Analysis

Growing demand for plant-based proteins

Analysis

Growing demand for plant-based proteins


Consumers are purchasing plant-based foods, especially protein alternatives in the meat and dairy aisles, in increasing numbers. Meat alternatives in particular have jumped 60% over the past two years, driven by better-tasting and more widely available products.

Plant-based dairy products, like soy, nut and oat beverages, are an established sub-category, commonly merchandised alongside cow’s milk in stores and continuing to gain share. Shoppers are gravitating toward “alt-protein” foods for a variety of reasons, including wellness, ethics, and flavor. Search and purchase data suggest growth will continue to accelerate, moving alt-proteins further into the mainstream.


The plant-based protein trend

The plant-based protein phenomenon is surging, forcing grocery manufacturers and retailers to respond quickly to meet shopper’s interest. Growth in the sector, which encompasses meat, cheese, milk, and sour cream alternatives, is powered by a convergence of trends in consumer behavior, product innovation, and investment.

Grocery sales of plant-based foods that directly replace animal products grew 12.1% to $1.3 billion in the 52 weeks ending July 31, 2021, and 53% over the last two years.

Sales of meat alternatives jumped 11% during this time to $922.2 million. The growth was powered by a 43% increase in households that purchased meat alternatives.

More than half (52%) of U.S. consumers are eating more plant-based foods and they believe it makes them feel healthier.

Investors have poured more than $16 billion into U.S. plant-based and cell-based meat companies in the past 10 years—including $13 billion alone in 2017 and 2018.

Source: NIQ RMS – Answers on Demand; Total US xAOC; L52W W/E 7/31/21, NielsenIQ Homescan; Total Panel, Total US, L52W WE 7/3/21, DuPont Nutrition & Health plant-based eating research, Food Dive Plant-Based Protein Tracker

Over the last 7 years, plant-based burgers from brands like Beyond Meat and Impossible Burger helped trigger broader interest in alt-proteins among mainstream consumers. However, plant-based burgers are only a piece of the larger story.

Plant-based proteins have a strong (and growing) presence in the dairy case and frozen dessert aisles. During the 52 weeks ending July 3, 2021, plant-based alternative milk products accounted for 15.5% of all milk dollar sales. Dollar sales reached $2.4 billion, a one-year increase of 9.8% and a two-year jump of 27%. Plant-based cheese grew 19.8% for the year and 65% for the two full years.

Taken in aggregate, these trends signal that plant-based protein foods remain a prime growth opportunity for retailers and brands.


What is driving the shift to plant-based proteins?

Broadly speaking, 3 factors are in play in this sector: shifting consumer behaviors, innovation in the space, and investors.

Consumers are prioritizing health, wellness, and social issues in increasing numbers, and this translates to more conscious shopping choices—such as buying products that align with specific diets, lifestyles, and values, as well as avoiding unwanted ingredients due to allergies or food sensitivities. In the U.S., there are 200 million shoppers who adhere to a diet or health-related program and 180 million have food allergies or intolerances that affect the way they shop1.

On top of this movement toward overall wellness, a subset of consumers are adopting a “flexitarian” eating approach—still eating meat, but less often. In a 2021 study conducted for the Food Marketing Institute (FMI) by The Hartman Group, 29% of shoppers indicated they are moderating their meat intake, compared with 9% of shoppers who indicate they consume no meat products whatsoever. For some consumers, it’s about improving their health and adding variety to their diets, while others choose to forgo meat for ethical reasons.

Product innovation is also driving interest in plant-based products. Taste, quality, and variety have reached a higher plateau, while products like burger patties, soy and nut milks, and dairy-free cheeses have carved out permanent spots in supermarket coolers. As they grow more accessible and familiar, shopper trials tend to follow. Recent market shortages of pork, beef, and poultry during the COVID-19 crisis may have helped to drive greater shopper trials of meatless burger products, for example.

Intense investor interest in the sector is also driving innovation and competition. Fast Company reported that investment into alternative meat and dairy companies in the first half of 2020 was over $850 million, surpassing the total raised in all of 2019. Their collective actions indicate a high confidence in the future of what analysts are calling the “alt-meat” category.


Plant-based protein sales are on the rise

As of March 2021, data from NielsenIQ Product Insider shows that 14% of food and beverage dollars came from products that meet criteria for a plant-based diet. Plant-based proteins are a subset that encompasses meat, dairy, and seafood alternatives.

Plant-based alternative meat products have dominated consumer news and claimed space in the retail meat department, where the products are often displayed alongside ground beef and sausage. In the latest 52 weeks ending July 3, 2021, there was a 43% increase in households buying meat alternatives.

Frozen veggie-bean burgers have established brands like Boca and Gardenburger, but newer entrants such as Beyond Meat and Impossible Burger have commanded the spotlight in the fresh meat case. Supermarkets have followed suit, introducing private label versions, often at lower price points.

Plant-based dairy products have a longer history in health and specialty stores, but have now migrated to the mainstream with far more dedicated space in both refrigerated and frozen cases. Nut, soy, and oat milks have already heavily penetrated, led by brands like Silk and Blue Diamond.

Today, plant-based alternative milk accounts for 15.5% of all dollar sales for retail milk. Plant-based cheese sales grew at a rate of 65% over the last two years—over 4 times faster than dairy cheese—led by vegan brands Daiya and Violife.

Oat milk continues to be the rising star in the plant-based milk category. Searches for oat milk were up 15% (by over 50,000 monthly searches) in July. Top search terms include variations of “oatmilk” and “oat milk,” including “unsweetened oat milk,” “creamy oatmilk,” and “vanilla oatmilk.” Brand-specific searches for Oatly accounted for nearly 13,000 monthly searches.

The “sugar-free” attribute is also trending with consumers across plant-based milks, up 23%, driven by searches for “no sugar soy milk,” “sugar free coffee creamer,” and “oat milk zero sugar.”

Plant-based seafood products have garnered less attention, but command a niche with interesting potential. The Good Foods Institute reports that plant-based seafood dollar sales grew 23% to $12 million in 2020. Plant-based seafood remains a small fraction of the overall plant-based meat and seafood category, though, accounting for less than 1% of dollar sales.


Opportunities for merchandising alt-protein

Manufacturers need to take steps to ensure that their plant-based and farm-raised products are discoverable with the right attributes. In stores, plant-based protein foods are commonly merchandised alongside their animal origin counterparts, which allows for direct product comparison of package info.

On the digital screen, it will be increasingly important to enable shoppers to search effectively for items that suit their health, wellness, and other dietary preferences.

Searches for relevant attributes are steadily increasing, our data shows. During the first half of 2021, online searches for “plant-based” increased 17% on Amazon and 50% on Instacart.

During the same six-month period, other key health and wellness attributes appear prominently in trending searches across Food & Beverage categories2:

  • “Sugar free”: +18% on Amazon and +30% on Instacart
  • “Low sugar”: +9% on Amazon and +59% on Instacart
  • “Sodium free”: +17% on Amazon
  • “Low sodium”: +18% on Instacart
  • “Low fat:” +25% on Amazon and +28% on Instacart

There may be somewhat of a disconnect on the digital side, as our data reveals 84% of brands fail to claim at least one of the top three most searched attributes.

Major product marketers and upstart “alt-meat” brands will need to bring category insights and promotion ideas to the merchandising conversation with retailers. Coordination of category planning and promotions can yield a win-win as plant-based protein foods continue their penetration of mainstream grocery.


Methodology

1Transparency Trends Report, FMI, 2020

2Label Insight, a NielsenIQ company; Jan-Jun 2021