The Plant Based Success Story

An industry that continues to grow as consumers ditch traditional meats.

The plant based space is a hot one. It’s really blown up over the years and continues to flourish in the market. The simple reality of it is the fact consumers are moving away from traditional meat consumption for various reasons. Whether it be health based or the issues around animal cruelty, companies all over have began penetrating the space and looking to take market share in all niches.

When we think of plant-based meat alternatives, brands like Beyond Meat and Impossible Foods immediately come to mind, and deservedly so. Influential partnerships with major fast-food chains have aided their disruptive emergence into the market. They’re not the only player in the space though and as mentioned the competition is really beginning to heat up. Even international players are beginning to break into the US territory and begin looking for market share.

Tyson, Perdue, Nestlé, Hormel, and many other major food companies all launched plant-based meat products over the last year. Unilever has an ambitious target to achieve over $1 billion annual sales of plant-based meat and dairy alternatives within the next five to seven years — Figures that could challenge the impressive beginnings of startups like Beyond Meat and the hundreds of other emerging brands in the space. Fortunately, the global plant-based meat category forecasts 28% compound annual growth, building on what was a $5 billion industry in 2018 to $85 billion by 2030.

Many researches reveal that for consumers, consuming plant-based foods have moved beyond experimentation into a permanent change brought on by health, lifestyle and social factors. Thus, following are market dynamics that discuss the plant-based food product aspects in the market. Climate change is recognized as a significant public health issue that will impact on food security. One of the major contributors to global warming is the livestock industry, and, relative to plant-based agriculture, meat production has a much higher environmental impact in relation to freshwater use, amount of land required, and waste products generated. Promoting increased consumption of plant-based foods is a recommended strategy to reduce human impact on the environment and is also now recognized as a potential strategy to reduce the high rates of some chronic diseases such as cardiovascular disease and certain cancers.

With that being said let’s look at the competitors. Greenleaf Foods recently announced a US$ 310 million investment in a new production facility, and plant-based producer Tofurky is being backed by further private investment. US company Greenleaf Foods, a subsidiary of Canadian Maple Leaf Foods Inc., announced that it will build the largest plant to produce plant-based proteins in North America.

Some of the major players operating in the global plant-based food market are Tofurky, Quorn foods Inc., Amy’s kitchen, Archer Daniel’s Midland, Claudron Foods, Morning Star Farms, Sweet Earth Foods, Impossible Foods, Maple Leaf food and Beyond Burgers. These companies have adopted numerous growth strategies including innovation product launches, investment in R&D, partnership, mergers etc. to sustain in the growing plant-based food market.

As mentioned originally I see this space on a continued upwards trend. I can imagine there will be a lot of M&A throughout 2021 with some headlining deals hitting the press. Meat alternatives fit right alongside the growing health trend and the push to be a more sustainable planet. Niche brands will continue to carve out their space while the big players continue to integrate and expand with new product lines.

The M&A has been driven by a range of factors including:

• established food and drink companies and financial investors gaining access into the fast growing plant-based alternatives market
• companies looking to consolidate and expand existing positions to achieve economies of scale and / or reach new geographies
• start-up companies requiring investment from individuals, financial or corporate investors in order to accelerate their growth potential

Acquirers are looking at specific factors as well for targets:

• is investment best allocated in the company’s current core offering or should they venture into the plant-based market (potentially seen as a next-generation product)?
• does the company have the relevant skillset to be successful in this market?
• should the company grow organically through new product development or inorganically through M&A?
• does a company’s existing brand have the credibility and capability to stretch into the plant-based sector?
• should the company target a more established market such as the US or less established markets that could potentially offer more white space?