Plant Based Foods Mature

Maturing Market

The plant-based market is maturing, while demand and the driving reasons behind adoption continues to evolve. The Plant Based Foods Association reports, 70% of U.S. population, are now buying plant-based products. This is an increase from 66% in 20221. As the demand increases, the list of reasons that new and existing shoppers continue to engage with plant-based offerings is expanding. Some heritage reasons why people are choosing plant-based include health interests, environmental concerns, animal welfare and dietary needs.

Industry Snapshot

As the cross-channel market stands today, plant-based product growth has slowed, averaging just over +5% across the past three years. Although growth has slowed in the most recent year (+4.9%), there were several bright spots across departments and categories.

SPINS:  Natural Channel & Conventional Multi-Outlet (powered by Circana, formerly named IRI);Trended Years Ending 04.23.23; Plant-based Positioned Products

For instance, the refrigerated department, which represents the majority (63%) of plant-based positioned dollars, grew 6% versus the previous year and contributed 66% of overall market growth. However, the sales increase within the refrigerated department were solely driven by average retail price (ARP) increases, as units decreased. Grocery plant-based offerings, representing 9% ($~700M) of sales, grew double-digits (+16.5%) and contributed more than double its fair share towards overall plant-based growth (25%). Like the grocery department, vitamins and supplements, the smallest plant-based positioned department, contributed more than its fair share of total growth and outpaced segment growth with a +11% increase over the previous year.

Growth in Grocery

The growth in grocery was impressive, expanding plant-based department sales by an incremental $100M over the previous year. Of those sales, shelf stable plant based milk (+36%), wellness bars (+27%), and shelf stable jerky and meat snack (+17%) plant-based offerings contributed +$79M (+79%) towards the incremental growth.

Other categories adding to the grocery plant-based market include shelf stable tea and ready-to-drink coffee, shelf stable condiments and dressing/marinades and shelf stable soups. Of those segments, all but three (wellness bars, condiments and soups) posted organic growth, by having both dollars and unit growth surpass average retail price increases.

SPINS:  Natural Channel & Conventional Multi-Outlet (powered by Circana, formerly named IRI);52 Weeks Ending 04.23.23; Plant-based Positioned Products

Top Plant-Based Categories – Total Store

Plant-based milks and meat analogs remain as the largest plant-based categories and represent a significant share of sales. Today, plant-based positioned items spread across 30 categories, up from 27 categories the previous year. The growing number of plant-based categories indicates manufacturers continue to target and expand beyond legacy segments, identifying white space opportunities, and are actively working to secure their market share. Brands are also turning to innovation to pull share and customer spend away from competing brands within existing markets.
SPINS:  Natural Channel & Conventional Multi-Outlet (powered by Circana, formerly named IRI);52 Weeks Ending 04.23.23; Plant-based Positioned Products

Leaders and Laggers

While the total plant-based market is displaying growth, there are still category leaders and laggers in the industry. Refrigerated plant based milk (+$170M), refrigerated creams and creamers (+$117M),  and dairy and plant based dairy alt other (+$39M) categories were among the highest-growth segments, based on incremental dollar change.
Total US, SPINS Natural Enhanced Channel + SPINS Conventional Multi-Outlet  (powered by Circana, formerly named IRI); | 52 weeks ending 4.23.2023 | Plant-based Positioned Products

Some of the larger plant-based categories, such as refrigerated cheese and plant based cheese and refrigerated plant based meat alternatives, fell on the lowest-growth list. Refrigerated meat alternatives, which ranked as the fourth largest plant-based category, shrank -$90M (-16.8%) versus the previous year. Frozen desserts, ranked in the fifth spot for largest plant-based categories, contracted by -$20M (-4.5%) . This highlights even more established segments can soften and are impacted by the change in demand/consumer spend being shifted to other plant-based developing sections of the store.

Summary

While the plant-based market continues to grow, performance is mixed. Expansive growth seen from 2019-2020 has slowed in recent years. An increase in plant-based adoption during the pandemic has also waned; however, consumers who are still engaged are leaning in and increasing their plant-based purchase frequency. For those who have moved on, or are interacting less with these products, may have a variety of reasons for their changed buying behaviors. A few determining factors could include the consumer age demographics are having on the industry, along with the product and price parity to animal-based offerings.

1. Younger consumers, particularly the Gen Z population, play a significant role in driving the growth of the plant-based market. Many Gen Z individuals are opting for vegetarian, or vegan diets, often driven by concerns for personal health, animal welfare, and environmental sustainability. This demographic is not only changing their own eating habits but also influencing their families. While these buyers remain highly engaged with plant-based offerings, consumers outside of this age demographic(s) may not be as committed and could exit.

2. Improving taste and texture are crucial factors in driving the growth and acceptance of plant-based products. While the demand for plant-based options is increasing, many consumers still have reservations about the sensory experience and how they compare to traditional animal-based products. If a plant-based product misses the mark in these areas, compared to animal-based counterparts, consumers may be quicker to switch out/back.

3. Price parity with animal-based products is a significant factor in determining consumer adoption of plant-based options. Currently, plant-based alternatives can be more expensive due to factors such as production costs, economies of scale, and limited availability. However, as the market grows and demand increases, economies of scale can help drive down prices. Additionally, advancements in ingredient sourcing, production processes, and supply chain efficiencies can contribute to reducing costs and making plant-based products more affordable and accessible to a broader range of consumers. In the interim, consumers are left with a tougher decision to make.

Overall, continuous efforts are being made to improve taste, texture, and price in the plant-based sector. Collaboration among food companies, ingredient suppliers, and research institutions plays a vital role in driving innovation and addressing these challenges. As we see improvement in product attributes, it will be interesting to watch how this market develops over time.
Sources:https://www.plantbasedfoods.org/2022-u-s-retail-sales-data-for-the-plant-based-foods-industry/ 1

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Looking for more information? Please contact the SPINS Account Manager for PRESENCE, Mike Murphy at mmurphy@spins.com.