Plant-Based Ingredients Are the Future of the Food and Consumer Goods Industries

Photo: vegan sliders at Sage Plant Based Bistro and Brewery in the Echo Park neighborhood of Los Angeles, California.

Consumer brands are undergoing a major marketing transformation. Products intended to go in or on our bodies are no longer driven by tagline positioning. They are now fulfilling a different brand promise: minimal packaging, transparency in processing, sustainable sourcing, even incorporation of vegan ingredients. Consumer demand for these features has launched a movement among manufacturers in the food and beauty sectors in particular: a shift toward plant-based alternatives and “clean” production.

The clean food ingredient market is estimated to reach $66 billion by 2025. Clean beauty ingredients will likely reach $33 billion in the same time, providing an attractive opportunity for innovation. Plant-based “dairy” has captured 13 percent of the clean food market, according to Beyond Meat’s S-1 filing. If we assume a similar market share for plant-based ingredients across the broader food and beauty sectors, we arrive at a whopping $13 billion market potential.

What’s driving the plant-based consumer goods revolution?

Food sector demand for plant-based ingredients is propelled by a number of converging trends.

First is our changing eating habits. In 2006, activist, food expert and journalist Michael Pollan published The Omnivore’s Dilemma: A Natural History of Four Meals, a New York Times bestseller that transformed the way Americans thought about food. Pollan, along with other food activists like Alice Waters and Paul Hawken, challenged consumers to question the origin and ingredients in their daily meal choices, helping ignite a global surge in “clean” eating, plant-based foods and whole food diets.

Second, technology has made plant-based ingredients more palatable to a broader audience. Ripple’s milk alternative made from pea protein, for example, tastes better and offers a broader variety of flavors than many almond and soy-based beverage options from previous decades. Beyond Meat, JUST and others have developed plant-based foods with textures and tastes similar to those of existing animal-derived versions – and consumers are enthusiastic (as the popularity of the vegan burger at a Los Angeles bistro, shown above). Ann Beaty, director of merchandising at Kroger, the largest U.S. supermarket chain, said at a recent industry event: “We’re in the business of selling what customers want to buy…[and] plant-based foods are growing like crazy. They’re no longer confined to a vegetarian section, but are in every section of the store. Shoppers are…not just trying these products, but coming back for more.”

Third, increasing consumer awareness of climate change, sustainability, animal welfare and the health benefits of plant-based diets is driving demand in the way we source and process food. According to a report by research firm GlobalData, the number of people in the U.S. who identify as vegans has increased by 600 percent in the last three years. Consumer pressure has prompted companies from General Mills to McDonald’s to embrace cage-free egg production, while fast food chains like Burger King and White Castle are serving up the meatless Impossible Burger.

The beauty industry is also pursuing plant-based innovations. As Tata Harper, founder of an eponymous natural beauty brand, explained to The New York Times, “Beauty follows food because we use a lot of the same ingredients. If they’re good to ingest, then they’re typically great to apply topically.”

Cosmetic manufacturers and brand owners such as the Unilever Group and Kendo Holdings are now offering plant-based ingredients and product lines. Globally, there has been a 175 percent increase in vegan (a sub-set of plant-based products) cosmetics launches over the past five years. According to the NPD Group, natural skincare brands are growing twice as fast as total skincare, and “sustainability is a requirement for new and existing brands, as well as a driver of innovation and opportunity across the beauty industry.” 

Consumers are also turning their attention to food and beauty upstream supply chains and processes, and demanding transparency and minimally processed or petro-free ingredients. The NPD Group notes that consumers “not only investigate ingredients and efficacy, they want to know about traceability.” As far as consumers are concerned, plant-based alternatives aren’t a big improvement if they are not sustainable or are processed with harsh solvents or chemicals. 

Manufacturer challenges

These changes, however, aren’t easy on manufacturers.

Food and beauty manufacturers stay in business by turning a profit. They won’t offer plant-based ingredients if they are cost-prohibitive.

Manufacturers also need to know that such plant-based alternatives will perform as well as, if not better than, traditional ingredients. If a dairy, meat or egg alternative offers cost savings but requires significant recipe alterations or delivers an unsatisfying texture or taste, manufacturers won’t use it and consumers, frankly, won’t eat it. Plus, the alternative must be scalable, and that’s a tall order. Red Robin and White Castle are already reporting Impossible Burger shortages. Lab-grown and  plant-based foods are a huge step forward and will clearly play a role in the food ecosystem – just consider Beyond Meat’s booming revenue and $10 billion market valuation – but they are subject to supply bottlenecks in ways ingredients derived from more abundant sources are not.

Fortunately for manufacturers, we’re at the point where plant-based ingredients make sense for their bottom lines. Often, these ingredients are more than just healthier alternatives to petroleum-based or animal-based ones: they’re significantly more environmentally friendly and affordable. Specialty chemicals are becoming expensive and harder to source in the U.S., thanks to the shift to shale gas in many refineries. On the other hand, plant material, particularly material that might otherwise not have been utilized, such as residues from agriculture or sustainable forestry, is affordable, especially if processed cleanly, without expensive additives. 

The onus is on the innovators

Consumer demand is driving innovation – and technology is speeding it along. Ingredient providers can lead the way in bringing sustainable food, beauty and wellness technology to consumers without breaking the bank. The most effective plant-based innovators will offer manufacturers ingredients that are sustainably harvested or sourced from large-scale, abundant feedstocks; that are minimally processed or altered; and that provide multi-functional performance and economic incentive in use. The time is right for consumer brand owners and their manufacturing partners to improve their ingredient lists, for the health of their customers, the planet and their bottom line.

Image credit: Jiroe/Unsplash

Editor's note: A previous version of this story noted that Ripple plant-based milks are nut-based (they're made from pea protein). We regret the error.