In this episode of FoodNavigator-USA’s Soup-to-Nuts podcast, the third in a three part series looking at the plant-based foods category, stakeholders discuss what challenges lay ahead for the industry and brainstorm ways to overcome them and move forward.
One of the major challenges holding back plant-based alternatives to meat products is that they often are sequestered to special parts of the store or are not as prominently and logically located as their counterparts.
To address this, the Plant Based Foods Association will explore the best places to stock plant-based products “to ensure they are not relegated to some corner of the market that only the dedicated souls are going to seek out,” said Michele Simon, executive director of the newly formed Plant Based Foods Association.
She added that manufacturers also can proactively improve product placement and distribution by educating retailers about the marketing potential of plant-based foods.
“Retailers need to know that they are going to make money by including the products on their shelves. So, simply showing them the numbers that we all know about, the incredible growth in this industry,” and explaining the opportunity this creates for them should help boost distribution and placement, Simon said.
Reach beyond the natural channel
In particular, manufacturers should reach out to and educate retailers outside of the natural channel, Simon said.
For example, she sees significant opportunity for growth by expanding the presence of plant-based options in food service – especially in college and university cafeterias where “we know that the next generation is really interested in and shifting to more sustainable, plant-based diets,” Simon said.
Greg Steltenpohl, co-founder and CEO of Califia Farms, agrees and adds that plant-based product manufacturers also should reach out to more conventional retailers and convenience stores, which are increasingly open to better-for-you options.
“We have a lot of discussions with companies like 7-Eleven, and we are getting very good results … and [these retailers] are starting to see that they get good velocity off of healthier products,” he said.
He also sees potential in the dot-com space as more younger consumers embrace ordering food with their mobile devices and tablets.
The power of names
Another challenge that is holding back sales of plant-based alternatives to animal products are restrictions on what to name products so that consumers clearly understand how to use them, but they steer clear of regulatory violations related to standards of identity.
“This is an age old problem,” that began when dairy milk alternatives first entered the market and dairy farmers didn’t want those manufacturers to use the term “milk,” said Eugene Wang, founder of Sophie’s Kitchen – a vegan seafood alternative manufacturer. But, he added, plant-based alternatives need to use familiar terms to help consumers understand to what their products are analogous.
“As a manufacturer, our point of view and our purpose of naming our foods is to make people understand what they’re going to use and what they’re going to do with it. It just makes it simple and clear to everyone [to use] the conventional fish name, or milk name,” he said.
Being open about names would help the industry introduce more plant-based options and drive sales, he added.
One way many companies are working around this is by misspelling the type of product in the name, such as using ‘z’ in cheese, said Simon, who said this practice to circumvent FDA regulations “is really silly” and “is not a good business practice, and not even smart from a marketing perspective.”
She added: “That is why we really need a trade group to step in and gather input from its members and from the industry at large to see what we can do to really create some more logical ways of naming these foods for consumers.”
Macroeconomics and an unfair disadvantage to compete on price also limit the consumers who currently buy plant-based alternatives, Simon said.
“We talked a lot about how great tasting these foods are … and all the wonderful attributes they bring consumers who are concerned about their health or the environment, but the truth of the matter is that in most cases these foods do cost more than their animal counterparts, and that is in large part due to the economic interests that the meat, egg and dairy industries have won through their very hard lobbying work in the halls of Congress,” Simon said.
She added that educating Congress about the economic disadvantages and brainstorming ways to even the playing field is another priority for the Plant Based Foods Association.
Related to these economic issues is ensuring that young companies in the plant-based space have sufficient funds to scale up, which is where the New Crop Capital, a $25 million VC fund that invests in plant-based and cultured products, and The Good Food Institute come in, said Bruce Friedrich, the executive director of the institute and a co-trustee of the fund.
“First, we’re focused on creating a pipeline of food scientists, entrepreneurs, syn-biologists, synthetic engineers and people who might otherwise go into another space and convincing them that they can both do a lot of good in the world and do well for themselves by using their talents on behalf of plant-based and cultured alternatives to meat, dairy and eggs,” he explained.
The Good Food Institute also is actively starting companies by pairing entrepreneurs and scientists, he said.
As for raising money, the institute taps foundations, government entities and corporations to support new technologies in the meat-alternative space, he said. In addition, the New Crop Capital fund invests in companies “that we think are going to be those transforming these sectors,” and connects other investors with players in the space.