Plant-based Diets are Here to Stay!

Understanding Consumer Motivations and Desires Driving Today’s Hottest Megatrend

Greg Paul, PhD, MBA

June 5, 2019 Why are -based diets here to stay? Firstly, consumer demand as over half US consumers are increasing plant and nearly 60% cite the change as permanent…

41% I know it’s permanent. 31%

29%

18% 11% I’m hoping it’s permanent but I’m not sure yet if I will keep it 26% up. Exclusive Animal Exclusive Both Reducing Neither Reducing Reducer/Avoider Plant Increaser Animal/Increasing Plant Animal/Increasing Plant

I’m going to try it for a while and 28% No Change then see how I feel about it. Increasing Increasing in Plant No Change Plant Plant in Plant ------No Change Avoid Reduce No Change in Animal Animal Animal It may not last. I’m just in Animal 14% exploring.

HealthFocus International, 2017 Why are plant-based diets here to stay? Secondly, follow the $$$ including incredibly strong retail sales growth and strong interest from the investment community.

State of the Industry Report: Plant-based , Eggs, and Dairy. , 2019. Plant-based Behaviors & Motivations: Online Anthropology

MotiveQuest Online conversations in English (January 2016 – November 2018) Consumer Cohort Exploration: Interest in plant-based dietary philosophies and substitutions is primarily driven by a quest for wellness and fitness, with half of conversation coming from general wellness and lifestyle venues online.

40% CONTEXT

PLANT-BASED INTEREST ACROSS CONVERSATION CONTEXTS During this 35 month period, consumers 1/1/2016-11/30/2018 generated approximately 21 million conversations 31% about meal planning and dietary decisions 30% overall. Just under 7% of these conversations specifically referenced plant-based dietary choices, brands, and products.

20%

17%

BASED DIET DISCUSSION DIET BASED - 13%

10% 10% 8%

6% 5% 5% 3%

SHARE OF OF SHARE PLANT 1% 0% Wellness & Lifestyle Health & Parenting & Hobbies & Style & Culture Cooking Causes & Budgeting & Reviews Fitness Medical Pregnancy Pursuits Politics Money N=2,151,515 Source: MotiveQuest, January 2019. Analysis of forums, blogs, message boards, review sites. The extreme gets people talking. But, more people self-identify as the “moderate middle,” gradually reducing meat and dairy consumption when convenient. This moderate middle is reluctant to adopt labels for their behavior.

TOPICS OF DISCUSSION vs SELF-IDENTIFIED RELUCTANT TO PARTICIPANTS ACCEPT LABELS 1/1/2016-11/30/2018

Veganism 47,9% “I guess I could call myself a flexitarian. 10,9% I do eat meat weekly, but in very little amounts. This didn't happen as an 23,6% 14,9% overnight choice, just gradually developed like this with the Dairy Reduction, Elimination 21,7% 41,8% development of my knowledge about environment, health and ethics issues. Meat Reduction 16,3% 27,2% There's still a lot of things I'm not sure about (mostly the lack of transparency Egg Reduction, Elimination 1,6% 4,8% about food frustrates me), but I feel good Share of discussion about these regimens about my diet and I end up buying mostly Flexitarianism 0,6% 0,3% Share of conversants who say they follow these regimens seasonal veggies and the little animal products I buy at least say they're 0% 10% 20% 30% 40% 50% 60% biological.” SHARE OF CONVERSATION/INDIVIDUALS

N=2,151,515 conversations; 427,594 individuals who self-identify Source: MotiveQuest, January 2019. Analysis of forums, blogs, review sites, and message boards. Motivations: Overall, moderates’ motivations to reduce meat, eggs, and dairy are personal and wellness-focused. and the environment are distant secondary benefits. Vegans are the opposite, leading with political and institutional change.

THEMES & DRIVERS OF BEHAVIOR ACROSS CATEGORIES 1/1/2016-11/30/2018 DAIRY 1,9% INTOLERANCES Allergies, Intolerance 19,2% 1,7% 7,5% “I have qualms about soy , but that's 2,6% provided by daycare and has more Wellness, Feeling Better 17,4% 12,1% calories. What have you all used as a Vegans 9,5% [due to allergies]? WIC Dairy-Reducers 9,8% provided checks for goat's milk, but I Environmental Concerns 2,7% Meat-Reducers 4,1% read that the protein in that is very 3,4% Egg-Reducers similar to cow's milk and can cause a 20,9% similar reaction.” Animal Welfare 2,2% 2,9% 3,5% 0% 5% 10% 15% 20% 25% SHARE OF CONVERSATION

N= 466,879 dairy-free, 350,697 meat-free, 34,424 egg-free Source: MotiveQuest, January 2019. Analysis of forums, blogs, review sites, and message boards. Meat Alternatives Flexitarianism close-up: Flexitarians resist labels. Red meat reduction tends to be the focus, and is motivated by increasing awareness of the health benefits of reduced meat consumption for general health and wellness, followed by secondary environmental benefits.

WHAT IT MEANS: “My wife and I have Reducing meat OPTING decreased our meat intake (mostly red TOWARD: consumption from 2- meat). Reduction Plant-based 3 times per day to 2- may be significant or substitutes such as moderate, but is beans and . 3 times per week usually measured by and it's been days per week. surprisingly easy MOTIVATIONS: [but we don’t call Motivated primarily by a desire to feel better and ourselves achieve better health, flexitarians]” environmental concerns are a secondary reason to reduce meat consumption. “Flexitarian? Dear NOT A FAN OF LABELS: me…. Youngsters Because flexitarianism is SOCIALLY nowadays. Always intentionally moderate and PRAGMATIC: need a label.” flexible, adherents are Reduction without reluctant to use labels to fanfare is socially define their changing habits. acceptable and practical. Source: MotiveQuest, January 2019. Meatless priorities: Meatless products have enjoyed recent hype generated by Impossible and Beyond brands. Consumer attention focuses on taste and enjoyment, with some acknowledgement of products’ processed nature. These products are not consumed daily, however.

TASTE, EXPERIENCE: Heavy emphasis on taste.

HEALTH: Mixed bag on health – good alternative source of protein, USAGE: but recognized as a Not used daily, but processed food with rather as an non-clean label occasional ingredients. replacement for meat, or to add variety to the rotation of non-meat Source: MotiveQuest, January 2019. dishes. Brand relevance: Meat reducers have strong interest in a number of meatless brands, particularly Beyond Meat, Gardein, and .

2,4% Beyond Meat 0,4% 2,4% Gardein 0,4% 2,2% Tofurkey 0,3% 1,6% Impossible Burger 0,2% 1,0% Silken 0,1% 0,9% Boca 0,1% 0,9% FieldRoast 0,2% 0,5% MorningStar 0,1% 0,3% Lightlife 0,0% 0,3% Yves Veggie 0,1% 0,2% Simply Balanced 0,0% 0,1% Frieda's (Soyrizo) 0,0% 0,1% 0,0% 0,1% Meat - Sweet Earth 0,0% 0% 1% 2% 3% Source: MotiveQuest, January 2019. Brand relevance: Consumers are sensitive to personal preference, and there is no single “best of” meatless product. Texture is a consistently-cited problem though. Many meatless products are too crumbly, too dry, and hard to cook with.

MEATLESS BRAND PERCEPTIONS 1/1/2016-11/30/2018 “The problem with all meat substitutes, including those marketed as meat substitutes is they simply aren't. And that's okay. Nobody orders turkey and then complains that it's Perceptions not chicken. The texture is different. The taste is different. I Texture a bit too crumbly to approximate the meat enjoy a . But I don't get upset that it has a different Beyond Meat experience, but taste is good. texture and taste than beef. It's a different product, a different protein.” Gardein Uncanny “just like chicken” taste.

Tofurkey “Different” taste; not just like the real thing though. “Honestly though, it's the texture of the [Impossible] burger and the embedded pockets of oil that do a lot more Excellent, juicy texture (consumers note this is due to oil for it. What they're doing is fantastic, especially once they Impossible content – puddles of oil on the plate are not uncommon). figure out how to get this produced at scale. While this won't change someone from a die-hard meat eater to a vegetarian, it Well-known and widely available, but many complaints Silken will help people consume less meat.” that it is just too hard to cook with. Broad awareness and familiarity, but not a lot of love. A number of restaurants (Bennigans, Red Robin) have Boca “ Italian - for sausage and peppers. switched away from Boac to Morningstar and other Boca Chicken Patty - by far my favorite chicken patty so far. brands. Gardein Pulled Pork Pockets - soooooo good, it's really so Extremely positive sentiment among vegans. Praise for close to the real thing. They also have pepperoni pockets that Field Roast crunchiness, spiciness, and tenderness. Less well-known are good as well. Gardein Chicken Tenders - great texture, by flexitarian meat reducers. great coating, amazing”

Source: MotiveQuest, January 2019. Methyl Cellulose and Xanthan Gum are the most popular binding agents used in Meat Substitutes

Stabilizers appearing in 2018 US Meat Substitute Launches as a Percentage of Launches Containing Stabilizers

Methyl Cellulose 40%

Xanthan Gum 22%

Konjac 11%

Alginate 11%

Gum Arabic 6%

Cellulose Gum 6%

Gellan Gum 5%

Carrageenan 5%

Source: Innova Market Insights, February 2019. Plant-based Beverages Priorities: Taste, Flavor is consistently consumers’ biggest non-dairy substitute priority, but there is less comparison with dairy/cow milk than there used to be. Thickness and creaminess discussion has grown by about 20% since 2016. MAJOR THEMES

TASTE, FLAVOR: Still the most important selection criterion to consumers, people are less likely to make comparisons between the taste of PBBs and the taste of dairy milk than they were just three years ago. With the continued introduction of new PBB varieties, there seems to be more acceptance of different flavor profiles.

PROTEIN: A perennial “must-have” health indicator, protein is always seen as a plus. Many people continue to use PBBs in protein shakes, so low protein content is easily compensated by protein powders.

THICKNESS, CREAMINESS: Interest in heft is noteworthy as people become more demanding of thickness in smoothies, shakes, and coffee add-ins. We are even seeing consumers swap away from milk and toward cottage as a base in their smoothies, because it provides greater thickness.

CALORIES, SUGAR, CARBS: Actually seen as a PBB benefit, sugar and calorie content is typically compared to dairy milk.

HEALTH/HEALTHY: Plant-based beverages have a health halo that is often non-specific to any particular nutritional attribute.

PRICE: Although recognized as more expensive than dairy milk, PBB price complaints are not overwhelming. Fundamentally, the benefits (health, digestion, flavor varieties) seem to justify higher costs. Also, newer niche Source: MotiveQuest, January 2019. brands make the mass PBB brands seem less expensive by comparison. Taste Expectations: Comparisons with dairy milk taste are falling. Consumers seem less interested in mimicking cow milk flavor, and more willing to experiment with the growing flavor options across plant-based alternatives.

10% COMPARISONS OF PBB WITH “REAL/DAIRY” MILK TASTE 1/1/2016-11/30/2018

8%

6%

BASED BEVERAGE BASED -

4% Comparisons with dairy milk taste DISCUSSION

2% SHARE OF OF SHARE PLANT

0%

Source: MotiveQuest, January 2019. Nutritional comparison with dairy: 4.2% of plant-based beverage discussion makes a nutritional comparison with dairy milk. Most comparisons are focused on protein, fat, and sugar.

Nutritional Comparisons NUTRITIONAL EXPECTATIONS: COMPARISON with Dairy WITH DAIRY MILK 4.2% 1/1/2016-11/30/2018

Protein 40,8%

Fat 37,2%

Sugar 32,3%

Calories 27,4%

Calcium 17,0%

Carbs 12,1%

Potassium 1,5%

0% 10% 20% 30% 40% 50% N=279,918 SHARE OF NUTRITIONAL COMPARISONS WITH DAIRY MILK Source: MotiveQuest, January 2019. N=11,777 Clean Label/Ingredient Concern: Conversation share shows a very slight downward trend over the last 3 years.

CONVERSATION ABOUT CLEAN LABEL/OTHER INGREDIENTS 1/1/2016-11/30/2018 5%

4%

3%

BASED BEVERAGE BASED -

2% DISCUSSION Clean labeling, other ingredients

1% SHARE OF OF SHARE PLANT

0%

Source: MotiveQuest, January 2019. N=279,918 Clean Label/Ingredient Concern: Although it does not drive high volume of conversation, clean labeling concerns focus on thickeners and fillers, as well as sweeteners and added sugars. These concerns aren’t confined to plant-based alternatives.

OTHER INGREDIENTS/CLEAN LABEL 1/1/2016-11/30/2018

ADDED SUGARS: Stabilizers and thickeners are not “My teen has been diagnosed with a CULPRITS: the only ingredient milk intolerance. In order to be Plant-based consumers supportive with his diet changes, we're beverages aren’t question: sugars all going dairy free. Not a big deal since the only culprits. and sweeteners are Consumers are sources of some the only thing I use dairy in is milk for my sensitive to concern as well. coffee. But the thought of in my additives in real coffee makes me gag. Any suggestions dairy products as well as creamers of what actually tastes good, and isn't a (both dairy-free and concoction of chemicals and sugar?“ dairy inclusive). ADDITIVES: Consumers focus on additives such as gums, fillers, and thickeners.

Source: MotiveQuest, January 2019. Gellan Gum has replaced Carrageenan as the most common stabilizer in Dairy Alternative Beverages; LBG is on the rise

Stabilizers in US Dairy Alternative Beverage Launches as a Percentage of Annual Launches 70%

60%

50%

40%

30%

20%

10%

0% Carrageenan Gellan Gum Xanthan Gum Guar Gum Locust Bean Gum 2014 2015 2016 2017 2018 Launches = 156 177 168 157 151 Source: Innova Market Insights, February 2019. Favorites Trends: Among trendier options, shows the most growth, thanks in large part to coffee interest. is growing, but familiarity is still low.

OTHER INGREDIENTS/CLEAN LABEL 1/1/2016-11/30/2018 “[For coffee] I like soy, coconut or oat milk. For me, almond and are too thin.”

“Oat milk is the best in coffee. I was using for years but I just moved to Europe and oat milk seems to be really popular here so I tried it and will never go back.”

“I find this Oatly barista blend version is very neutral in flavor and nearly indistinguishable from dairy milk in a latte. Its

much more neutral than soy and richer than almond.” SHARE OF OF SHARE CONVERSATION “Oat milk has improved recently, Oatly is a good brand for coffee though I don't believe it will be cheaper than cow milk. The last half gallon of Oatly I bought was $4.99. Almond has too much of an aftertaste for my likes and often overpowers the coffee. Everyone's tastes are different and all of the milks are different as well.” Source: MotiveQuest, January 2019. Brands: Plant-based non-dairy brands don’t generate a large share of dairy-free conversations, but is by far the most-discussed brand. In general, brand conversations are positive; consumers have favorites (usually based on flavor preference).

Part of the reason for Silk’s dominant share of discussion is its heavy use of “Crowdtap” to solicit consumer reviews online.

In the last three years, 10% of Silk mentions have come from Crowdtap-solicited reviews.

Source: MotiveQuest, January 2019. WhiteWave has launched the most Dairy Alternative Beverages over the past two years in a highly fragmented market

US Non-Dairy Beverage Launches by Brand as a Percentage of Launches (2017 – 2018; Total Launches = 308)

Silk 16%

Pacific 5%

Almond Breeze 4%

So Delicious Dairy Free 4% From 2016-2017, the Top 10 brands for new product launches accounted for Forager Project 3% 55% of launch activity. From 2017- Rebbl 3% 2018, this number was 46%. Good Karma 3%

Elmhurst 3%

Ripple 3%

Koia 3%

Califia Farms 3%

Source: Innova Market Insights, February 2019. Summary

PLANT-BASED EATING: Retail sales of plant-based foods are increasing at double-digit rates across multiple categories 1 driven by consumers’ belief that the products are healthier and just make them “feel better.” Investments in pre-exit plant- based food companies are soaring. With high consumer permanence scores, plant-based diets are here to stay.

VEGAN EXTREME: Vegans are known for being strident, extreme, and judgmental. They open people’s eyes to plant-based 2 benefits, but also turn people off of experimenting with plant-based diets. Vegans say they are more motivated by animal welfare and the environment than by health.

TRENDING IN MEAT-FREE: Casual, flexible meat reducers are overwhelmingly motivated by increased awareness and 3 concern about meat’s impact on human health and wellness. Texture is an opportunity for improvement. A positive eating experience is key, not necessarily a “meat-taste.”

PLANT-BASED BRANDS: PBBs are actually most interesting to dairy-reducers and casual meat reducers. Both of these 4 moderate groups are attracted to culinary credibility signals (see Beyond Meat and Impossible). Meatless brand alternatives are polarizing within the vegan community.

TRENDING IN DAIRY-FREE: Emerging trends in dairy-free include an interest in thicker, foamier, frothier, coffee cream that 5 can be steamed or added to coffee without separation. Taste comparisons to milk are negligible as the category has established its own identity.

HUMAN HEALTH MESSAGING IS KEY: Better health and wellness through a flexible diet that incorporates more plant-based 6 foods is a resonant message with the masses. Dairy-free products should promise thickness/creaminess, while meatless products should promise culinary credibility. DuPont™, the DuPont Oval Logo and Danisco® logo are trademarks or registered trademarks of DuPont or its affiliates. Copyright © 2019 DuPont de Nemours Inc. All rights reserved.

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