How will the coronavirus outbreak affect the plant-based food industry?
Shoppers flocked to supermarkets last month, filling their carts with a variety of foods as they geared up to stay at home for several weeks at least. The coronavirus pandemic put stress on US supermarkets and food suppliers as panic shopping became the norm and consumers stocked up on both animal products and plant-based foods, a trend that's continuing as food stores remain essential businesses.
Before the pandemic hit, consumers were buying plant-based meat, dairy and egg alternatives in greater amounts each year. US retail sales of plant-based foods increased 11.4% last year, according to a SPINS report done for the Good Food Institute and Plant Based Foods Association. Sales grew as the growth of new products fueled consumers’ growing interest in trimming meat, dairy and eggs from their diets on concerns about health and the environment, and the combination of innovation and increased demand was attracting investors.
In the years before 2017, sales of plant-based meats were growing at a respectable rate of about 5% annually, says Seth Tibbott, who founded and bootstrapped a tiny tempeh company and ultimately turned it into Tofurky.
About three years ago, sales began to surge as new high-profile products hit the market and a growing number of consumers identified as flexitarians who wanted to replace some of the animal products in their diets, Tibbott says.
“Now the conversation for us is not where are we going to put it or how will we get placement in the grocery store, but can we make enough of it? Can we keep this incredible pipeline filled?”
Pandemic-driven panic buying sent sales of some plant-based coronavirus quarantine foods soaring even higher in recent weeks. US retail sales of fresh plant-based meats grew 279.8% in the week ending March 14, beating a 206.4% jump the week before, according to Nielsen data.
Sales of oat milk grew 476.7% in the week ending March 14, while dairy milk sales grew 32.4%, with some in the industry speculating that the shelf-stable nature of oat milk was a big draw as consumers packed their pantries with foods that have a longer shelf life.
While plant-based meat coronavirus sales have been part of consumers’ panic-buying carts, reports show sales of traditional meat and other animal foods have also surged as consumers turned to the familiar and often more affordable options. Retail sales of meat grew 77% in the week of March 15, according to IRI data, and news photos from supermarkets around the country showed empty or nearly empty meat cases.
Is the future of plant-based protein still bright?
Food Business News quoted a report from Culinary Tides President Suzy Badaracco, who predicts that, while vegetarians or vegans will stick with plant-based foods, the flexitarians who accounted for much of the plant-based category’s growth are likely to revert to familiar old eating patterns in the midst of a crisis.
But others in the food world see it differently.
For one thing, there’s been a growing awareness of the role animal agriculture can play in the origins of disease. The novel coronavirus that causes COVID-19 originated in a wet market in Wuhan, China, where live animals and people were thrown together, a perfect storm for zoonotic diseases to jump from animals to humans.
“Bird flu, swine flu, and now COVID-19 demonstrate that keeping large numbers of animals in close contact with one another presents a tremendous risk for global health,” says Christie Lagally, founder and CEO of plant-based chicken maker Rebellyous Foods.
Her company’s mission is to supply school lunch programs and other foodservice channels with plant-based versions of chicken nuggets that taste just as familiar as the animal-based version and cost the same or less.
Seattle-based Rebellyous had to switch gears when the pandemic forced institutions to close, temporarily cutting off demand in foodservice. Instead, the company is continuing to perfect its technology and speeding up plans to launch affordable plant-based chicken products into retail markets.
Lagally isn’t surprised that many consumers are turning to familiar animal-based foods amid the crisis. People likely feel secure in their ability to cook the animal products and, with more than 17 million Americans newly unemployed in the past three weeks, many are also seeking more affordable options.
Plant-based meats are still premium priced items, she says, and while at this point they can be indistinguishable from animal products on taste and texture, the package sizes aren’t usually big enough to feed a family.
“I don’t blame consumers,” Lagally says. “They want to buy the things they can depend on and that don’t cost too much. Both of those are things the plant-based industry has yet to deliver.”
Affordability is a key issue Rebellyous, formerly Seattle Food Tech, is working to solve. The company recently announced it has won a $6 million investment that will go toward perfecting the technology that will allow it to scale manufacturing with the goal of driving affordability in the plant-based meat space.
Will plant-based investments keep flowing?
Before the outbreak, plant-based food makers were attracting investment from venture capital firms and major established meat supply companies. Companies including Nestle, Cargill and Tyson Foods have all been developing plant-based meat brands alongside their more traditional meat products.
And even after the pandemic hit, some plant-based meat companies announced new investments. Impossible Foods said in late March that it had raised $500 million in a new funding round, part of which the nine-year-old company will use to develop new plant-based meat alternatives in categories including lamb, goat and fish.
Others are also betting that the time is ripe to jump into plant-based product investing.
Vancouver, Canada-based Eat Beyond Global is moving forward with its plans to invest in early-stage plant-based food startup and food tech companies, CEO Patrick Morris says.
The fund is new, with plans to be listed on the Canadian Stock Exchange in the second quarter and start investing in up to 10 startups with the potential to innovate in the plant-based diet, plant-based protein and food tech segments, he says.
The firm believes in the power of these segments to be disruptive as consumers’ interest in the origins, safety and healthfulness of their food supply continues to grow, he says.
“The public around the world is going to be extremely health conscious and will take preventative measures and continue to try alternative sources of protein.”
The coronavirus outbreak is presenting challenges across the food supply chain, but it also may bring new opportunities, Tofurky’s Tibbott says.
“I do think with crises, the deeper the crisis the deeper the opportunity to change and connect the dots. And I still believe that the most important thing that’s going to move this plant-based movement forward will be the taste and texture of the products.”
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