Demand for Plant-Based Foods Boosting Packaged Food Market

A consumer shift toward healthier lifestyles and packaging innovations are boosting demand for packaged foods in the U.S.

In fact, the U.S. packaged food market size is expected to grow at a CAGR of 4.1% and reach $1.376 trillion by 2028, according to a recent report published by

Moreover, the growing trend of plant-based and organic foods is driving the market. With the rising health consciousness, consumers are gradually shifting toward healthy food and drink alternatives. As a result, food products with low-calorie, low-fat, gluten-free, sugar-free, and organic claims are gaining traction among consumers.

Plant-based momentum

“Throughout my CPG career, I have seen trends explode on to the scene. The pendulum swings hard and then slowly comes back to the middle. Right now, we are in the hard swing for plant- based items— where everyday foods from baking mixes and cookies to crackers, cheese, milk, meat, fish and more are converting to plant based,” said Amy Goldsmith, chief marketing officer at Halo Healthy Tribes, an alliance of food and beverage brands that are plant based and have no sugar added. “We saw this with low fat, low carb and gluten free. Now it’s the plant-based products turn.”

Goldsmith added that growth in plant-based and organic food is driven by Millennials and Gen Z and their concern for the environment, interest in buying from mission-driven companies, and desire to eat healthier.

Packaging innovation

In line with the concerns of Millennials and Gen Z, consumers have been aligning with companies known for prioritizing sustainable production and environment-friendly packaging. As a result, several companies are focusing on sustainable packaging and a transparent supply chain. For instance, in January 2020, Nestle announced an investment up to $2.12 billion in advanced sustainable packaging solutions to shift to food-grade recycled plastics from virgin plastics. The company has also committed to making 100% of its packaging reusable or recyclable by 2025.

Other highlights from the packaged food report include:

  • By product, the beverages segment held the largest share of more than 20% in 2020. The popularity of healthy drinks and growing demand for functional beverages are expected to remain a favorable factor for the segment growth over the next few years
  • The ready-to-eat meals product segment is expected to register the fastest CAGR of 5.7% through 2028 owing to the busy lifestyle and hectic work schedule of the consumers
  • In terms of distribution channel, the supermarkets and hypermarkets segment dominated the market by accounting for over 65% share in 2020