The Good Food Institute: Plant-based food investment tops $17bn since 2009 as over one-third of Americans embrace animal-free products
While demand for plant-based foods is expected to continue, global demand for animal-based food is also on the rise, noted GFI executive director, Bruce Friedrich, in the report.
"Globally, consumers’ appetite for meat has been rising, and with the global population projected to reach 9.8 billion by 2050, demand for animal-based foods is expected to rise by nearly 70%. In order to meet this demand without exacerbating the numerous and well-documented impacts of animal agriculture on the environment and public health, new and innovative approaches for producing meat are needed," said Friedrich.
"One such innovative approach is to make meat entirely out of plants."
Production of plant-based meat alternatives has come along way since soy and bean burgers from the 1970s. In recent years, advances to plant-based meat alternatives involve mimicking the biochemical composition and three-dimensional structure of meat with plant-based ingredients and novel manufacturing techniques, Friedrich explained.
"The biomimicry approach only really began when Beyond Meat was founded in 2009 and Impossible Foods shortly after, in 2011. This is when product quality began to dramatically improve, from products that were good enough for vegetarians to products that were simply good."
Plant-based food investment breakdown
According to the GFI, which commissioned custom data from Nielsen in August 2018, retail sales of of plant-based meat rose 23%YoY in the 52 weeks ending August 11, 2018.
Retail sales of plant-based foods (which the GFI classifies as products that replace animal-derived foods such as eggs, milk, meat etc) remain relatively concentrated to the top brands, indicating there is still substantial room for new entrants and diversification of options for consumers. The top nine brands plus private label comprise 91% and 95% of plant-based meat and milk retail sales, respectively, GFI found.
In 2018, $673m was invested into the plant-based food industry from a variety of sources, but the most common type of funding was venture capital.
Investment from strategic corporate VCs such as General Mills 301 Inc. and Tyson Ventures, and large meat and dairy companies suggest that the broader food industry views plant-based food market as a viable investment, said GFI: "These types of partnerships will enable plant-based brands to tap into leading food industry players’ product development expertise, distribution networks, and production infrastructure."
Room for further household penetration
Many companies from large heritage CPG brands to tech-based food startups have invested heavily in the plant-based industry, with household penetration of plant-based alternatives hovering around 37% for plant-based milk and 12% for plant-based meat.
According to GFI, plant-based milk and meat consumers follow a similar demographic skew. Plant-based milk is purchased across all consumer groups, but the category over indexes in households with children under the age of six, households earning more than $70,000 a year, college educated households, and households in suburban and urban areas.
Plant-based meat consumers fall into similar buckets, but over-index even more significantly with millennials and higher-income households, GFI and Nielsen data market research revealed.
"These demographic attributes represent an opportunity for retailers to attract high-value consumers and increase average basket size by featuring a wide assortment of plant-based milk and meat options on shelf," noted GFI
Plant-based milk consumer demographics:
Plant-based meat consumer demographics:
Aside from demographic factors, plant-based meat companies have been increasingly been targeting their marketing towards flexitarians (consumers who still eat animal products but are trying to limit their intake), which according to GFI comprise one-third of the US population.
It was also found that of the one-third of US consumers who said they are very or extremely to purchase plant-based meat, 3% were vegan or vegetarian, 13% were light meat eaters (less than once per day), 50% were medium meat eaters (1-2 times per day), and 34% were heavy meat eaters (more than twice per day).
"Thus, the trend for flexitarians — and even traditional omnivores — to seek out plant-based meat is projected to grow," GFI said.
White space opportunities in the plant-based foods category
The increasing demand for plant-based foods presents an opportunity for startups and established brands to develop new products to fill current white spaces in the market, according to GFI. Retailers carry an average of 41 plant-based milk products (28 refrigerated and 13 shelf stable), and 24 plant-based meat and seafood products (19 frozen and 5 refrigerated).
"While plant-based beef and chicken products are relatively common, categories like pork, turkey, fish, and shellfish are underrepresented in the plant-based market," GFI pointed out.
"Increasing the number of options and diversity of products in less developed plant-based categories could help grow the market share of plant-based products in various categories. In addition to product diversification, there is also still significant room across categories for product quality improvement, including both the biomimicry and plant-forward approaches."
