How Nestlé is expanding the plant-based category

Nestlé, the Swiss multinational food and drink firm, has seen sales of plant-based products smash forecasts, reflecting the growing consumer interest in reducing meat consumption and climate-consciousness; now it is expanding its offer with egg and shrimp alternatives.

Why it matters

There are multiple stories here: first, it’s strictly business. Plant-based foods are growing well ahead of the rest of Nestlé, according to its half-year results this year, as the company reveals to the Financial Times that its vegetarian and vegan products now top a billion Swiss Francs ($1.1bn).

Second, consumers are changing. Big food multinationals are currently in a ‘land grab’ phase as the willing audience for protein alternatives expands beyond committed vegans and as a broader public begins to think deeply about the sustainability and carbon impact of their consumption. Per Nestlé figures, plant-based alternatives help make a 70-80% carbon saving compared to meat/dairy.

Background

• Nestlé already sells around CHF 200m (approx. $216m) of plant-based meat.
  
• Plant-protein accounts for 10% of Nestlé’s R&D budget.
• The company’s plant-based category was expected to sell north of CHF 700m (approx.$755m), according to comments made by Nestlé finance chief, François-Xavier Roger at the Barclays consumer staples conference last month.
• Plant-based products offer big opportunities around the world, but in EMENA the Garden Gourmet brand is growing sales 40% and driving market share gains.
• According to Nestlé figures, the total plant-based meat and dairy category is worth $28bn but is set to balloon to $45bn by 2025. 

New products to define an emerging category

Undoubtedly a feat of innovation, the company’s latest vegan offerings seek to replace eggs and shrimp under the umbrella brand of Garden Gourmet. The new products will carry the less-than-triumphant titles, Vrimp and vEGGie (how you say the last one differently from ‘veggie’ is as yet unclear).

This follows a deeper theme seen in Garden Gourmet’s Vuna (vegetable tuna), which has rolled out to four central European markets, followed by Wunda, a pea-based milk, this past spring.

There are rich opportunities to push plant-based ingredients through other categories (like confectionery, ice cream, chocolate), bringing these innovations into the mainstream and unlocking the PR-benefit of lower carbon across a broad swathe of the Nestlé portfolio.

A note of caution

The battle is not yet won. Despite forecasts of a heady 15.8% CAGR for the plant-based category, Polaris Market Research points out that these foods are inherently highly-processed and that brands should therefore think about how to allay consumer wariness over a long list of ingredients at a time when ‘natural’ is a prized attribute.

Sourced from Nestlé, Financial Times, Polaris