The Checkout: GFI Studies ‘Plant-based 2.0,’ Kraft Heinz Sells Natural Cheese Brands
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GFI Studies ‘Plant-based 2.0’
Since January, plant-based companies have raised $1.5 billion in investment funding — more than twice the capital the category raised in 2019, according to nonprofit trade organization the Good Food Institute (GFI). As the industry readies for the next phase of growth, GFI analyzed recent trends in retail and merchandising to help the category achieve “Plant-based 2.0.”
During a webinar this week, GFI noted that nearly 5,000 different plant-based products were available in U.S. stores last year and predicted the market will reach at least $100 billion — and possibly up to $370 billion — by 2035. Plant-based food generated $5 billion in retail sales in 2019, including $2 billion from plant-based milk sales and $95 billion from plant-based meat sales, with research firm SPINS predicting a $12 billion opportunity for the latter as it gains more market share.
As they grow, alternative meat companies are working to lower their prices to reach a wider audience: for example, Beyond Meat launched a value pack this summer, the GFI noted. Still, plant-based consumers are willing to spend 61% more than the average shopper, according to data firm SPINS, with millennials and Gen X shoppers driving the market, giving brands more wiggle room on pricing.
Whole Foods and King Soopers were found to have the largest plant-based product assortment — with each having as many as 150 plant-based meat SKUs and over 380 plant-based dairy and egg SKUs. Despite the growing range of products, GFI noted, there’s still white space for fresh ‘by-weight’ private-label plant-based meats, such as those sold by Bristol Farms and Wegmans.
Moving forward, there’s also opportunity for retailers to partner with brands, like Kroger’s Home Chef kits, which allow shoppers to swap out conventional meat for Impossible Foods, said Emma Ignaszewski, GFI’s corporate engagement strategist. However, where these products lie within the store is still being explored. A recent test by Kroger and the Plant-Based Foods Association (PBFA) found that placing plant-based brands in the meat case drove sales of the meat alternatives by 23% due to the fact that many plant-based consumers are flexitarians, said GFI research analyst Kyle Gaan. For example, 95% of Impossible Burger shoppers and 93% of Beyond Meat shoppers regularly buy animal-based meat as well.
“There is actually considerable crossover between plant-based and animal-based purchasers,” Gaan said.
Beyond Meat Rolls Out Meatballs, Impossible Foods Hits Target
As plant-based brands grow their market power, Beyond Meat this week announced plans to roll out new meatballs into stores including Whole Foods Market, Stop & Shop and Sprouts by early October.
Beyond Meatballs are sold in 12-packs with an MSRP of $6.99. The ready-to-cook balls, which will be sold out of the fresh meat section in some stores, are made with peas, brown rice and Italian spices and contain 19 grams of protein per serving. The launch marks the brand’s third product rollout this year, following Beyond Sausage and Cookout Classic, a burger designed for grilling. In total, the brand is sold in 26,000 stores.
After focusing on growing its retail footprint in the past six months, Impossible Foods this week announced it will also enter 1,500 Target stores this month.
Before the pandemic the brand was available in 150 stores, having since increased its door count by 77 times, according to a release, to reach over 11,000 stores including Walmart, Kroger and Albertsons.
“[W]hen people cook it at home, they start telling friends and family about it,” said Dan Greene, Impossible Foods’ SVP of sales. “Our retail surge has become a powerful flywheel for long-term growth.”
PBFA and Upton’s Naturals File New Labeling Lawsuit
Plant-based brand Upton’s Naturals and trade group the Plant-Based Foods Association (PBFA), represented by nonprofit law firm the Institute of Justice (IJ), this week filed a lawsuit against an new Oklahoma food labeling law that would require plant-based brands to have a ‘plant-based’ disclaimer on its packaging that is the same size as a product’s name.
The suit argues that the Oklahoma Meat Consumer Protection Act, set to take effect November 1, violates the First Amendment.
“Oklahoma is treating safe and healthy plant-based meat alternatives like they are cigarettes,” said IJ attorney Milad Emam.
Upton’s, which sells products like seitan and jackfruit-based jerky and hot dogs, currently uses the term ‘vegan’ on its packaging. Updating it to comply with the new law would be costly for the small brand and, according to the PBFA, many of its 170 members will likely remove their products from Oklahoma rather than meet the new labeling requirement, thus impacting their overall revenue.
“Our labels make it perfectly clear that our food is 100% vegan,” said Upton’s Naturals founder Daniel Staackmann. “But now our meat industry competitors in Oklahoma want to force us to redesign our labels as if our safe, healthy products are potentially harmful.”
The law, which passed last April, was introduced by Sen. Michael Bergstrom (R-OK) and Rep. Toni Hasenbeck (R-OK) with support from trade organizations the Oklahoma Cattlemen’s Association (OCA) and the Oklahoma Pork Council (OPC).
“We believe if a product wants to pass itself as beef, pork or meat, then it must be properly labeled so consumers will know exactly what they are purchasing,” the OCA and OCP wrote in response to the suit.
It’s the second lawsuit filed by Upton’s and the PBFA, which last year sued the state of Mississippi over its “Fake Meat Bill,” which would have banned plant-based brands from using meat product terms like “burger” and “bacon.” The bill was ultimately revised in November, allowing plant-based brands to use the terms as long as they include a qualifier like ‘plant-based’ or ‘meatless.’
Kraft Heinz Sells Natural Cheese Business, Aims to Focus Portfolio
During its investor day event this week, food producer Kraft Heinz announced the sale of its natural and specialty cheese business to global dairy company Groupe Lactalis for $3.2 billion. The move comes as Kraft Heinz seeks to restructure its portfolio and revamp its classic brands with simpler, better-for-you ingredients.
The deal is expected to close in the first half of 2021.
The sale includes Kraft Heinz’s natural, grated, cultured and specialty cheese brands in the U.S., such as natural and organic brand Knudsen, feta and hummus brand Athenos and cottage cheese and sour cream brand Breakstone’s. The company’s Canadian grated cheese business and international cheese business are also part of the sale. According to a release, the combined brands generated $1.8 billion in sales during the 12 months ending June 27, while the company’s 2019 annual sales were $25 billion. As part of the agreement, three production facilities and a distribution center, along with 750 employees, will be transferred to Lactalis.
Lactalis, meanwhile, has picked up a spate of U.S. dairy brands, widening its product portfolio in the natural channel. For example, the dairy company previously purchased yogurt makers Stonyfield and Siggi’s in 2017 and 2018, respectively.
“The sale sharpens our focus on growing areas where we have competitive advantage,” Kraft CFO Paulo Basilio said of why the company was divesting. “We will invest more, and more efficiently, to drive growth.”
Part of that effort includes an ingredient overhaul: the company plans to remove 60 million pounds of sugar and cut sodium by 5% from its product portfolio, Rashida La Landa, global general counsel and head of environmental, social governance and government affairs, explained. For example, the company plans to launch zero sugar or lower sodium ketchup, she said.
Along with simplifying ingredient decks, Kraft Heinz also plans to launch new plant-based protein products. The manufacturer has yet to approach plant-based meats while fellow CPG manufacturers including Kellogg, Conagra and Tyson have all launched meatless brands.