Plant-based food is one of the fastest-growing categories in the alternative space, and findings by market research firm Spins are a testament to the trend. Data released in March showed grocery sales in the US grew 11% in 2019 compared with the previous year, hitting the $5 billion mark. Meat and dairy alternatives are leading categories in the plant-based sector with $2 billion and $939 million in sales, respectively – an increase of 5% and 18% compared with 2018.
The upward trend has continued this year. The Covid-19 pandemic has played a part in shifting consumers’ preferences towards plant-based food. Moreover, it has catapulted the animal-free alternative to cheese into the limelight.
The Plant Based Food Association revealed data garnered by Spins spanning 16 weeks ending 19 April this year. In the three months to March, retail sales of plant-based cheese were growing at 30% and spiked to 95% in March – the panic-buying period – compared with the same period a year ago. The Spins report also showed that sales in this category have remained on an upward trend, with a growth rate of 54%.
The sales increase in the alternative cheese category exceeded the rate of sales in the whole plant-based food space. Data showed a 90% spike of retail sales of plant-based food at the time of peak panic-buying, up 25% compared with sales of traditional food. The upward trend of retail sales of plant-based products has continued at 27%.
Sector-specific data on retail sales of plant-based food products in Europe are hard to come by, but players in the field agree that the shift seen in the US market is a reflection of a global trend.
To prove the point, suffice to say that in the UK, law firm EMW reported a 128% surge in trademark registration of plant-based drink and food products, from 47 in 2018 to 107 last year.
Consumer goods giant Unilever, for example, trademarked vegan ice cream for its Magnum and Ben and Jerry’s brands.
Upfield and Beyond Meat have also registered trademarks of product names based on variations of ‘Beyond Butter’, ‘Beyond Cheese’ and ‘Beyond Mince. Upfield, the owner of Flora, bought the vegan cheese producer Violife for a reported €500 million earlier this year.
In Asia, Hong Kong-based manufacturer OmniFoods reported that sales increased 120% between April 2019 and January this year. The plant-based food space in India is also booming, as reported by this publication.
Traditionally, the plant-based cheese category has been associated with demand for dairy-free products from vegans. The vast majority of the products in the market are made from plant protein extracted from nuts, cashew being the most common ingredient.
The raising awareness of the impact of the carbon footprint of manufacturing dairy products to the environment, plus increasing consumer interest in plant protein, and the demand for allergen-friendly alternatives, has contributed to the creation of a broader plant-based category. Today, brands enter this space tapping into a wider range of consumer preferences, from dietary requirements to lifestyle choices.
Challenger brands in the plant-based cheese space
The dairy-free cheese space continues to be driven by products made with nuts, but today’s wider spectrum of consumer needs has sparked a new generation of brands with technology and an innovative mindset to cater for them.
New entrants to the plant-based cheese category are gaining traction in the market and the attention of investors who have dedicated funds for the right candidate in the alternative protein space. Grounded and Good Planet Foods are two prime examples of this trend.
Based in California, Grounded attracted six-figure seed funding from business accelerator Big Idea Ventures last November, and Seattle-based Good Planet Foods closed a $12 million Series A round in May this year, led by Cleveland Avenue, and joined by GreatPoint Ventures, Tasseo Consumer, Stray Dog Capital and Lever VC.
Big Idea Ventures operates a $50 million fund with a special focus on the alternative protein space. Andrew Ive, its founder and chief executive, has been on the hunt for the next big plant-based cheese brand since the fund’s inception in 2018.
“We’ve seen a lot of companies in the plant-based cheese category. Many of them are using cashew as an ingredient, and many in this space are very similar to each other,” says Ive. “Products are not that innovative and often they don’t have the right taste and texture.”
Along with Grounded, Big Idea Ventures invested in Pleese, a New York-based start-up committed to launching products by the end of this year.
Cheese is a budding plant-based food category, but by no means an easy space to jump into. As well as sharing the manufacturing hurdles of all plant-based food products – achieving the taste, texture and mouthfeel of the animal product it replaces – brands that enter this segment face the challenge of developing a product with the melting characteristic of traditional dairy cheese.
NutritionInvestor talks with the founders of Grounded and Good Planet Foods, and highlights some of the brands standing out in the market.