It’s clear 2020 has been a disruptive and difficult year, changing the lives of people around the planet. With the pandemic lifting the lid on both the public health and supply-chain challenges associated with so many industries, the plant-based food industry has thrived, experiencing record growth, says Allen Zelden.
As this challenging year (finally) comes to an end, and with more consumers switching to plant-based foods, where does Australia stand in this global market and what opportunities can we expect to benefit from in the uncertain year ahead. From increasing competition to improved retail integration, here are my four trend predictions for the Australian plant-based food industry in 2021.
Generally speaking, Australia is a few years behind with respect to the plant-based food category as we’ve only recently seen investment and dynamic market activity over the last year or two.
With most of the noise in Australia presently focused around alternative meats, and the market already close to severe saturation, I believe we will see more category diversification and competition from a variety of food businesses, especially those with distinct competitive advantages such as access to scale (and thereby pricing).
Currently, many privately-held players dominate the Australian plant-based meat category with no brand front and centre or capturing mind and market share yet. Globally, that private dominance is slowly being disrupted by traditional meat companies (like JBS and Tyson), as well as large consumer packaged food companies (such as Nestle and Kellogg), all trying to protect their position or expand into the fast-growing plant-based food category. Given the immense cost of entry for Australian independent food businesses looking to access our concentrated supermarket duopoly, it’s likely we will experience similar disruption throughout 2021.
As for the many other plant-based categories with limited penetration to date, Australian consumers are sure to see a lot more product innovation hit the market during the year with regard to cheese, poultry, seafood, and eggs.
2. Greater foodservice significance
With foodservice sales now returning to growth, I anticipate this will become a far more meaningful distribution channel for Australian plant-based foods in 2021.
Historically, the foodservice channel has contributed to many global plant-based foods’ success. For instance, Beyond Meat’s exposure to foodservice businesses has been an instrumental growth driver for them, with 50% of their overall net revenue reportedly coming from foodservice sales in 2019 – a whopping increase from 30% the year before.
As plant-based offerings via foodservice channels are still a relatively new offering in Australia, given recent global high-profile announcements such as McDonalds’ imminent McPlant line and Beyond Meat’s partnership with Pizza Hut, I’m confident we’ll see many more Australian restaurants and food chains embrace greater plant-based options in 2021.
3. Improved retail integration
Over recent years, when plant-based milks moved from UHT long-life shelf packaging to sitting in the fridge amongst other dairy milks, sales surged.
Clearly, adaptation drives success. For instance, according to data released in July 2019 (by the Plant-Based Foods Association and The Good Food Institute), sales of plant-based milks grew 6% over one year, making up 13% of the entire milk category.
However, integration starts with necessity and as plant-based food sales continue to skyrocket in Australia, I believe we’ll see improved collaboration between departments to align on strategy for placement, promotion and integration for the many other plant-based categories such as meat, cheese and more.
Another recent 2020 study by the Plant-Based Foods Association, in partnership with major US grocery retailer Kroger, supports this with plant-based meat sales increasing 23% when their products were ranged in the meat department.
4. Sustainability Credentials
Increasing concerns around environmental sustainability are casting a greater light on plant-based foods.
With meat production plants forcibly shutting down and plant-based manufacturers ramping up production to meet growing interest from shoppers during the pandemic, consumers are progressively realising the environmental impact of their food choices.
Thanks to the efforts of Beyond Meat & Impossible Foods, there is growing awareness that avoiding meat is the single best way to reduce your environmental impact on the planet. In fact, both businesses carried out Life-Cycle Assessment (LCA) studies to prove this. When comparing a burger made from a cow, producing one Beyond Burger requires 90% fewer GHG emissions & an Impossible Burger 87% fewer GHG emissions.
With Australia’s own Fenn Foods launching the world’s first carbon-neutral plant-based meat, I believe we’ll start to see other plant-based companies use LCA studies and other assessment tools for both internal and external purposes to support more sustainable development and purchasing decisions.
* Allen Zelden is the founder of Intrinity Global where he assists plant-based companies looking to scale-up and execute growth through increased sales, funds raised and access to global networks and manufacturing.