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Latest headlines

The plant-based food trend continues to grow

Some big food companies, like Campbell’s, are signaling moves into this growing sector.

By Debra Schug
vegetarian
Yoon
Author and advisory firm owner Eddie Yoon has been tracking the growth of plant-based foods, while watching the decline in meat sales.
vegetarian
Yoon
January 24, 2018

At the end of last year, Campbell Soup Company announced it was joining the Plant Based Foods Association. Launched in March 2016, PBFA is the nation’s only trade group representing the plant-based foods industry, and Campbell was the first major company to join it.

According to recent Nielsen data, the plant-based foods sector grew more than 8 percent in 2017, and the plant-based milk category is up 3 percent since last year, outpacing sales of cow’s milk over the same period.

Author and advisory firm owner Eddie Yoon has been tracking the growth of plant-based foods, while watching the decline in meat sales. His book, Superconsumers: A Simple, Speedy and Sustainable Path to Superior Growth, is about how brands can grow their business by appealing to a subset of consumers—superconsumers, as he calls them—who become brand fanatics.

We talked to Yoon about the plant-based foods trend, and what innovation in this space could mean for processors.

FE: Plant-based foods are on trend right now, especially with small food start-ups. But are big food companies making the leap yet? If so, who and what are some of the products they are working on?

Yoon: Big companies tend to be risk averse to the point where they wait until the opportunity is as close to a sure thing before jumping in. You can see it now with Danone buying WhiteWave on the dairy side, which was a big move, but plant-based milk has grown steadily for awhile. Nestle bought Sweet Earth Natural Foods, which makes vegan meals and snacks. Tyson has a five percent ownership stake in Beyond Meat. The single largest opportunity in plant-based meat is ground beef.

Three types of big food companies could play here, but all have unique hurdles that hold them back. First, branded food companies not in meat are wary of meat because it is nearly all private label with no big brands.

Second, the branded companies in meat are nearly all in poultry where brands matter. They could move into ground beef, but it is different territory and potentially cannibalistic with their poultry business.

Third, the beef companies like JBS and Cargill core competencies are on the supply chain side versus marketing, branding and innovation.

My bet is that the real disruption starts from outside of grocery by foodservice. One of the major foodservice players will introduce an amazing plant-based meat via meatballs, burgers, where ground beef would normally be used, but a plant-based innovation is nearly as good. I've tried them, and they are awesome. It's starting with niche foodservice players, then one of the major players like an upscale burger player (like Five Guys), Chipotle or if they are smart, McDonald's will introduce this. Then the grocery players will follow shortly thereafter.

FE: For big food companies that aren’t considering entering in this space, why should they consider doing so? Should traditional meat brands, like Jimmie Dean and Hillshire Farms, be looking at innovating in this space? Why or why not?

Yoon: Yes, traditional meat brands like Jimmy Dean's and Hillshire Farms should absolutely be looking at this space, and they are likely already doing so. The latent demand is there and it's a great hedge if a real migration away from meat does happen. The jury is still out, but my guess is that there are likely significant other supply chain benefits (e.g., less risk of spoilage/shrink) and potentially real consumer benefits (e.g., shelf life, less food safety risk).

But I also think companies that are not traditionally in meat should absolutely look for this. Any major food company in meals of any kind (e.g., frozen, refrigerated, deli meals) should be looking hard at this space because it's an important part of the meal that was previously way too complex to enter, but now it is better.

My dark horse prediction is that Amazon/Whole Foods together figure out a way to crack the code on awesome gourmet, plant-based burgers for the home as a meal kit service or same day delivery. Think Five Guys + Fed Ex.

FE: Why are consumers looking more to plant-based foods and beverages? Is it for health, ethical, or economic reasons, or a mix?

Yoon: You always have a small, vocal minority of values/ethics driven consumers. They are willing to compromise taste and pay a higher price for what they feel is ethically the right thing. These are typically less than 5 percent of consumers and are served by the 1.0 versions of the category and brands.

Another larger group are the superconsumers-the highest passion and high profit consumers. They love the category (e.g., milk or meat) and are always willing to try an innovative new product that provides a compelling set of benefits. For plant-based milk, it may be an excuse to indulge in chocolate milk again and justify it because it is plant-based! For plant-based burgers, it may be an excuse to eat more burgers because it is plant based. These are also about 10 percent of consumers and they are willing to pay a premium.

The rest of the consumers are much more practical and risk averse. They will not pay a premium for this. They will not sacrifice benefits. They will wait for the innovation to be proven. This is the majority of consumers who will not adopt, until the 2.0 or 3.0 versions of the category that have significantly better innovations or a significantly better price.

FE: What food/beverage categories are really ripe for converting to a plant-based format?

Yoon: To me, anything that is ground beef based is ripe for plant-based innovation: burgers, meatballs, taco meat, spaghetti. Right now, plant-based innovations are often times too niche or gourmet versus the traditional “meat & potatoes" bullseye.

My view is that plant-based ground beef substitutes taste pretty good. That plus the values/ethical part of the story is compelling. But innovators need to talk to ground beef superconsumers to figure out what superconsumers love and hate about ground beef.

For example, ground beef is beloved for its versatility (you can make so many things) and flexibility. It's great for last minute cooks who don't plan. They need to showcase plant-based ground beef alternative is similarly if not more versatile and flexible.

But they need to understand what superconsumers hate about ground beef. It's the yuck factor, which is why packaging innovation may be just as important so that the plant-based meats can be handled with less mess and/or longer shelf life.

FE: Anything else you’d like to comment on?

Yoon: To me, the biggest thing holding companies back is the inability to create new categories. Not just enter old categories as we understand them, but to re-invent new categories through breakthrough product innovation (plant-based meats) and breakthrough business model innovation (Whole Foods + Amazon).

And the only way to do that is via superconsumers!

For more information about Eddie Yoon, visit EDDIEWOULDGROW

KEYWORDS: food and beverage industry trends meat industry specialty foods

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Debra schug 200px

Debra Schug was Editor-in-Chief of Food Engineering. She began her media career over a decade ago writing and producing broadcast news for both television and radio at the local and national level. She spent many years as the managing editor for two trade magazines in the oil industry and the research editor for an annual petroleum report. She has a master’s degree in journalism and mass communication from Iowa State University.

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