SKU’d Thoughts 32: Has big CPG missed the alternative-meat wave?

Consumer behavior and interest in non-meat-based protein options have increased globally because of environmental, health and animal welfare concerns. In the US, evidence of this sea change was the IPO of one of the largest plant-based meat companies, Beyond Meat. Since going public in May, the company’s stock has increased more than 700%. This is significant for a consumer packaged goods company that has never made a profit and points to the fact that investors believe the alternative meat category will gain significant share from the $1.4 trillion global meat market.

Some fast-food chains and quick-service restaurants have taken notice of the meat-less wave and rolled out tests across thousands of locations. At the beginning of 2019, Carl’s Jr. partnered with Beyond Meat to sell the Beyond Famous Star burger in 1,100 of its restaurants and this month, Burger King started selling the Impossible Whopper, a plant-based burger supplied by Impossible Foods (Beyond Meat’s largest competitor), nationwide in more than 7,000 locations. Other chains with these meatless rollouts are Cheesecake Factory, Red Robin, Dunkin, Tim Hortons, Bareburger, and more (Beyond Meat & Impossible Foods restaurants).

Both Beyond Meat and Impossible Foods have experienced supply issues because the demand for alternative proteins has outpaced their production capabilities. This supply issue is an opportunity for competitors, like big CPG, to gain a foothold.

So, big CPG hasn’t missed the alternative-meat wave, at least not yet.

According to a McKinsey analysis, one of the most popular food-and-beverage product search queries is vegan products, with a 16% compounded annual growth.

Food manufacturers are taking notice of this trend and producing more products that have a vegan and no animal ingredient claim as shown on the graph below from McKinsey.

True to form, some traditional food manufacturers have entered the alternative-protein discussion through acquisition. Nestle acquired Sweet Earth, a California vegan food manufacturer and ground beef producer Jensen Meat Co. acquired Before The Butcher, another California based vegan food brand. Tyson Foods is launching “made with plants” nuggets under its Raised & Rooted Brands this fall in 4,000 grocers. The nuggets contain egg-white so they are not vegan but this is the meat giant’s attempt to cater to the conscious consumer.

The increase in alternative-meat does not mean consumers will completely stop eating meat anytime soon. It does, however, indicate that companies should be investing in alternative protein solutions. Big manufacturers and startups alike have an opportunity to gain share in this space that currently only boosts two dominant players.