group. “They get the ‘burger’ experience while assuaging their need for more protein and social concerns. With that said, U.S. consumers have not given up on beef burgers but are willing to mix things up every now and then.”
The future of plant-based foods
The plant-based boom has stoked the appetite of the investment community. Plant-based food and beverage start-ups have raised more than $17 billion in funding since 2009, said Michele Simon, founder and executive director of the Plant Based Foods Association.
“Plant-based foods aren’t new, but what’s happening now is it’s gone from being a niche industry targeting mostly vegetarians and vegans, who are still an important part of the market segment, but now it’s grown into a mainstream industry that is targeting everyone, and that’s really what’s causing it to explode, combined with the innovation that’s happening,” Ms. Simon said.
In September, Tyson Foods, Inc., Springdale, Ark., announced an investment in New Wave Foods, San Francisco, a manufacturer of plant-based shellfish alternatives, including a shrimp alternative made with seaweed and plant protein.
This past June, Tyson Foods launched a line of blended and plant-based products under the Raised and Rooted brand. Initial product applications sold under the brand include nuggets and burgers.
“We’re excited about this investment in the fast-growing segment of the plant-based protein market,” said Amy Tu, president of Tyson Ventures. “This continues our focus on identifying and investing in companies with disruptive products and breakthrough technologies related to our core business so we can continue to serve a growing global population.”
Plant-based food and beverage businesses are a focus of Stray Dog Capital, Lenexa, Kas.
“Due to the nature of our thesis, we’re not looking for companies that have a product as good as the animal-based version, but rather ones that are better in taste, texture, price and/or process,” said Macy Marriott, a venture analyst at the firm. “Data are showing a notable consumer shift led by millennials and Gen Z in the form of flexitarians and reducetarians who are wanting to incorporate more plant-based options in their diet, and we’re seeking innovative products that fulfill that desire.”
Stray Dog investments include Good Catch, a maker of plant-based seafood alternatives; Miyokos Kitchen, a maker of vegan cultured nut cheese; and Goodseed Burger, a brand of veggie burgers made with hemp seeds. Another portfolio company, Ocean Hugger Foods, Inc., produces plant-based sushi ingredients made with tomatoes, carrot and eggplant.
“The rise in plant-based eating has awakened the C.P.G. category,” Ms. Marriott said. “A 2018 Nielsen study found that plant-based product sales are growing across all categories. During the 12-month study range, alternative meat sales skyrocketed by 24%. This growth is great news for major players like Beyond Meat and Impossible Foods but also indicates plenty of room for new entrants.”