Milling & Baking News Corporate Profiles - 2019 - 8

EDITORIAL

Plant-based foods:
Chronicle of a boom foretold
n declaring 2016 the International Year of Pulses, the United Nations deserves credit for telegraphing what could be emerging as one of the most
powerful U.S. eating trends in decades - plant-based foods.
The extraordinary foresight behind this declaration has been underscored
by investor infatuation in Beyond Meat, Inc. since its initial public offering, and
the full-throated commitment to pursuing the plant-based foods market over
the past year voiced by so many companies. It also should be said that the
prescience in declaring an international year of pulses stands in contrast to so
many other recent U.N. "years of," which often seem idealistic and banal. For
example, 2008 was the International Year of Languages while 2011 was the
International Year of Youth.
In its pulses declaration, the U.N.'s Food and Agriculture Organization
emphasized the many benefits of the cultivation and consumption of pulses
around health, nutrition and sustainability. The products are celebrated as a
source of plant-based protein and fiber, giving pulses great potential in the
fight against obesity and chronic diseases such as diabetes, coronary conditions
and cancer. As a sustainability star, pulses require less water than many other
crops and draw nitrogen into the soil, enhancing soil health.
For all these pluses, it was not until the past two years that developments in
the marketplace shined a light on the category, demonstrating that the International Year of Pulses was more than just a hollow expression.
It only has been since April that Burger King announced it would launch a
trial of a Whopper made with a meat-free patty from Impossible Foods.The following month, Impossible Foods' competitor Beyond Meat, Inc. held a successful initial public offering of stock. A full-blown plant-based frenzy has followed.
The Burger King trial drew attention to the breakneck pace at which the
Impossible Burger was gaining traction as an alternative in leading restaurant
chains, now including Red Robin, White Castle, Cheesecake Factory, Applebee's and Little Caesars Pizza. In September, Burger King made the Impossible
Whopper available nationally.
Beyond Meat's shares surged following the i.p.o., quickly lifting its market
value north of $5 billion, a remarkable figure for a company that generated
only $88 million in sales last year. In the months that followed, numerous food
service companies announced the introduction of menu items with Beyond
Meat products, and the announcements often triggered immediate surges in
Beyond Meat's share price. Partnerships announced during the summer included Subway, Hardee's, Dunkin' and a market test at McDonald's. With a peak
price of $239.71 a share in late July, Beyond Burger's market capitalization
had climbed to more than $14 billion, eclipsing the value of numerous major
consumer packaged foods companies, including Campbell Soup Co. (about $13
billion in July) and The J.M. Smucker Co. (about $12 billion).

8 \ November 2019

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While Beyond Meat's shares have retreated considerably from peak summer
levels, many other signs during the summer pointed to staying power for the
plant-based trend. Several of the food industry's largest companies have announced plans to launch plant-based meat substitutes or to re-energize existing businesses that had been dormant. Nestle S.A., the largest food company
in the world, in 2017 acquired Sweet Earth Foods, a California-based maker
of plant-based foods. Early in 2019, Nestle announced the introduction of
the Awesome Burger. Kellogg Co., one of the older players in the plant-based
burger business with its Morningstar Farms business, announced in September
it was introducing a refrigerated patty under the Incogmeato brand. Hailing
the new product, Steven Cahillane, chairman, president and chief executive
officer of Kellogg, said Incogmeato has performed well in consumer tests. He
explained, "It is a real meat-like experience. It grills like meat. It bleeds like
meat. It tastes like meat, and we're very excited. We think we have a right to
win in this space, and ... launching in the first quarter of 2020, and we have
ambitious plans for this." Other food companies announcing a major thrust
into the plant-based space included Danone S.A.; Conagra Brands, Inc.; and
Tyson Foods, Inc.
Also pointing to the trend's staying power, Cargill announced it was investing $75 million to double pea protein production at an existing Puris plant in
Dawson, Minn. Puris and Cargill in 2018 formed a joint venture to produce pea
protein ingredients.
Where is the plant-based foods market headed? One financial analyst predicted it will grow into an $85 billion market by 2030, from less than $5 billion
in 2018.
The excitement surrounding new-age veggie burgers comes at a time most
leading packaged foods companies have struggled to grow sales. More than
fulfilling an idealistic declaration by the United Nations, the plant-based foods
boom shows that for food companies that unlock the innovation formula in just
the right way, the industry's potential remains exciting. CP

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