Plant-Based Meat, Dairy Drive Category

Arielle Feger | 27 Apr 2021

Total U.S. retail sales of plant-based foods hit $7 billion in 2020, up 27 percent from $5.5 billion in 2019, according to the Plant Based Foods Association. Leading the channel are plant-based dairy (including milk and other dairy) and plant-based meat, which account for $4.4 billion and $1.4 billion in sales, respectively.

The PBFA, The Good Food Institute, and research firm SPINS discussed the current U.S. retail market for plant-based foods and the opportunities that the plant-based meat and dairy categories represent for the food industry during a webinar, Thursday.

Diversity, Innovation Drive Plant-Based Adoption

U.S. retail sales of plant-based meat reached $1.4 billion in 2020, growing 45 percent from $962 million in 2019. The category is mainly being driven by refrigerated and frozen plant-based meat products, though shelf-stable alternatives saw double digit growth this year as well.

“Plant-based options benefit most from integrated and integrated-segregated merchandising strategies,” said Kyle Gaan, research analyst at GFI. In an integrated strategy, plant-based options are placed in the same space as non-plant based ones. An integrated-segregated strategy separates out plant-based from animal-based products, but still puts the displays together for easy access and product comparisons.

From December 2019 through February 2020, the PBFA partnered with Kroger to conduct a pilot in 60 stores across Kroger’s Central division and its King Soopers stores in the Denver market. During the 12 week program, Kroger placed a variety of plant-based meats in the meat departments of these stores, with accompanying signage to help shoppers understand the new placement. This led to a total 23 percent increase in plant-based meat sales, said Gaan.

The Good Food Institute launched a similar program in 2020 with Heinen’s Grocery Store. After rolling out integrated-segregated merchandising across the grocer’s plant-based categories, Heinen’s saw a 43 percent year-on-year increase in dollar sales of plant-based meat and a 106 percent increase compared to the prior two years. In addition, Gaan said the grocer found that 50 percent more customers shopped the newly integrated-segregated meat section than the deli section where the plant-based meat products were previously shelved.

Though plant-based burgers were the top selling product form, followed by sausage links and patties, nuggets, tenders, and cutlets, the fastest-growing format was plant-based grounds, which doubled its sales over the course of 2020.

Similarly, plant-based beef is the highest selling subcategory of plant-based meat, followed by plant-based pork and chicken. Plant-based seafood remains a growth opportunity area for food makers.

“When it comes to plant-based food, consumers are now looking for diversity in product types, formats, flavors, and unit sizes,” said Gaan. Plant-based bacon, fish, steak and whole cut beef cuts, turkey, and lamb are some of the more underrepresented product types.

The biggest opportunities for food makers lie within taste and price, said Gaan. According to Mintel research, the number one and two barriers to eating plant-based meat products are taste and price, with 27 and 25 percent of consumers reporting those reasons they don’t eat plant-based meat, respectively. Currently, animal-based ground beef costs $0.44 an ounce, versus $0.75 cents for Impossible Foods’ plant-based ground beef. Bringing plant-based products closer to parity with animal-based ones may increase access and adoption.

COVID-19, Home Cooking Increase Plant-Based Dairy and Egg Sales

Plant-based milk leads the plant-based dairy category, with U.S. retail sales worth $2.5 billion. Refrigerated plant-based milk sales make up the majority of the category and drive growth. Almond milk is the category leader, followed by oat milk and soy milk.

“Moving plant-based milk to the refrigerated set over a decade ago was key to introducing it to a much larger consumer base, thus increasing household penetration and rapidly growing sales,” said Jennifer Holt, data analyst at PBFA.

Plant-based ice cream and frozen novelty is the largest of the other plant-based dairy categories, totaling $435 million in sales in 2020, up 20 percent from a year prior.

“COVID-19 drove a return to comfort food, and indulgent desserts and ice cream saw a resurgence in popularity,” said Holt. “Plant-based ice cream is well positioned to capitalize on a consumer shift back towards better-for-you options.”

Plant-based creamer, offered in both liquid and powdered form, represent $394 million in sales, up 32 percent from 2019.

Plant-based yogurt sales reached $343 million in 2020.

According to Holt, “As functional benefits and claims continue to rise, consumers will look to plant-based yogurts for digestive and gut health, including ingredients such as pro- and prebiotics.”

Similarly, increased cooking and baking at home helped drive plant-based butter sales, which totaled $275 million in 2020.

Sales of plant-based cheese totaled $270 million, with cashews as the leading ingredient. Coconut and sunflower oil are also frequently used ingredients, and private label cheese is expected to grow in popularity, according to Holt.

Also growing rapidly are sales of plant-based eggs, which reached $27 million in 2020, up 168 percent from 2019.

Related: Cold Brew, Plant-Based, Sparkling Spur Sluggish RTD Coffee, Tea SalesPlant-Based Sales Grow to $7 Billion.