Insights Plant-based foods Report PLANT-BASED FOODS TAKE ROOT riven by a growing consumer Today, companies are racing to create passion for wellness, new products and brands that appeal D sustainability and animal to a more health-focused consumer. welfare, the market for plant-based But product developers be warned: foods is expanding rapidly, with this mainstream appeal comes with consumers throughout Europe and higher expectations for taste, texture around the globe placing increased and appearance – and an increasingly emphasis on a plant-centric diet. competitive landscape vying for a Gone are the days when plant-based place in shoppers’ grocery carts. alternatives were relegated to niche consumers, warranting little shelf space on grocery aisles. © 2020 Cargill, Incorporated. All rights reserved. The plant-based revolution is not being propelled by a growing cohort of vegetarian or vegan consumers. In fact, the number of consumers who Flexitarians profess to follow vegan or vegetarian diets remains small across Europe, whilst the number of consumers embracing what’s been dubbed a drive demand “flexitarian” lifestyle has ballooned. Flexitarians mainly seek to educer their consumption of animal-based foods, rather than giving it up for plant- altogether, and are increasingly adding vegan and vegetarian products based foods to their shopping lists. In the U.K., data suggests that one in three (34%) meat eaters have reduced their meat consumption,1 whilst one in four (19%) dairy consumers have reduced their consumption of animal-based dairy products.2 In comparison, just 3 percent of UK consumers view themselves as vegetarian and only 1 percent identify as vegan.3 Vegans don’t consume animal products Flexitarianism is also clearly taking root on the European continent. Research from Cargill reveals that 4 in 10 (43%) European shoppers Vegetarians don’t consume consume both dairy and dairy alternatives – versus just 1 percent who animal meat claim they only consume alternative dairy products.4 Flexitarians The health benefits associated with plant-based foods appear to be make a conscious effort to the biggest motivator for flexitarian consumers. Almost four out of ten limit their meat consumption (37%) of European shoppers claim plant-based foods are healthier than and increase their animal-based foods, and a similar proportion claims you can have a plant-based foods' consumption balanced diet without consuming animal-based dairy. Research suggests environmental and ethical concerns play a role as well, but these concerns are bigger drivers for becoming fully vegan or vegetarian. For most of today's consumers, the sustainability appeal of plant-based foods is secondary to their health hallo. Whatever the reason, interest in plant-based foods is high, and so is the opportunity for food manufacturers. Euromonitor estimates that the global meat alternative retail market will reach USD 26 billion by 2024, whilst the milk alternative retail market is expected to reach USD 25 billion by the 89% same year.5 of UK vegan meals Yet barriers remain to achieving that level of success. Today’s mainstream consumers want something more than the tasteless alternatives that are consumed by defined the category just a few years ago, and many consumers still need non-vegans. to be convinced that plant-based foods can be tasty as well as healthy. As Mintel found, among UK consumers who rarely or never try meat-free Source: Kantar World Panel, 2019. foods, one in four (26%) said a more meat-like taste could win them over, while one in five (18%) wanted alternatives with the same texture as meat.6 Similar challenges face the dairy alternative market. Proprietary Cargill research suggests that the vast majority of dairy consumers in the UK and Europe still prefer the taste of animal-based dairy. of European dairy consumers prefer the taste of real dairy versus the 66% taste of dairy alternatives. Source: Cargill proprietary research, 2018. 2 | Plant-based foods take root Vegan Vegan vs. Vegetarian claims in Europe % of launches with a vegetarian or vegan claim versus innovations all food & beverage launches Europe – 2014 to 2019 9.3% drive growth 9.2% 10.1% As the plant-based trend has taken 8.8% 9.2% 9.4% hold, savvy brands have followed 8.7% 8.3% suit, launching a bevy of products 6.6% into the space. Increasingly, they 5.6% turn to on-pack vegan claims as 4.3% opposed to vegetarian claims to signal a product’s plant-based 2.5% status. Though a relatively small 2014 2015 2016 2017 2018 2019 number of consumers follow a strict vegan diet, the clear-cut definition Vegetarian Vegan of what is a vegan product – no animal ingredients, no ingredients % of launches with a vegetarian or vegan claim Vegetarian tested on animals – makes it easier versus all food & beverage launches Vegan for marketers to stand behind. Top 5 European countries – 2019 Data from Innova show the number of European food and beverage UK 32% products making vegan claims 18% increased fivefold between 2014 5% and 2019. Overall, the company Germany 17% reports that 9 percent of new food products launched in Europe in 8% Netherlands 2019 had a vegan claim, up from 9% just 2 percent in 2014. In fact, new product launches with vegan claims 3% Spain now exceed these with more 7% loosely defined vegetarian claims in 8 3% all countries except the UK. France 5% For new players hoping to enter this rapidly expanding field, a word Source: Innova Database, 2020 of caution. The vegan space is no longer the sole bastion of a relatively few niche players. Major consumer packaged goods (CPG) Vegan claims by Category (Europe) companies, grocers and food % of launches with a vegan claim (2019) service providers are flocking to the and % CAGR in number of vegan launches (2014 to 2019) vegan marketplace. McDonald’s Corp.’s United Kingdom business 53% unit rolled out its Veggie Dippers, a first foray into the vegan space. 42% 38% CPG giants like Lidl, Danone, 36% 32% 31% Nestlé and Unilever have all expanded their vegan offerings. In the grocery aisle, UK supermarket 16% 11% 12% giant Sainsbury’s reported a 9% 8% 10% 65 percent increase in sales of plant-based products year-on-year, Sugar Dairy Ready Meals Snacks Bakery Sauces and Confectionery (including and (including Seasonings prompting the retail giant to launch Ice Cream Side Dishes Cereals) a new range of vegan products.9 and Desserts) It seems everyone wants a slice of % launches with a vegan claim CAGR in number of vegan launches 2014-2019 the plant-based pie. Source: Innova Database, 2020 3 | Plant-based foods take root Technical A partner for plant-based challenges formulations remain Gone are the days that plant-based products catered to a small consumer segment that was willing to compromise on taste and Consumers are clearly intrigued by texture. With only one chance to impress today’s flexitarians, finding the tsunami of new plant-based the right ingredient partner is a critical first step for manufacturers products. However, to make sure looking to introduce or expand their plant-based offer. that product innovations are more than a passing fad, manufacturers Cargill’s broad range of solutions suitable for vegan and vegetarian must up their formulation game. formulations — including proteins, starch, pectin, carrageenan, Animal-based ingredients have lecithin, sweeteners and blends — gives formulators the flexibility specific properties that impact to address their unique application needs. Apart from offering taste and texture. Even if many alternative protein solutions, Cargill can deliver on specific texture consumers are receptive to requirements, from gelling and thickening, to emulsifying, water switching to a vegan or vegetarian binding, structuring and stabilizing. And, as pressure mounts for alternative, most will have little more label-friendly solutions, the breadth of our product offer gives tolerance for change in flavor or product developers greater options. organoleptic characteristics. We pair our deep product portfolio with technical expertise, Nor is the plant-based revolution helping manufacturers to answer processing challenges and solve immune to other industry forces, formulation gaps. such as the trend for more Next to our offer of single ingredient solutions, we can combine label-friendly formulations. various proteins, texturizers and sweeteners into functional systems A typical plant-based meat and tailored blends to meet specific customer demands. substitute might have as many as 15 to 20 ingredients. Some We have the ability to develop prototypes and validate new are also laden with high levels of formulations in our pilot plant, approximating the conditions of sodium, saturated fat, additives and real-world processing lines. artificial colors. Finding new, more label-friendly formulations might well be the next big challenge. Further complicating the picture, developers are faced with an ever-growing list of possible plant proteins, each with its own unique properties. It takes a well-balanced mix of plant-based ingredients to be able to mimic the animal ingredients that need to be replaced. Just as the challenges vary by application, so too, will the solutions. 4 | Plant-based foods take root Cargill’s broad range of solutions Meat Alternatives Meeting consumers’ organoleptic and texture expectations CARGILL SOLUTIONS: for meat alternatives is a major challenge. Animal proteins • Gluvital® vital wheat gluten bring a distinctly chewy, succulent and firm bite that is • Pea Protein difficult to replicate when switching to plant-based proteins. • SimPure® label-friendly functional native starch We offer wheat-based proteins to improve binding, • Satiagel® RPM carrageenan juiciness and chewiness, and continue to develop our pea-based protein • Flanogen® REM functional offer for Europe. Our functional native starches help achieve the optimum system balance between bite and juiciness, whilst our seaweed solutions help with • Tailored blends gel formation and water retention.