Vegan consumers are being taken seriously by major food producers and brands. But how big is the trend, how far will it go, and what impact is the enthusiasm for meat-free foods having on prices and available supplies?
Vegan Guinness, ‘forever-vegan’ Shreddies – big brands are cashing in on the growing number of plant-eaters. In fact, last year 16% of all new food product launches in the UK were vegan, doubling from 8% the previous year, according to Mintel. And it’s not just in the UK. US firm Walmart asked suppliers to ramp up plant-based product in 2017, and sales of plant-based food across the US rose 20% in 2018, according to Nielsen data for the Plant Based Foods Association. “Plant-based is the new organic,” said international food and restaurant consultants Baum & Whiteman.
Jeff Bezos, billionaire and Amazon CEO, is just one investor riding the veganomic wave, this year contributing towards a $30m investment in Chile-based vegan mayonnaise brand The Not Company (NotCo), which has combined food tech, machine AI and plant-based ingredients to create a sustainable, non-animal protein source. The company wants to become “the Nestlé of millennials”, says co-founder Matias Muchnick.
And Bezos is not alone. Investors rushing to bet their dollars on a plant-based future also include giants of technology such as Bill Gates, Google co-founder Sergey Brin and Twitter founders Biz Stone and Evan Williams, who have all invested in vegan start-ups, and seem to be convinced that veganism could be a rainbow that leads to a pot of gold.
But can innovations such as the plant-based Impossible Burger 2.0, which uses a laboratory-created compound to taste and bleed like a meat burger, make veganism an attractive long-term proposition for the most committed of meat eaters, or even the army of ‘flexitarians’, switching between veganism and their usual diet? According to Kantar Worldpanel, the answer is a resounding ‘yes’. Its figures show that 66 million British consumers ate 150 million vegan meals last year. Fraser McKevitt, the head of retail and consumer insight says: “Looking back on 2018 as a whole, one of the most notable consumer trends is the shift to a more plant-based diet.”
Check these stats. In Sweden, 1.4 million people or one tenth of the total population is now vegetarian or vegan, according to Animal Rights Sweden. In the under-30 crowd, the ratio is even greater – one in five. The Economist reported that a quarter of 25- to 34-year-old Americans now say they are vegetarian or vegan. It believes this is the year of the vegan, saying where millennials lead, business and governments will follow. After the Asia-Pacific region, the US is second in the world for demanding dairy alternative milks. Australia is the third-fastest growing vegan market in the world, currently worth about ¢136 million, according to Euromonitor International. In China – where the government recommended consumers cut meat consumption by 50% – it has predicted a growth in the vegan market of more than 17% in the five years to 2020.
Good for business
The launch and subsequent social media storm that followed the release of a vegan sausage roll by UK bakery chain Greggs has been described as a masterclass in public relations. On 2 January, Greggs tweeted “The wait is over” as it launched its #vegansausageroll. That tweet only reached 25,000 views until TV host Piers Morgan tweeted his 6.5 million followers: “nobody was waiting for a vegan bloody sausage, you PC-ravaged clowns”, to which Greggs replied, “Oh hello Piers, we’ve been expecting you”.
The timing was impeccable. The vegan roll was launched in the post-Christmas dieting period and at the start of Veganuary, which challenges people to go vegan for January, and helped Greggs’ sales top £1bn for the first time.
Vegan products are currently receiving primetime marketing – although not all of it positive. UK pub chain Young’s had to rethink its offering of cauliflower steaks, following complaints it was charging the same as for an Aberdeen Angus steak – a profit-making strategy that some described as “grabby”, while others were sympathetic about the extra cost involved in making tasty vegan meals.
Either way, both chains were wise to the growth in plant-based only eating. And, although still a fraction of the overall food market, it is a trend that buyers need to be aware of, as well as understanding the long-lasting motivations that are behind it for many.
The scale of change
Internet searches for veganism have doubled in the past year, according to Google Trends, and it has gained mainstream popularity. Holly Johnson, editor of Simply Vegan magazine, says demand for vegan products is at an all-time high: “New products are launching almost daily in the sector. We’ve seen Canadian brand Gardein stocked in Sainsbury’s for the first time and Gourmet Plant-based Seafood by US brand Sophie’s Kitchen arrive over here too.”
UK supermarkets, including Waitrose, Tesco, Asda, Sainsbury’s and Marks & Spencer, have all recently introduced own-label vegan ranges and products to capitalise on the shift and compete for market share; while on the high street, chains including Wagamama, Pizza Express, Yo Sushi!, Zizzi, Gourmet Burger Kitchen, The Real Greek, Las Iguanas and Giraffe are among those advertising a range of vegan options.
Kantar Worldpanel says statistically there was no drop-off in sales of primary meat and poultry in the 12 weeks to 27 January, but increased choice is being offered on menus.
In the US, the American Medical Association has called on more hospitals to offer plant-based meals; public healthcare group NYC Health + Hospitals recently debuted Meatless Monday at its 11 hospitals; and the district of Los Angeles is now serving vegan meals in all its schools.
Nagarajan S, team lead for agro commodities and food ingredients at pricing and trend company Beroe, tells SM: “Vegan substitutes are fast gaining importance due to growing health awareness. Meat substitutes such as tempeh, tofu and falafel are gaining momentum among consumers. According to our estimates the vegan meat market is expected to grow at an annual rate of 7-8% in the next eight to 10 years.”
David Read, chairman of Prestige Purchasing, says: “There’s no doubt veganism and vegetarianism is impacting food service massively. We are seeing products appear not only on high-street menus but all over the place – schools, business catering, staff catering and feeding – it’s going everywhere.”
Many businesses with in-house canteens are asking catering contractors to provide vegan options and, the Vegan Society is now petitioning the English, Scottish and Welsh governments for public sector institutions to provide at least one vegan food option on every menu every day, asserting that veganism is a protected belief under the Equality Act 2010.
Health and changing dietary requirements are among the motivators for the move, together with animal welfare, but the prime reason for many to reduce their meat intake – or go vegan altogether – is the environment.
Earlier in 2019, a study by supermarket chain Sainsbury’s revealed that 91% of UK residents are actively reducing their meat intake for health, ethical and environmental reasons. Climate change is a major driver; a study by Modular Classrooms this March showed that more than half of British people are now considering eating less meat and driving their cars less in an effort to help the environment.
In the US, a Vegan Climate Index has been set up to help investors avoid companies engaged in animal exploitation, defence, human rights abuses, fossil fuels extraction and energy production, and various other environmentally damaging activities.
“On the whole, vegans are very eco-conscious,” says Simply Vegan’s Johnson. “In an ideal world, they’d eat local produce that’s low on food miles and packaging. Health is important to them – so organic sells – but that’s not to say they don’t want the convenience of a ready meal now and again. As the media continues to report on the need for humans to eat less meat to slow down climate change, veganism, whether full or part-time, is set to boom.”
A study by Oxford University says food production is responsible for a quarter of all human-produced greenhouse gas emissions. The findings come from research, published this year, that examined the environmental impact (on land, water and emissions) of dairy milk versus various alternatives, with cows’ milk having the biggest impact of all three compared with non-dairy counterparts (including oats, almonds and soy).
Studies carried out by researchers in Australia and elsewhere concluded that animal agriculture puts a huge strain on water resources, requiring 20 times more fresh water to produce animals compared with the same weight of plant products.
Tofu and lentils (at the top end of the water-demanding plant scale in the study) still need only a fraction of the thousands of litres required to produce beef, mutton/lamb and pork.
One exception is almonds, which is oft-quoted as requiring a gallon of water to produce one nut. But US almond farmers – who switched from carrots, lettuce and cotton for the higher returns – say that figure does not account for the other parts of the nut, which are used as animal bedding, feed and fuel.
However, in some cases the alternatives present their own challenges. For example, removing butter from a processed product and replacing it with palm oil is not necessarily healthier. Nor is it likely to be locally produced, therefore requiring higher food miles and logistics costs, and the environmental impact may be worse and/or the sustainable version more expensive.
Prestige Purchasing’s Read says in the case of some vegan dishes, additional expense results from it costing producers more to create tasty meals: “It’s very easy to stick a steak on the barbecue and everyone thinks it’s amazing. It’s less easy with vegetarian or vegan dishes. Extracting flavour from vegetables to make a sauce uses a lot of heat, labour and ingredients, which makes the overall cost more expensive.
“There’s a lot of drying of things to make powders and dusts to make the flavours exciting in good vegan cookery and it’s quite an art to make a good vegetable stock. Cream and butter immediately add depth and flavour, but you can’t use those in a vegan sauce.”
Supply chain security and pricing
He says for some time there has been greater demand for fruit, vegetables and superfoods as populations become more health-conscious: “People are taking healthy eating much more seriously and the hipster street food scene means things like smashed avocado are now in the mainstream.”
Quinoa and beetroot have also experienced sudden large surges in demand, affecting costs, but Read has not yet observed across-the-board rises for such foodstuffs.
This is echoed by price trend analysts Beroe and IHS Markit, the latter of which says plant food prices are, like many commodities, driven by availability (see box, opposite).
Beroe’s Nagarajan S tells SM that despite growing popularity, prices have not witnessed significant increases in the recent past: “The major reason is because prices are largely controlled by raw material supplies. For example, tempeh and tofu prices are controlled by the availability of soybean. Similarly, prices of other substitutes such as pea protein, falafel and mushrooms are also controlled by supply/demand dynamics of respective raw materials. This is attributed to the fact that more than 50% of production cost is driven by raw materials.”
Some products have become more popular because they suit a range of dietary demands like coeliac (gluten-free) or paleo (caveman) diets. For example, low-carb rice and pasta substitute quinoa has grown in popularity. This South American seed has more fibre and protein and appeals to followers of the wholefood movement. If Western diets continue to demand it, prices will likely rise in the short term. Equally, it could mean exports are increased (instead of it being consumed domestically), crop stocks increased or grown elsewhere, says IHS Markit.
Ryland Maltsbarger, principal economist at IHS Markit, which projects global supply, demand and prices for major row crops, fruits and vegetables and major livestock meats, says the vegan trend is set to stay hot for years. He says the rise in numbers may not be quite as sudden as some suggest.
“Some new consumers into the category were probably very close to vegan prior and it is a modest shift from their consumption patterns. Either way, even a few days a week [change in diet] for other consumers adds huge demand and is to bring growth for years.”
He also comments on whether smaller suppliers may be able to withstand competition now bigger businesses are getting in on the act. “There are many large brands that are buying up smaller firms to expand their product lines to capture some of the sales growth,” he says. “The larger companies have scale and can bring more products to a wider market in a shorter time frame.”
Some categories are likely to end up having more competition than before and will have to reduce prices, he says, while some companies in this category are dependent on higher margins to remain economically sustainable: “This is general business sense but the strong growth and good sales can lead to overreach.”
Looking to the future, Maltsbarger says a dramatic decline in meat and dairy product purchases could lead to producers going out of business: “They may reach out to their governments for assistance, raising subsidies to farmers. Other countries that export meat to developed regions could also have lower farm income, leading to increased food insecurity. As an offset, there would be demand for more vegan products, which could benefit countries that can grow and export them.”
For now, vegan choices, where they appear, still comprise a minority percentage of menu options, but their star is rising. Suppliers and procurement professionals need to be ready to source bleeding beetroot burgers alongside beef patties.
Crop supplies: the economist’s view
Bob Maltsbarger, senior economist, agriculture service at IHS Markit, says pricing trends for vegan alternatives such as soya, tofu, oats and palm oil are largely influenced by available supply. Here he gives an overview of pricing fluctuations in the most common commodities.
Cocoa “This is largely driven by supply in West Africa, especially Ivory Coast production. Prices since 2000 appreciated through 2011, dropped for a couple of years, appreciated again in 2014, remained mostly steady through 2016, dropped again in 2017 and modestly appreciated to close 2018 in a pattern that primarily followed West African production.”
Cauliflower “Has had a steady, slow increase with seasonal variations since 2000 equating to a real basis decline in the US price.”
Avocado “It’s a similar story, but on a stronger appreciation path. Prices have appreciated since 2000, with spikes coinciding with (US exporter) Mexico experiencing supply disruptions, such as the October strike. As the consumer market has become more affable to eating fats, avocados have experienced a positive shift in demand as well.”
Palm oil “The price generally follows other vegetable oil prices and especially soybean oil, which follows soybean production. It has declined since 2011 with the recent Q4 2018 price near 2009 lows. The cost of this oil typically remains at a discount to soybean oil prices, largely based on taste preferences because soybean oil is generally considered superior. The exceptions are when either an El Niño or La Niña event causes a supply disruption.”
Guinness and other vegan news
Guinness is now vegan after finding a way to remove yeast without isinglass (fish bladders), which it used for 256 years.
High US demand caused supply shortages and stalled the UK launch of the vegan Beyond Burger, which uses beetroot juice to ‘bleed’.
3D-printed vegan meat substitutes from Israeli start-up Jet Eat could be on sale next year.
McDonald’s is continuing to roll out its McAloo Tikki and McVegans.
Google Trends shows a steady growth in interest in veganism interest searches, with top five countries : Australia, Israel, Canada, New Zealand and Austria