On Beyond Animals: Consumers Flock to Plant-Based Alternatives

By Lorrie Baumann

Market strength created by consumers who are seeking plant-based foods because they think they’re better for their health, for animal welfare and for the health of the planet is motivating grocers to make room on their shelves and in their cases for a rapidly expanding range of these products. Catering to these products’ popularity, though, comes at a price.

According to market research firm SPINS’ data, dollar sales of plant-based foods grew 11 percent in the past year and 31 percent over the past two years, and the retail market for plant-based foods is now worth almost $4.5 billion, said Julie Emmit, Director of Retail Partnerships for the Plant-Based Foods Association. The trade association, founded in 2016 and now comprising 166 member companies, defines “plant-based foods” as those that are substitutes for animal-based meat and dairy products rather than as any foods made from plants, she said.

The growing market strength of plant-based foods isn’t taking sales away from grocers’ meat cases, according to Erin Ransom, Vice President of Marketing for Tofurky. Bill Puza, Category Manager for Meat at Hannaford markets, an Ahold Delhaize banner based in the northeastern U.S., agrees. Hannaford caters to a demographic whose median age is older than the average American, but the chain is responding to its shoppers’ demands for plant-based alternatives with plant-based sets throughout its stores, he said. Beyond Meat’s market success last year has helped drive the market for plant-based burger products, so the chain is expanding that set and has placed the plant-based product next to the ground beef, which is a staple for the chain’s shoppers, he said.

But although the chain is experiencing success selling plant-based products, particularly in areas of the store that receive the highest foot traffic, the effort to meet shoppers where they are with plant-based products has some drawbacks too, according to Puza. “Our biggest concern right now is shrink,” he said. “This is the grace period, where everybody wants to try everything, but the grace period has an ending.” After a careful analysis of which products are moving and which aren’t, Hannaford will soon respond with an adjustment of its product assortment after taking into account the importance of its relationships with its various vendors, Puza said.

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The most effective sampling is likely to take place by incorporating the item into the prepared food menu, since the product is most likely to shine when it’s prepared by a trained chef, noted Adrienne duBois, Vice President of Global Sales for Follow Your Heart. Customers who are curious about plant-based foods may be encouraged to try them when they see them on the menu of a restaurant, and then they may be more likely to look for those products in their grocery markets, she added.

In their grocery store, consumers may find that the prices of plant-based meat alternatives are a deterrent to purchase. Some of those price disparities occur because many plant-based foods are being made by companies that earned their start in the natural foods channel, which means that the products had to be made according to an ethic that met the standards of the natural foods shopper, according to duBois. Meeting the expectations of those shoppers adds constraints that often involve higher costs, she said. She noted that the expanding market for plant-based foods is attracting interest from other companies with a history of operating in conventional channels, where consumers have different expectations that could be met with a lower cost structure.

The resulting entry into the market of cheaper plant-based alternatives will drive both the affordability of the products and the diversity of the product range, according to Ransom. That will, in turn, increase sales, and that could lead to supply chain issues and spot shortages that create a start-stop pattern of product availability, she said. Tofurky, in particular, is already taking a hard look at its supply chain to make sure that it has the capacity to supply enough product to meet rapidly growing demand, according to Ransom.

“Plant-based foods are becoming more mainstream with respect to price and selection,” said duBois. “If we’re trying to mainstream, it’s about improving performance of the product for various use occasions. It’s getting better over time.”