Legume burgers that sizzle and bleed like beef. Cashew cheese that melts and stretches like mozzarella. Oat milk that froths in a latte or churns into ice cream.
Disruptive innovation at the start-up level has played a major role in the burgeoning plant-based foods movement, as emerging brands such as Beyond Meat and Califia Farms redefine dietary staples for the mainstream palate.
“Where we are today is that consumers expect that there will be substitution without sacrifice,” said Darren Seifer, executive director and industry analyst of food consumption at The NPD Group and based in New York.
A barrage of new meat and dairy alternatives is capturing consumer imaginations and dollars in a way traditional tofu or soymilk never could, fueling a retail market that surged 11% to $4.5 billion last year, while total retail food sales in the United States inched up 2%, according to data from the Good Food Institute and the Plant Based Foods Association.
Americans continue to consume record amounts of meat each year, and the proportion of vegetarians and vegans remains small — about 5% of the U.S. population. But a growing number of consumers are incorporating more meat and dairy alternatives into their diets because they view the options as healthier than animal products, Mr. Seifer said. To a lesser extent, consumers are adopting occasional plant-based eating due to concerns related to animal welfare and climate change.
Sales of plant-based milks, which include alternatives based on almonds, coconut, soy, hemp and oats, grew 6% over the past year and now account for 13% of the entire milk category, while cow’s milk sales declined 3%, according to the Good Food Institute and the Plant Based Foods Association. The plant-based meat category grew by 10% and is now worth more than $800 million. Plant-based meats equated to 2% of retail packaged meat sales, with refrigerated plant-based meat growing 37%. Sales in the conventional meat category, in contrast, grew by 2%.
Barclays analysts last year predicted the global meat-alternative market will reach $140 billion over the next decade, equating to approximately 10% of the $1.4 trillion meat industry.
Taste and convenience are drivers of the broader adoption of plant-based alternatives. Another factor is marketing. Only recently has “plant-based” become a buzzword, appealing to omnivores who may have overlooked or rejected products featuring a vegan label. Ninety per cent of plant-based foods consumers also eat meat, Mr. Seifer said.
Additionally, the term “plants” connotes health to many consumers, Mr. Seifer said, even as some view certain plant-based products on the market as unhealthy or overly processed.
The Center for Consumer Freedom, a meat industry-backed nonprofit based in Washington, likened plant-based alternatives to dog food in recently published full-page newspaper ads. A television ad that aired in a local market during the Super Bowl called attention to ingredients used in some meat alternative products, like methylcellulose, with the message, “If you can’t spell it or pronounce it, maybe you shouldn’t be eating it.” (Impossible Foods, the maker of the plant-based Impossible Burger, quickly responded with a parody video suggesting the presence of fecal bacteria in ground beef and the statement, “Just because a kid can spell ‘poop’ doesn’t mean you or your kids should be eating it.”)
“There’s definitely a segment of consumers who will look at an ingredient list, and if they don’t recognize what’s on it, it will give them reason to pause,” Mr. Seifer said. “When we look at the growth of plant-based, it seems that the fact it’s based on plants, that word makes consumers feel comfortable so far.”
The buzz generated by the Beyond Burger and Impossible Burger on national restaurant menus has prompted significant investment in new product development by many established food companies, including Nestle, Conagra Brands and Tyson Foods, attempting to engineer imitations that similarly offer a “real meat-like experience.”
But for many entrepreneurs in this segment, plant-based alternatives represent not merely a market opportunity but a solution to large-scale issues. Four prominent founders interviewed recently discussed a shared passion to create a positive impact on the environment, animals and human health through plant-based innovation.
“You’re not going to solve a global challenge like, ‘how do you feed 7 billion people high-quality protein’ with a shoestring budget and small thinking,” said Ethan Brown, founder and chief executive officer of Beyond Meat, Inc., based in El Segundo, Calif. “It’s a big, big problem, and you need big solutions.”
The plant protein pioneer
At Beyond Meat’s Southern California innovation center, dubbed the Manhattan Beach Project, a group of scientists, engineers, food technologists, chefs and researchers experiment with hundreds of plant-based raw materials and formulations to continuously improve and develop the meatiest plant foods possible.
“We have three platforms: beef, pork and poultry,” said Ethan Brown, founder and chief executive officer of Beyond Meat. “Within those three platforms we continue to innovate around four things: flavor, aroma, appearance and texture. And we keep trying year after year, quarter after quarter, to close the gaps between animal protein and our products with respect to those four characteristics.”
Beyond Meat was established just over a decade ago on the transformative idea “you don’t need an animal to produce a piece of meat,” Mr. Brown said. Soy burgers and similar alternatives had existed in the marketplace for decades, but Mr. Brown, formerly an executive at a fuel-cell company, wanted to produce a plant-based patty that looked, cooked and tasted like beef.
“For us, meat is not a mystery,” Mr. Brown said. “It’s these five things at a very high level: amino acids, lipids, trace minerals, vitamins and water. We can study those at a very granular level and instead of using the animal to put together those five pieces, we can use materials directly from plants.”
The Beyond Burger debuted in 2016 alongside conventional ground beef in the fresh meat case of supermarkets. Today, the brand’s products, including plant-based sausage and beef-like crumbles, may be found in more than 58,000 retail and food service outlets globally.
Last spring, Beyond Meat rolled out a new iteration of the Beyond Burger, which was described as having a “meatier” flavor and mouthfeel, formulated with peas, mung beans and rice. The release of the updated recipe coincided with the company’s initial public offering, which raised $241 million. Days before a secondary public offering in August, Beyond Meat’s shares hit a record high of $239.71, inflating the company’s market capitalization to approximately $14.4 billion. (In mid-February, shares of Beyond Meat hovered around $115).
“What really excites me the most about the business is how much consumers want this to work,” Mr. Brown said. “People are cheering for this to work. I think our job is to not let them down. It’s to continue to innovate so someday it will be absolutely indistinguishable from animal protein.”
U.S. retail sales of Beyond Meat products rose to $75 million over the 52 weeks ended Oct. 6, 2019, marking a 135% increase from the previous 52-week period, according to Information Resources, Inc.
“What really excites me the most about the business is how much consumers want this to work.”
The increase gave Beyond Meat a 10% market share of the U.S. plant-based meat substitutes market, behind MorningStar Farms and gardein. (In his early 20s, Mr. Brown invested in MorningStar Farms and received a “good return” when Kellogg Co. acquired the brand in 1999.)
Product development at Beyond Meat is driven by four core concerns: human health; animal welfare; use of land, water and energy; and climate change.
“More and more people are beginning to link livestock and climate as an issue the way we did maybe 20 years ago with automotive and climate,” Mr. Brown said. “You look to natural resources, whether it’s land, energy or water, you see more and more consumers drawing connections between livestock and natural resources.”
Compared to a ¼-lb beef burger, a Beyond Burger requires 99% less water, 93% less land, 46% less energy and generates 90% fewer greenhouse gas emissions, according to University of Michigan research.
Beyond Meat is the product of more than a decade’s work by Fu-Hung Hsieh, Ph.D., and his team of scientists at the University of Missouri in Columbia. In 2009, Mr. Brown began working with Dr. Hsieh to commercialize the product.
“I think maybe the biggest insight we brought to the sector is that you can take technology and marry that with all-natural ingredients to build a piece of meat directly from plants,” Mr. Brown said. “It’s not about creating something that has artificial ingredients or G.M.O.s. We think that everything that you need to build a piece of meat from plants is being provided by nature already. And our job is not to change the material basis of that but rather to organize that.
“And if we stay true to that we can create a product that is great for consumers, that they feel great about eating because it comes from plant material they’re familiar with and presents to them in the exact same way that a piece of animal meat would. We’re not there yet in terms of the overall sensory experience, but we’re getting closer every year, and the best part about this project is that our target is standing still…
“The ability to make the animal a more efficient delivery mechanism for meat is limited. Our ability to keep increasing efficiency of our system is almost unlimited.”
The modern-day milk man
Greg Steltenpohl’s quest for dairy-case domination began several years ago in a Memphis hospital. A couple years prior, he launched Califia Farms as a juice brand in partnership with Sun Pacific, the producer of Cuties mandarins. He partnered with the fruit farmer to squeeze the bruised and blemished crop into ready-to-drink refreshers. Previously, Mr. Steltenpohl co-founded and led the Odwalla juice brand before Coca-Cola acquired it in 2001.
But in 2012, a personal health crisis opened Mr. Steltenpohl’s eyes to a new opportunity. As he recovered from a liver transplant, inspiration struck to pivot the business to plant-based beverages.
“I got a new lease on life and came back with a renewed charge to make a real difference,” Mr. Steltenpohl said. “Because there weren’t very many well-made protein drinks for people recovering from surgery or any major traumatic event, I started studying this and turned my attention to plant milks and plant proteins.”
Since then, Los Angeles-based Califia Farms has become one of the fastest-growing natural beverage companies in the country, offering dozens of dairy-free alternatives to milk, creamers and yogurt drinks packaged in distinct bottles and made from almonds, cashews, oats, coconut or peas.
“Our vision is to completely transform what people used to call ‘the dairy case’ into a plant-based wonderland.”
In addition, the company offers bottled coffee beverages and is preparing its first foray into plant-based foods with the launch of butters and spreads in March, Mr. Steltenpohl said.
“Discovering a delicious way to get plant protein without genetic engineering became a cornerstone of our product development,” Mr. Steltenpohl said. “Our vision is to completely transform what people used to call ‘the dairy case’ into a plant-based wonderland.”
In January, Califia Farms raised $225 million in a Series D financing led by the Qatar Investment Authority, with other investors, including Singapore-based Temasek, Canada-based Claridge, Hong Kong-based Green Monday Ventures and a Latin American family with interests in coffee and consumer products.
The latest funding round will help Califia Farms further invest in increased production capacity, substantial research and development, deeper U.S. penetration and continued expansion to international markets, where demand for plant-based products is accelerating.
“This is a very different climate from when I came up, the post-hippie, early natural food pioneer days in the ‘80s and ‘90s…” Mr. Steltenpohl said. “Now it’s just a global imperative.”
The ethical egg advocate
Following its first full year on supermarket shelves, the San Francisco-based maker of Just Egg has sold the plant-based equivalent of more than 20 million eggs, requiring 98% less water and 86% less land to produce than conventional animal sources, according to the company.
Made from mung beans, Just Egg tastes and scrambles similar to a conventional egg. More than three-fourths of consumers who purchase the product eat meat, said Josh Tetrick, founder and chief executive officer of Eat Just, Inc.
“And that was the whole point in starting the company,” he added. “We’re not going to do the things that are necessary for the planet … if we’re just selling to people who are already eating in a relatively sustainable way. We’re going to really have the impact when we have an approach that touches more people.”
Just Egg is available in 10,000 retail outlets, including Whole Foods Market, Kroger and Walmart, and in approximately 1,000 food service outlets. In a leading U.S. supermarket chain, Just Egg is outselling all branded plant-based cheese, yogurt and margarine, almond milk and soymilk, and tofu, seitan and tempeh, according to Nielsen data.
“We’re not going to do the things that are necessary for the planet … if we’re just selling to people who are already eating in a relatively sustainable way."
“Eggs are the cheapest, most ubiquitous source of animal protein on the planet today,” Mr. Tetrick said. “It felt like a more-than-obvious place to start if we were going to embark on this mission.
“The next question after that was, ‘Can we find a plant that scrambles?’ And answering that question took a lot longer than we thought. It was a lot harder than I thought. It cost a lot more money than I thought. It ended up taking well over four years to find something that scrambled and then another two years to figure out a way to scale it up to put it in the supermarket.”
But to broaden its impact, the product needs to be cheaper, tastier and healthier than conventional eggs, Mr. Tetrick said.
“We really think that embedding this idea of eating a lot better for the planet in a way that’s aligned with our values can’t just be about climate change and animal welfare; it has to be about human health and eating in a way that is more restorative and healing to our bodies,” he said. “We need to make it healthier. We need to continue to clean the label up. We need to bring in antioxidants. We need to develop processes that bring more bioavailability of nutrients into the end product.”
Mr. Tetrick founded the company, then called Hampton Creek, in 2011. Early products included plant-based Just Mayo and Just Cookie Dough, featuring ingredients such as Canadian yellow pea and sorghum as sustainable, functional, cheaper alternatives to eggs. Billionaire investors jumped in early, he said.
But along the way, the Silicon Valley darling became embroiled in scandal and legal battles. The company was accused of buying its own product to boost sales, and Target removed the brand from its shelves on allegations of food safety concerns.
Hampton Creek since repositioned itself as Eat Just, Inc. and pared its portfolio to a fraction of the ambitious lineup previously offered. This year, the company plans to introduce a reformulated version of Just Egg. A frozen, folded plant-based egg alternative also is set to debut.
This past December, the company acquired a 30,000-square-foot facility and 40 acres of land in Appleton, Minn., to process mung bean protein. Eat Just already has invested millions of dollars in processing equipment for the site with plans for future expansion.
“To make our mission happen, we need to scale,” Mr. Tetrick said. “We want to be as ubiquitous as Coca-Cola is.”
The fancy plant cheese monger
Thirty years ago, serial entrepreneur and chef Miyoko Schinner loved cheese. Specifically, gourmet boards of Brie, Gouda and cheddar accompanied by a glass of wine.
When she became vegan, she discovered how to replicate her beloved indulgence using plant-based ingredients and age-old cheesemaking techniques. She authored several books, including “Artisan Vegan Cheese” and “The Homemade Vegan Pantry.”
In 2014, she launched her Sonoma, Calif.-based business, Miyoko’s Creamery, selling vegan versions of European-style cheese wheels, cream cheese and butter made with organic ingredients such as nuts and legumes with no fillers, additives or artificial ingredients.
“I heard wherever I went that cheese was the last hurdle,” Ms. Schinner said. “People kept saying, ‘I’d go vegan but for the cheese.’ There’s a lot of focus now on the role meat plays in climate change, but for some reason dairy is given a pass as if it’s somehow more benign.
“The dairy industry is tantamount to the meat industry. It’s one in the same. In fact, it’s worse because we’re producing milk, depleting resources, using water, land, emitting greenhouse gas, etc., and then we’re producing meat on top of that. People often forget to think about that, and I do believe there’s a moral imperative for businesses to take the lead in trying to reverse climate change. It just seemed like if I was going to make sense of my life personally, and I had developed these cheeses and written a book on it, then I needed to launch something one more time.”
Miyoko’s portfolio of high-end cheese wheels are available in more than 12,000 retail outlets nationwide. Later this year, the company will introduce a lineup of lower-priced, mainstream cheese offerings made from oats and legumes to appeal to more consumers, she said.
“Ultimately what’s going to save the planet aren’t the fancy cheese wheels but everyday cheddar, pepper jack, mozzarella for pizza, etc.,” Ms. Schinner said. “Food service is key. We were at a major quick-service restaurant headquarters last week meeting with them about using our cheeses because we think every great vegan burger needs a great vegan cheese. This year is our big push to get into quick-service restaurants and offer a holistic solution for everybody wanting something quick and vegan.”
In February, the company announced the launch of a meltable mozzarella-style product for food service operators that may be used in pizza, lasagna and Philadelphia-style cheese steak sandwiches.
“People eat a lot of pizza, billions of slices a year,” Ms. Schinner said. “When products made 100% from plants taste and perform like their cow dairy counterparts, it makes it easy for people to switch, and in turn, eat healthier while being more compassionate to animals and our planet.”
Miyoko’s Creamery is investing in research and development with a focus on creating products with simple, recognizable ingredients that match the taste and texture of cheese and other dairy products.
“We often say we’re really a mission with a company, and our mission is to have the same kind of impact alternative milks have had on the fluid milk category but even to do it more aggressively.”
“We are ramping up our efforts in innovation,” Ms. Schinner said. “We’re increasing staff. We’re going to be putting a lot of effort into researching the powers of plants and figuring out what can we do that’s natural, that’s whole foods-based, to transform plants into flavors and formats that are recognizable and familiar to Americans and the rest of the world.”
The company also recently announced plans to partner with a California dairy farmer to convert the farmland to plants for human consumption. The transitioned acreage will become part of Miyoko’s Creamery product development and supply chain.
“We often say we’re really a mission with a company, and our mission is to have the same kind of impact alternative milks have had on the fluid milk category but even to do it more aggressively,” Ms. Schinner said. “We have a ways to go, but we’re at the tipping point, and I’m just so excited because I’ve been at this for a very, very long time.
“If you had asked me 20 years ago if the world would ever go vegan, I would have said, no. I felt like I was hitting my head against the wall with some of these earlier businesses I had. I’m so full of hope, and I truly believe we’re turning the corner where the majority of people are going to start adopting a plant-based diet. I really do believe that.”