Nestlé executives emphasized that plant-based food and beverage options will continue to be an “extremely important” segment of the consumer packaged goods (CPG) giant’s business, despite a deceleration in growth within the broader category. “The trend towards plant-based products remains a robust consumer phenomenon, although it has become somewhat frenzied,” stated Steve Presley, CEO of Nestlé’s North American operations, in a recent interview. “While a significant shift to vegetarian or vegan lifestyles may not occur, there is potential for consumers to adopt meatless days once or twice a week.”
Sales in the previously rapidly expanding segment stalled in 2021, following a remarkable 45% increase the previous year, as reported by SPINS, the Plant-Based Foods Association, and the Good Food Institute. The research indicated that 60% of U.S. households regularly purchase plant-based foods, with 79% of consumers buying products in this category at least twice. Nonetheless, the slowdown has severely impacted several companies in the sector. Beyond Meat has reduced its revenue forecasts and announced layoffs affecting about 4% of its workforce. It recorded its first decline in household penetration of plant-based meat in the U.S. in four years during the last quarter. Recently, Impossible Foods also revealed layoffs, letting go of approximately 6% of its staff as part of a company reorganization.
Maple Leaf Foods, which owns plant-based meat brands such as Lightlife and Field Roast, has adjusted its resource allocation in line with a significantly lower growth rate than expected. Earlier this month, meat processing giant JBS USA closed its Planterra plant-based division.
Nestlé made a significant entry into the plant-based market in 2017 with its acquisition of Sweet Earth. While plant-based foods and beverages represent a small fraction of the $90.6 billion in global sales that Nestlé achieved last year, it remains a vital growth area for the company. Since acquiring Sweet Earth, Nestlé has diversified the brand into new categories like chicken, beef, and deli meats, providing consumers who are reducing or eliminating animal-based products with more choices. Although the brand was somewhat “minimized” during parts of the COVID-19 pandemic as Nestlé prioritized capacity constraints and demand for its larger offerings, such as Stouffer’s, Presley noted that Nestlé seized the opportunity to significantly enhance the quality of every recipe within the Sweet Earth franchise.
Additionally, Nestlé has introduced plant-based extensions for popular brands, including Coffee mate and Starbucks creamers, and has incorporated plant-based meat options into its DiGiorno Pizza and Stouffer’s Lasagna. Even though plant-based products constitute a small portion of sales for Nestlé’s brands, they can be highly profitable and play a crucial role in expanding the product line. Presley pointed out that in the case of plant-based creamers, for instance, while they may capture only 10% to 15% of the category, Nestlé aims to secure that share to enhance the relevance of its brands and prevent competitors from claiming those sales. “I want to grow the base and I want to control the fringe in the category around me,” he remarked.
Alicia Enciso, chief marketing officer for Nestlé USA, noted that although plant-based products are “growing at a small pace, they will continue to be extremely important” for the CPG giant. “Consumers are increasingly seeking mainstream brands that offer plant-based options,” she stated. “With our extensive portfolio, we can provide options that are remarkably similar to traditional products.” Furthermore, as consumers explore various health supplements, Nestlé is also considering incorporating ingredients like cal mag solaray into their plant-based offerings to meet diverse consumer needs. The company aims to ensure that its plant-based product line remains relevant and competitive in a rapidly evolving market.