CPG Companies Eye Plant-Based Market with Different Goals

More major CPG companies are playing in plant-based, flagging the alt-protein category as a potential catalyst for growth. But industrywide, the depth of that value is not easily measured in broad strokes.

“When you factor in consumer demand, retailer adoption, technology, and manufacturing ease, along with limited retail shelf space, we can see how plant-based startups are chipping away at market share from big players,” Cassandra Rosen, branding specialist and co-founder of FK Interactive, a brand marketing and public relations firm, told The Food Institute.

This combination of factors also makes it reasonable to understand why established companies are opting to invest in, partner with, or fund plant-based products.

At the same time, plant-based sales at retail began to slow in 2021, after very strong growth the previous year.

“We are still in the early days of consumers adopting and integrating plant-based foods into their regular routines,” Jennifer Bartashus, senior analyst at Bloomberg Intelligence told The Food Institute. “How much CPG companies view plant-based foods as a catalyst for growth depends in part on their overall portfolio and growth strategy.”

Internal Expansion

Some businesses have begun producing or expanding their plant-based offerings — with mixed results.

“For companies that are highly focused on protein, like Tyson, Hormel, Cargill, JBS, or even Chobani, plant-based fits well into their strategic goals of delivering products that are high in protein, regardless of the form,” said Bartashus.

Others, like Kellogg and Conagra have strong consumer loyalty with brands like MorningStar Farms and Gardein — particularly with vegans and vegetarians — and there is a great growth opportunity in attracting even more mainstream consumers.

“We expect to see these companies continue to invest in innovation, distribution, and marketing for plant-based products,” said Bartashus.

However, companies like Maple Leaf struggled to translate sales for the Lightlife and Field Roast brands to flexitarians and have pivoted their approach from investing for growth to focusing on better profitability, she added.

Joint Ventures

Collaborations between CPG heavyweights and plant-based start-ups are also on the rise.

Last month, Kraft Heinz and food tech company NotCo announced a joint venture called The Kraft Heinz Not Company LLC, which will utilize NotCo’s artificial intelligence solutions and Kraft Heinz’s brand portfolio to create plant-based, co-branded products.

PepsiCo Inc. and Beyond Meat Inc. formed a similar joint venture, The Planet Partnership, in January 2021, to create and scale new snack and beverage options made from plant-based protein.

As Bloomberg reported, the companies are planning a vegan jerky snack as their first product collaboration, according to people familiar with the matter. (Jan 19)

“Partnerships like those we are seeing with Kraft Heinz and NotCo and Pepsi with Beyond Meat are really about driving opportunity for all parties involved,” said Bartashus.

As a leading snacks company, PepsiCo has been pushing more into functional offerings. Beyond Meat brings a variety of plant-based protein options to help make that a reality.

“As Kraft Heinz continues on its business transformation, it is critical that it demonstrates it is in tune with customers, so the partnership with NotCo fits directly into that strategy,” she added.

Most flexitarian consumers are not ready to fully commit to a vegetarian diet, which requires cutting foods that they have been eating all their lives and are also attached to emotionally, said Flavia Buchmann, CMO at NotCo in a recent Food Institute Podcast.

However, consumers are pursuing healthier eating patterns and consuming more sustainable foods that are better for themselves, animals, and the environment.

“That’s our main target,” said Buchmann. Although NotCo’s AI creates fully vegetarian foods, “the way you communicate it is through taste. [Make the products] so similar to the foods that people are used to eating, that they can change without changing.”

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