Don’t Call it Vegan: Strategies for Retail Success in Plant-Based Food

By Lorrie Baumann

Your strategy for appealing to customers who are interested in decreasing their meat consumption for reasons as various as their concerns about their health, environmental sustainability and animal rights, should start with the basics: Don’t call it vegan. Today’s plant-based foods are designed to appeal to meat-eaters as well as vegetarians and vegans, and they respond to the term “plant-based” with their purchasing dollars, which helps to explain why we’re suddenly seeing the term “plant-based” pop up everywhere.

U. S. retail sales of plant-based foods amounted to $5 billion in 2019. Counting purchases of a spectrum of foods made directly from plants and intended to substitute for animal-based products, including milk and other dairy products, meat and eggs. That’s up 11 percent from 2018, according to the Good Food Institute, an advocacy organization that promotes a food system that does not include animal products. “Since 2017, the plant-based food market has grown by over $1 billion, a 29 percent increase in just two years,” said Caroline Bushnell, GFI’s Associate Director of Corporate Engagement.

Plant-based milks are the largest segment in this category, accounting for $2 billion in sales in 2019, with other plant-based dairy, including yogurts, cheese and butter. Plant-based meats sales amounted to $939 million in 2019, although Bushnell estimates that 2020 sales have already reached $1 billion.

IRI data from just prior to COVID showed that sales of plant-based foods were growing 14 times faster than total food sales. Over the past two years, sales of plant-based milks have grown by 14 percent compared to a 4 percent decline for dairy milk, while sales of plant-based meats have grown by 38 percent, compared to 5 percent for animal meats, according to SPINS data analyzed by GFI. According to IRI data, about 14 percent of American households had purchased plant-based meat in 2019. Plant-based meat currently has just 1 percent share of total retail meat sales in this country, according to GFI, so there’s a lot of room to grow.

Impact of COVID on Sales of Plant-Based Products

Plant-based meat has experienced strong growth in the first half of this year, despite the disruptions caused by COVID-19, according to Kyle Gaan, a GFI Research Analyst. Prior to the pantry-stocking even in late March, plant-based meat was up by 40 percent, versus the same week in 2019, and dollar sales growth was 152 percent versus the prior year at the peak of the pantry-stocking period, and then remained strong through the summer, with week-by-week growth ranging from 43 percent to 79 percent, versus the prior year, from April through July, he said.

Retail meat sales were also strong during COVID, but growth in sales of plant-based meats has consistently outpaced growth for conventional meats For the nine-week period ending May 10, sales of conventional meats grew by 45 percent, while sales of plant-based meats grew by 86 percent, according to a report from 210 Analytics LLC that used IRI data. During the pantry-stocking period in late March, sales of fresh plant-based meats grew by more than 400 percent, while sales of conventional meats grew by 100 percent over the previous year, and sales growth of plant-based meats remained strong through the next several weeks, massively outperforming sales growth for conventional meats.
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The Morning Star Farms brand experienced a 66 percent increase in March sales, driven by its frozen products, while Gardein experienced a sales increase of 65 percent from March 13 to April 19, 2020, compared to the same period in 2019. More than a third of Gardein buyers were first-time customers. For Tofurky, sales increased by 40 percent from February through April, while sales of its plant-based ham product grew by 631 percent compared to the same period in 2019, according to Forbes magazine.

How to Capitalize on This Opportunity

Based on a GFI evaluation of plant-based sales strategies used at 23 banners operated by the largest U.S. grocery retailers, the organization’s “Good Food Retail Report,” which can be downloaded, for free, from www.gfi.org/retail-report, the organization has some recommendations that include merchandising strategies as well as ideas for making your store a destination for shoppers seeking out plant-based foods in general rather than specific products and, the simplest, just using the term “plant-based” to identify these products as you market to bring customers into your store and as you guide your shoppers to find these products on your shelves.

The organization recommends that you stock a wide assortment of plant-based meat, egg and dairy products. Top retailers in the benchmarking study carried more than 150 plant-based meat SKUs across the refrigerated and frozen cases and more than 380 plant-based dairy and egg SKUs. “If it’s not on the shelf, merchandising and marketing won’t matter,” pointed out Emma Ignaszewski, GFI Corporate Engagement Strategist, who added that shoppers are looking for diversity in product types, formats, flavors and unit sizes. They want to be able to choose between plant-based chicken, beef and seafood products and between grounds, patties, sausages, strips, nuggets and shreds to accommodate their cooking styles and their desires for novelty. “The time for having merely a couple of plant-based burger patties on the shelf is over,” Ignaszewski said.

GFI recommends that you integrate these plant-based products into your conventional sets on the shelves. As an example of the success of this kind of approach, Bushnell points to Silk’s success in expanding the market for its product by putting it in gable-topped cartons and asking grocers to merchandise it in their dairy cases, where it would be right in front of consumers’ eyes as they weighed their options. Compared to its previous positioning on shelves in center-store, Silk’s sales escalated dramatically, Bushnell said.

In the case of meat alternatives, you may either put your plant-based chicken patties right next to your ground chicken in the case, or you may want to segregate all of your plant-based protein products together within your meat case, preferably with a sign or shelf tag that calls your shoppers’ attention to the plant-based options. According to GFI, 76 percent of American shoppers say that they prefer to shop for plant-based meats in the meat or frozen section of the store, compared to 24 percent who prefer to see these products in the produce area. Kroger has released the results of a study it conducted together with GFI that found that with a 3-food plant-based meat section in the meat aisle, sales of plant-based meats increased by 23 percent compared to stores that didn’t use this strategy.

Identifying these options as “plant-based” rather than “meatless” or “vegan” may get you 15 to 20 percent more purchases of these products, according to GFI. “Using plant-forward language has the potential to really boost sales,” Ignaszewski said. “The meat department as we know it is transforming into a protein department, serving up conventional protein alongside plant-based protein and, some day soon, cultivated protein, from the butcher counter to the packaged meat section.”