The market for plant-based foods is expanding in the West, creating business opportunities for CPG companies poised to put meatless “meat” on store shelves.
Environmental concerns are among the primary drivers of rising demand for plant-based and other meat alternatives in the West, particularly in the US. Animals raised for food are big consumers of water, grain and land, and produce more than 15% of greenhouse gas emissions. Health and ethical considerations are also factors behind the growing consumer trend.
One approach to meeting the demand is to create substitutes for familiar meat products, such as burgers and meatballs, from plants. Such products have been available in health and specialty food stores for decades, but have more recently made their way into the mainstream. Their share of supermarket real estate is growing and a number of restaurants, including fast-food chains, are putting them on the menu.
A plant-based burger from California company Impossible Foods, for example, was launched in a number of restaurants last year. Beyond Meat, another contender, is readily available in retail outlets such as Whole Foods Market, a popular supermarket chain in America.
Other food companies are opting instead to produce real meat – minus animal agriculture. The leader in this field is Mosa Meat, a Dutch firm which makes cultured meat from animal cells, The Economist reports. At present, the production costs are sky-high, but companies like Mosa Meat and American start-up Memphis Meats are working to bring them down.
Cow’s milk is also losing ground with consumers. Nut milk, particularly almond milk, has soared in popularity in the US in recent years, so much so that dairy farmers are under pressure to sell out to nut producers. US coffee giant Starbucks added almond milk to its menu of non-dairy alternatives, which already included coconut milk and soy milk, in 2016.
The past few years have seen a surge in M&A activity in the food industry, a sizable portion of which is due to demand for healthier foods, including plant-based foods. Large food companies find that acquiring or merging with smaller companies is a more economical way to adapt to changing consumer preferences. In 2016 French multinational food company Danone acquired WhiteWave Foods, an organic and plant-based food and beverage maker, for more than $10 billion.
Gregg Engles, Chairman and CEO of WhiteWave, remarked: “We believe the development of plant-based products is still in the early stages and there is significant runway to increase household penetration and broader usage by converting dairy milk households to plant-based households, targeting additional consumers into the plant-based alternative space, broadening usage occasions by broadening our portfolio of products, and expanding the category with new items.”
