Plant-Based is the New Organic, but Look Before you Leap

This article first appeared on Food Logistics

The plant-based food market is ripe with opportunity, but rushing to market with new products will likely lead to failure.

Retail sales of meat and dairy alternatives were soaring before the Coronavirus disease (COVID-19), reaching $5 billion in 2019. The pandemic has fueled this growth, with alternative meat product grocery sales up 264% in lockdown, as conventional meat was in short supply.

Before food processing companies jump on the bandwagon with plant-based products, they must make sure their products, production and target markets are viable for long-term success.

The challenge of entering the plant-based food market
According to the International Food Information Council, taste is the primary purchase driver for all food products, and consumers were willing to pay more for it. However, evolving drivers, like sustainability and health benefits, are following closely behind the more traditional factors of taste and price. In fact, more than 50% of consumers are strongly motivated by these newer drivers.

New products need differentiation strategies to catch and retain consumers’ attention. It can’t be the same thing as competing products for the same price. Brands need to think through their marketable advantages and how to tell that story to consumers.

What’s more, the processes and technologies fueling this growing industry are still developing. Plant-based substitutes for animal-based products are relatively new, and entrants into this market should be prepared to invest significantly in product and process development. Specialized equipment and co-packing options, which are readily available for many conventional consumer packaged goods (CPGs), are less available for still-developing plant-based products. Some may not yet exist.

Brands that failed to conduct this feasibility portion of their research and development have fallen short of consumers’ expectations.

We might not be able to see into the future of the plant-based foods market, but it’s worth it for brands to think back. When the organic food segment began to emerge in the ’70s, it was a niche market. Prices were very high, choices were few, and acceptance was low until consumers became more aware of potential benefits. For years, there was no consistent definition of “organic.” Plant-based products are facing similar challenges today. 

Consumers now understand and care about the health and environmental benefits of organic products. As these products have become more accepted and mainstream, the prices have declined almost to the level of conventional items in many cases. With a similar early trajectory, plant-based foods could be the “new organic” in the food processing industry. Growing consumption indicates it’s more than a fad, but brands must keep an eye on shifting tastes, personal health, cost, and convenience as the major motivations for all food purchases.

How food processing companies can take on the challenge of plant-based foods
When creating a business plan, look beyond a great product idea. A successful product starts with an idea, but it will end there too if key strategy elements aren’t explored and planned for. Feasibility studies and business plans should address the following four elements to, first, determine whether something can be done and, then, how they will do it.

1. Be clear about your product differentiation. Any successful product must have marketable advantages over the alternatives. These usually come down to quality, such as taste or nutritional value and price. People will often pay more if they see significant positive differences in one product over another; likewise, they may buy a product over alternatives if the quality is acceptable, but the price is significantly lower. The falling prices of organic products have factored into their increased market acceptance. This trend is likely to continue with plant-based foods.

2. Know your markets. It’s not enough to have a good or low-cost product. Plant-based products still won’t appeal to everyone. Knowing your markets — their consumption behaviors and cultural biases — is vital to understanding how to keep differentiating your product. For example, seafood consumption in the United States is heavily concentrated in coastal states, particularly in urban areas. If you’ve developed a superior plant-based fish substitute but are located in the Midwest, you’ll have additional challenges even among consumers seeking plant-based alternatives.

3. Be certain you can reliably produce your product. Can it be done, and can it be done reliably at scale? Plant-based foods face particular challenges due to their nascent processes and technologies. Turnkey equipment, processes, and co-packing options may be less available — or even non-existent — for plant-based products compared to conventional ones. Will you be able to produce it in sufficient quantity? Will the demand for this new product outweigh the necessary investments?

4. Don’t forget the basics. Understanding your market and ensuring your product can be made, packaged and shipped reliably are vital elements of any successful product, but even if you do these things perfectly, your product will fail if it doesn’t meet the basic requirements — taste, mouthfeel, health, cost and convenience — of sustained success.

The plant-based food market is ripe with opportunity, but rushing to market with new products will likely lead to failure. However, companies that conduct feasibility studies and model out likely scenarios to determine the long-term viability of their ideas and construct solid business plans to bring viable ideas to market will capitalize on this quickly growing trend.

About the Author

Brent Morrison is the Founding Principal at Morrison. To get in touch with Brent, please find contact information for Morrison here.


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