29 Jul 22 Emerging trends in the plant-based industry
The plant-based revolution is here, and here to stay! Discover the latest growth opps, innovation, risks and challenges in the sector in this Mintel article.
Over the last decade, the explosion in all things plant-based has been immense. First coined as a term in the 1980s, “plant-based” didn’t surface seriously onto the world stage until 2015.
With increasing concerns about health and climate, consumer interest in both plant-based diets and plant-based lifestyles has driven a wave of product innovation in the plant-based industry around the world.
Data from Mintel Global New Product Database highlights the size of that growth, between 2015 and 2021, the number of new consumer packaged goods launched with a plant-based claim has grown by nearly 700% and accounted for 12% of launches in 2021 (Mintel GNPD 2015 – 2021).
It’s safe to say that plant-based is now a lifestyle choice, and it’s here to stay.
Looking at the last five years to May 2021, Mintel GNPD shows that the top ten companies that have launched vegan innovation globally are Danone, Aldi, dm-drogerie, Lidl, Tesco, Sainsbury’s, Unilever, Marks & Spencer, Woolworths and Kellogg. These companies account for around one in ten launches of plant-based/vegan products globally – this shows how fragmented the plant-based/vegan industry still is.
Interestingly, these companies have not increased their share of launches over the past five years, evidencing that smaller start-up brands continue to play a prominent role in driving growth in the vegan food market.
What does plant-based mean?
Put simply, plant-based refers to diet or consumer goods that are derived from plants (we know it sounds obvious, right?). In the main, this means fruit, vegetables, grains, pulses, nuts, oils, seeds, spices and plant-based extracts.
Consumer concern over planetary environmental health and human health are the key driving factors behind the plant-based food trend.
Plant-based innovations are making a splash in consumers’ daily diets, such as plant-based meat substitutes/alternatives, plant-based dairy alternatives, plant-based fish/seafood alternatives and plant-based egg substitutes. We also see plant-based claims in beauty and personal care products, household, fashion and apparel categories.
Are plant-based and vegan the same thing?
While they are similar, they have some key differences. Vegan diets eliminate all animal products, while plant-based consumption does not necessarily eliminate animal products and proteins, they instead reduce the consumption of animal-based ingredients and focus on eating more plant-based goods such as vegetables, fruit, nuts etc.
Plant-based brands have previously tapped into the vegan market but are now keen to have a more mainstream appeal focusing on flexitarians and omnivores, rather than pursuing a small segment of the vegan consumers. For example, only 3% of adults in the UK claim to follow a vegan diet.
Plant-based market scope – issues and opportunities
Plant-based meat substitutes continually press ahead towards the mainstream in many markets: half of UK and Canadian consumers engage with meat substitutes. The US trails that but still shows 39% of consumers engaging with the plant-based category.
Yet, the challenge now for Western plant-based players is generating repeat purchases, increasing consumption frequency and differentiating brands in an increasingly competitive market.
The future success of the plant-based meat substitute market depends on improved taste, nutrition, environmental impact and increased value.
At risk of losing its healthy image?
Consumers perceive food and drink products with plant-based claims to be healthy and natural – brands that are able to deliver on those perceived benefits will have more credibility in the future. Alas, like all-natural claims before them, plant-based claims have proliferated into a wider range of sub-categories, yet such diversification could in turn, threaten their credibility.
In addition, reports in the media have questioned the healthiness of plant-based meat alternatives, such as the Impossible Burger compared with ground beef. This backlash could negatively impact consumers’ perception of plant-based claims, leaving them to question their value.
Stand out in an increasingly crowded market by focusing on providing top consumer benefits
Focus on promoting desirable qualities, such as fruit/veg content and high protein. Protein is a key opportunity as the majority of plant-based consumers would like to see more high-protein plant-based dairy alternatives, according to Mintel’s research on plant-based proteins.
Food and drink companies have an opportunity to appeal to the large percentage of consumers who want to explore vegan alternatives and add fruits, vegetables and grains into their diets – support consumers who are looking for pro-plant diets, not necessarily vegan.
Diversify protein sources
Improved variety in plant-based proteins is key for sustained market growth. Types, formats and sources of plant-based protein innovation will also continue to diversify in order to meet consumer demands for realistic alternatives to both meat and dairy.
As one of the most popular plant-based products, the high use of burger substitutes has much to do with their availability and the innovations brands have made in both taste and texture. Brands can find ways to stay ahead of the competition by elevating new alternative formats to other types of meat products in the way that Impossible Foods and Beyond Meat did with burgers.
What are the latest innovations in plant-based food and drink?
Plant-based seafood innovations have recently accelerated and fish substitutes are expected to increase their plant-based market share in the near future. A variety of seafood species lend themselves to fish substitute innovation, offering more variety to consumers seeking to diversify their plant-based protein choices.
In the next decade, lab-grown dairy could take a market share between 35% and 50%, thus challenging plant-based alternatives. In the longer term, the challenges from lab-grown milk will push dairy and non-dairy to unite forces and seize the opportunity to position their hybrid products as the ‘best of both worlds’.
Around a fifth of European consumers buy dairy alternatives because they can be used for baking. In the future, plant-based drinks brands will look to increase this market share as they continue to compete for new occasions beyond coffee and will use the enthusiasm over ‘foamable’ products to expand usage, particularly in the home cooking market.
70% of US consumers agree that food/drink companies can be leaders in protecting the environment. Moving forward, plant-based substitutes will need to work harder on their packaging sustainability to remain at a competitive advantage over animal protein products to deliver on waste reduction.
In China, 68% of adults agree that plant-based foods can help reduce the risk of the ‘three highs’ (high blood pressure, high cholesterol, and high blood sugar). There is a continued demand for product innovation that looks to increase the visibility of plant-based meat products and help soy-based protein products to eliminate the outdated image of soy-based foods.