- After Beyond Meat’s staggering success, food companies are focusing on plant-based meat alternatives.
- Kellogg and Hormel Foods announced new vegan-meat products.
- Tyson Foods has also rolled out two new plant-based protein products.
Beyond Meat’s (BYND) staggering success is driving several food companies to add plant-based meat alternative products to their portfolios. Looking to replicate Beyond Meat’s astounding growth, Kellogg (K) introduced “Incogmeato” on Wednesday, which is a plant-based meat alternative. Made from non-GMO soy, Kellogg’s plant-based burger patties, Chik’n tenders, and Chik’n nuggets will be in grocery stores in early 2020.
Meanwhile, Hormel Foods (HRL) announced its plant-based meat substitute called “Happy Little Plants.” Hormel Foods’ plant-based products launched at select retail outlets this week. The company plans to expand the distribution more in upcoming quarters.
Beside Kellogg and Hormel Foods, Tyson Foods also rolled out its alternative protein products. The company introduced “Aidells Whole Blends” earlier this year. Tyson Foods also started shipping its “Raised & Rooted nuggets” made from plants. The nuggets will be available in 4,000 retail stores by the end of September.
Why is there a plant-based craze?
Plant-based meat substitutes are marketed as being good for consumers’ health and the environment. The substitutes are witnessing stellar demand from consumers. Also, leading companies like Beyond Food and Impossible Foods are highlighting the fact that these plant-based products taste and smell similar to the actual meat.
We think that consumers are buying these arguments. For instance, Beyond Meat’s revenues rose 287% YoY in the second quarter due to stellar demand. Anticipating sustained demand, the company also raised its fiscal sales outlook.
Will Kellogg and Hormel gain?
As food companies witness soft demand for packaged foods, they’re shifting towards high growth snacks and the frozen category. We think that the consumer spotlight on meat substitutes will help drive Kellogg and Hormel’s revenues. The substitutes could provide new growth opportunities. The growing demand, backed by innovation and expanded distribution, will likely support sales.
Sara Young, the general manager of Kellogg’s MorningStar Farms, said, “MorningStar Farms has often been the first meat-alternative product people have tried and it is proud to be the plant-based protein brand with the highest consumer repeat rate.”
However, plant-based meat is already drawing criticism for being highly processed. We’ll have to see if the demand is sustainable in the long run. Given the strong consumer response, food companies will likely benefit at least in the near term.