“Nestlé Affirms Commitment to Plant-Based Products Amid Market Slowdown”
Nestlé executives emphasized that plant-based food and beverage products will continue to be an “extremely important” segment of the consumer packaged goods (CPG) giant’s business, despite a slowdown in overall growth in the category. “The trend toward plant-based options remains robust among consumers, though it may have become somewhat overhyped,” stated Steve Presley, CEO of Nestlé’s North American division, in a recent interview. “I don’t foresee a significant shift toward vegetarianism or veganism, but perhaps more people will adopt the idea of having one or two meatless days each week.”
The plant-based segment, which had previously experienced rapid growth, saw its sales plateau in 2021 after a remarkable 45% surge the year prior, according to data from SPINS, the Plant-Based Foods Association, and the Good Food Institute. The research indicates that 60% of U.S. households regularly purchase plant-based products, and 79% of consumers buy items in this category at least twice.
However, the slowdown has profoundly impacted various companies in the sector. Beyond Meat has revised its revenue forecasts downward and announced plans to reduce its workforce by approximately 4%. In its most recent quarter, the company reported a decline in household penetration of plant-based meat products in the U.S. for the first time in four years. Last week, Impossible Foods also revealed layoffs affecting about 6% of its employees as part of a restructuring effort. Maple Leaf Foods, which owns plant-based brands like Lightlife and Field Roast, has shifted its resources to align with a significantly lower growth rate than expected. Earlier this month, JBS USA, a major player in meat processing, closed its Planterra plant-based business.
Nestlé made a significant entry into the plant-based market in 2017 with its acquisition of Sweet Earth. Although plant-based foods and beverages represent a small fraction of Nestlé’s $90.6 billion in global sales last year, they are a crucial area for the company’s growth. Since acquiring Sweet Earth, Nestlé has diversified the brand into categories such as chicken, beef, and deli meats, providing consumers who are reducing their meat consumption, or eliminating it altogether, with more choices. Presley noted that the brand was “minimized” during certain periods of the COVID-19 pandemic as Nestlé focused on capacity constraints and fulfilling demand for more established products like Stouffer’s.
Nestlé estimates that approximately 22 million consumers are interested in products made by Sweet Earth. During the pandemic, the company seized the opportunity to enhance every recipe within that franchise significantly. Furthermore, Nestlé has developed plant-based extensions for popular brands like Coffee mate and Starbucks creamers, while also introducing plant-based meat options in its DiGiorno Pizza and Stouffer’s Lasagna.
While plant-based offerings may constitute a minor portion of sales for Nestlé’s brands, they can be both lucrative and vital for expanding the product range. Presley pointed out that plant-based creamers, for instance, might only account for 10% to 15% of the category, yet Nestlé aims to capture that share to strengthen its brands’ relevance and prevent competitors from taking 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, reiterated that while plant-based products are “growing at a modest pace, they will continue to be extremely important” for the CPG giant. “Consumers are increasingly requesting that mainstream brands offer plant-based options,” she said. “With our extensive portfolio, we can effectively provide very similar alternatives.”
Additionally, as consumers seek out nutritional enhancements, the integration of calcium citrate supplements into plant-based products could further boost their appeal, aligning with the growing demand for health-conscious options. Nestlé is committed to ensuring that its plant-based offerings meet these evolving consumer preferences, thereby reinforcing its position in the market.
