Due to an increased awareness of industrial animal agriculture’s impact on the environment and climate, desire to follow trends, protect animals, and eat healthier, it is no surprise that there is a growing demand for plant-based foods as alternatives to animal products. Plant-based food producers are expected to grow significantly in the foreseeable future. Many start-ups, as well as a few corporations, have not only already seen large growth rates in their plant-based product line, but have also been able to raise millions of dollars in venture capital from noteworthy investors and companies such as Bill Gates and the venture capital arm of General Mills. From Argentina’s Casa Rosada instituting Vegan Mondays, to the second-largest school district in the U.S. starting a vegan meal pilot program, it is evident that the current facts and trends are indicating that now is the time to invest in or fund solely plant-based companies.
Plant-based eating has been gaining a lot of attention, including making the menu at this year’s World Health Summit. It was also named the hottest trend in fast-casual food. According to Mintel, a market research firm, in its Global Food and Drink Trends of 2017, plant-based foods are at the top of the list. Mintel expresses that the preference for natural, simple and flexible diets will drive further expansion of vegetarian, vegan, and other plant-focused formulations. This cannot be far from the truth since plant-based proteins are becoming an integral ingredient in many menus as Americans are discovering they can get plenty of protein without eating animal products. Plant-based milks, meat alternatives, and vegan offerings have rapidly moved into the mainstream as consumers are looking for innovative options to take the innate benefits of plants into their daily lives. According to estimates, the plant-based meat market is expected to reach $5.2Bby 2020 and could make up one-third of the market by 2050. In 2014, introductions of new products with plant-based proteins grew 14.7% (while animal protein grew 7.5%), and according to Supermarketnews.com, in 2015 more than 100 plant-based meat substitutes were introduced in grocery stores. As consumers’ preferences are changing and are beginning to show a greater willingness to experiment with newer brands, this food start-up craze has been joined by big players in the food industry the latest being giant Tyson Foods with its investment in plant-based food startup Beyond Meat, and Maple Leaf Foods’ acquisition of Lightlife Foods for $140M.
In addition, consumers are steadily reducing their dairy intake due to many factors, including allergens, antibiotic, and hormone use. U.S. household penetration of dairy-free beverages has doubled in the last five years to more than 30%, with almond milk now accounting for almost 70% of sales and other new nut-based milk growing. In the past five years, the almond milk market has grown by 250% and has become an $894.6M industry. Representing a $2B category, dairy-free milk sales growth is expected to outpace dairy milk sales at least through 2018. The power consumers have to change the markets has led to innovations through the creation of new products, startups, and acquisitions. Ben & Jerry’s introduced its first vegan ice cream line in 2016, and other brands such as Breyers and Häagen-Dazs quickly followed. The yogurt chain Red Mango also joined the trend, debuting two vegan “Fro-No” flavors. Frozen treats chain sweetFrog recently added six non-dairy flavors of Dole Whip to the menus of its 340 locations. Freshly joining the dairy-free milk industry is soup giant Campbell’s Soup, who announced it will acquire almond, oat, and hemp milk company Pacific Foods for $700M as it positions itself to be more in line with current food trends.
Research done by CBInsights of the fifteen most well-funded VC-backed food and beverage startups as of May 2017, depicts they have racked up a startling $1.49B in aggregate funding, mainly by focusing on plant-based food and drinks. Of the fifteen most well-funded startups, five solely focus on replacing animal proteins with plants, while two more focus on cold-pressed juices, and seven focus on healthy, plant-based foods and drinks. With the increasing surge of new groundbreaking plant-based companies and venture capital firms looking to fund them, plant-based businesses are the best way to go whether looking to impact-invest or achieve a healthy financial return. As the investment group, New Crop Capital believes: “The meat, egg, and dairy sectors represent a $700B global market that is ripe for innovation and large-scale disruption.” This period of innovation and disruption is just beginning.