Plant-Based Meats Report: Retailers invest in private brands

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Plant-Based Meats Report: Retailers invest in private brands

By Michael Applebaum - 04/23/2020

If the past 12 months are any indication, plant-based meats are here to stay.

It has been less than a year since Beyond Meat went public and the Impossible Burger appeared on Burger King menus nationwide. Yet the U.S. plant-based meat industry, which is the third-fastest growing category of plant-based foods behind milk and other dairy substitutes, is on track to surpass $1 billion in 2020. To put that number in perspective, sales of Greek yogurt, which have been rising for the past decade, registered approximately $6 billion in the United States last year.

Plant-based meat accounts for 2% of all U.S. dollar sales for retail packaged meat.
The Good Food Institute

“The plant-based meat category today is reminiscent of the plant-based milk category when it was in its early stages of rapid growth,” said Emma Ignaszewski, corporate engagement strategist at the Good Food Institute. She noted that plant-based meat accounts for 2% of all U.S. dollar sales for retail packaged meat and approximately 1% of all dollar sales for total retail meat. And today, plant-based milk accounts for 13% of all dollar sales for retail milk. “If plant-based meat follows the same path as plant-based milk,” she said, “that’s a $10 billion opportunity.”

According to the Plant Based Foods Association, which currently is running a program with Kroger to measure the impact of changing plant-based meat placement on sales and customer engagement across 60 stores (results are expected later this spring), total plant-based food sales in the United States grew 11.4% to $5 billion in the past year. Sales of plant-based meats were up 18%, to $939 million, with refrigerated plant-based meat driving the growth, up 63%.

“Plant-based foods offer consumers a great tasting, healthy and sustainable alternative to animal products,” said Julie Emmett, senior director of retail partnerships at the Plant Based Foods Association. “Consumers are voting for plant-based foods with their wallets, and they’re choosing from the wide variety of plant-based alternatives across the meat and dairy spectrum.”

STORE BRANDS LEAD THE WAY

Retailers are driving many of the new product introductions in the plant-based meat category. That includes a recent wave of new private label products from Kroger, Albertsons, Wegmans, Aldi, Whole Foods and Trader Joe’s. Earlier this year, Kroger launched Simple Truth Emerge, a new line of pea protein-based alternative meat products, as part of a broader initiative to introduce 50 new Simple Truth Plant Based products in 2020. Also this year, Aldi U.S. has introduced nine new plant-based meat products under its Earth Grown line, many of which are now being featured as part of the retailer’s weekly specials program, Aldi Finds.

“Our Earth Grown products, which started as a test in our stores a few years ago, consistently fly off the shelves as one of our top-selling product lines,” said Scott Patton, vice president of corporate buying at Aldi U.S. “We’re seeing a growing trend of shoppers choosing to add more plant-based foods into their diets, regardless of their dietary restrictions or choices. We’re continuing to expand and refine our plant- based offerings as we get more feedback from Aldi shoppers.”

Jim Wisner, president of Lake Forest, Ill.-based Wisner Marketing Group and an expert in private brands, said that retailers have a unique opportunity to leverage store own brands in plant-based meats, given the credibility that some have already established in other categories, such as organic food and beverages. 

“Organics are more disproportionately moving toward store brands and the penetrations are significantly higher than in other categories or groups of goods,” Wisner said. “Part of the reason is that there aren’t long established brands in organics, so it’s a shorter runway. A lot of retail- ers will be able to get into and out of the plant-based meat category very quickly, rather than wait for someone to develop the market and enter three years later and siphon off some of the business.”

Wisner added that store brands that have achieved a high rate of consumer acceptance, such as Kroger Simple Truth, may have an edge over national brand manufacturers who have only recently gotten into the space. “If you take something like the Simple Truth brand, it is very easy to enter the plant-based market at a dramatically better position and price, with the consumer believing the product quality will be just as good,” he said. “For store brands, in many ways the opportunity in this category may be a little greater than in other areas.”

INGREDIENT MANUFACTURERS IN HIGH DEMAND

The food manufacturing industry is awash in demand for new ways to source and produce alternative meat products that retain the best properties of meat. The vast majority of plant-based meats are targeted to the roughly 26 million flexitarian or “reducetarian” consumers in the U.S. who are committed to lowering the animal fat content of their diets without going all-in on a vegan lifestyle.

Such trends are a boon for ingredient manufacturers like Sacramento, Calif.-based Better Meat, which produces an original plant-based protein formula for blending purposes; and Garner, N.C.-based Improved Nature, whose non-GMO protein is used in products like chickenless nuggets and strips. “It seems like every grocery store is calling us, wanting us to do private label for them,” said Rody Hawkins, CEO of Improved Nature. “Everyone is looking for something a little different, but they all know they need something in this market because the consumer is demanding it now.”

It seems like every grocery store is calling us, wanting us to do private label for them.
Rody Hawkins , CEO of Improved Nature

Improved Nature uses heat pressure and steam to produce fibers that are formed into units like nuggets and strips, which, according to Hawkins, have a comparable taste and texture to the traditional chicken products.

“Most companies use some version of textured vegetable protein to create smaller units that they combine with binders or fillers. We’re producing the finished product with just one ingredient and no fillers,” Hawkins said. “The one similar approach is a high-moisture extrusion process where you mix soy protein with water and heat, and set it through an extruder — but that is very expensive to do. We’re taking the powder and adding steam heat and pressure to turn it into fibers, and while they’re still hot, cross linking them and building it into bigger units. It’s more economical.”

Meanwhile, Better Meat has developed an alternative plant-based protein formula to the typical mushroom-based enhancers on the market. According to CEO Paul Shapiro, the formula has similar properties when cooked but is far more cost effective than using mushrooms alone — or, say, pea protein, which is the main ingredient in Beyond Meat burgers.

“We combine plant-based proteins, fibers, fats and flavors to create a product that, even at a high-inclusion rate, is indistinguishable from a solely meat product,” Shapiro said. “Most people can’t tell the difference or have an active preference for the blended version. It has a better mouthfeel because we’re using functional fibers that retain the moisture within the meat itself.”

THE PUSH TOWARD CLEAN LABEL

For the growing numbers of consumers who are making the switch to plant-based meats, the desire to eat “clean” while also preserving the environment is a key factor in their purchase decisions. Thus, manufacturers are increasingly pushing clean-label products as a way to drive incremental sales. According to a new study from Glanbia Nutritionals, two out of every three consumers say they are willing to spend 5% more for a plant-based meat alternative with clean label attributes.

While there is currently no industry standard for what constitutes “clean label,” Glanbia’s research uncovered the top five attributes that shoppers most closely associate with the term: No artificial colors/flavors; limited num- ber of ingredients; Non-GMO; “I know what the ingredients are;” and preservative-free.

“Consumers are spending more time looking at the back of nutritional labels, and if they see a product with only four or five ingredients, versus one with 20 or more, they tend to go with the cleaner label products,” said Tim Greene, senior director of sales (Midwest and Canada) at Glanbia. The company has just introduced a new clean-label solution, called Simpleat, which uses a patented process to remove unwanted ingredients while preserving the taste and texture of a range of meat substitute products.

Aside from labeling, various merchandising tactics may help boost sales of plant-based meats. GFI recommends placing the products adjacent to or integrated with the corresponding animal-based products, rather than segregated in the refrigerated vegan/vegetarian case or in the produce section. In this way, consumers who are new to plant-based products can easily find them in a section of the store where they already shop, and can more easily do ingredient or price comparisons. Additionally, the Good Food Institute’s research found that packaging with high-contrast colors, or that employs boxes or pouches, has the strongest associations with “tastiness” and “deliciousness.”

Ignaszewski noted, “Interestingly, we found that dark packaging — namely brown — was ranked highest for tastiness as well as health and nutrition. Green had divided opinions; it scores well on indulgence and excitement in organic but in a counterintuitive way is seen as the least healthy color in packaging. Red should generally be avoided, as it scores poorly on all attributes.”

Going forward, it appears that the sky is the limit for the global alternative-meat market, which UBS predicts will grow to a whopping $85 billion by 2030. To be sure, store brands will face stiff competition from the likes of Perdue, Nestle and Hormel.

But Wisner believes retailers’ overall price advantage may be a deciding factor. “The market right now is very fragment- ed,” he said. “Before anyone creates a dominant position, for store brands to come in and say, ‘I can give you something that’s as good as anything else,’ and if I can save $2 on a hamburger, that’s a really big deal.”