It’s 2019 and traditional bean and rice veggie burgers seem like a distant memory.
Food technology in recent years has pushed the limits of what we thought we knew about protein. By replicating the basic building blocks of meat protein with plants, scientists have been able to create foods that have the appearance, aroma, versatility, and satiety of meat without any animals.
Plant-based proteins are undeniably one of the hottest categories in the US food industry right now. Recent US grocery scan data from February shows refrigerated meat alternatives growing over 30% year-over-year, compared to animal-based meat growing at just 2%. The rapid growth has created a tidal wave of newsworthy events in the category, resulting in an amplification of awareness among Americans.
One of the most notable players in the plant-based protein space is Beyond Meat (NYSE: BYND), whose IPO is considered by Forbes to be one of the most successful of the year having increased 506% since May. Today, the market cap of Beyond Meat is $9.05B with annual retail sales of less than $100M and operating profit yet to break even demonstrating Wall Street’s high expectations for this growth category. In August, Beyond Meat partnered with KFC to test plant-based “chicken” in several Atlanta locations; the items sold out in just 5 hours.
The metaphorical “Pepsi” to Beyond Meats’s “Coke,” Impossible Foods is the notable rival entrant to the space. Primarily focusing on foodservice, Impossible sells their burgers at national fast food chain White Castle and rolled out nationally on Burger King’s menus in August. Impossible’s potential IPO has investors jostling for a piece of its massive $5B valuation, and rumors are swirling of a grocery retail launch in September pending FDA approval.
The plant-based meat category is rife with new entrants from surprisingly large players like Kellogg’s Morningstar Farms new brand “Incogmeato.” Even private label brands like Kroger’s Simple Truth are jockeying for space in the plant-based protein refrigerated case. Meanwhile other start-ups have also entered, like Meatless Farm hailing from the UK, who launched two items nationally in Whole Foods in August. Incumbent brands like Nestle’s Sweet Earth and Quorn are stepping up their own innovation to compete with their own raw meat-style burgers leveraging their existing technology expertise and brand equity.
Health is likely a lesser driver, given that many of the plant-based burgers contain an equal amount of fat, sodium, and calories as meat equivalents. Instead, increased concerns about environmental sustainability and animal welfare are predominant factors. Most experts attribute growth to a consumer segment called Flexitarians: consumers actively reducing their meat consumption without entirely eliminating it. Millennials are also driving demand with their increased consumer consciousness and environmental sustainability concerns. Or maybe it’s simply hype and curiosity compelling consumers to try these innovative, new foods.
While plant-based proteins are the largest category, other plant-based segments are growing as well such as alternatives to dairy, eggs, and seafood. Food technology and consumer interest are causing a paradigm shift in what were once stable commodity categories creating a new and exciting landscape for manufacturers, brands, and retailers in America.