Author: Alice Grahame

The cost-of-living crisis, whether caused by low wages, austerity, rising costs of energy and ingredients, COVID-19, Brexit, or all the above, poses a threat to food businesses and especially plant-based ones. According to a UK Office of National Statistics report from July 2022, around half of adults are buying less food, and around three quarters were very or somewhat worried about the cost of living. So how well will plant-based businesses weather the storm, and what can they do to survive these multiple crises intact?  

For established vegan consumers there are plenty of ways to spend less. The Vegan Society website has lots of tips on how to make the most of affordable ingredients like lentils, oats and chickpeas. There are also recent studies showing eating plant-based can be more affordable than eating animals. An Oxford University study from 2021 found that in the US, UK, Australia and Western Europe eating more plant-based dishes could cut food bills by a third. It has also been reported that in the Netherlands plant-based meat has become cheaper than the animal equivalent. The research shows that in the Netherlands discount supermarket options at Aldi and Lidl offer great benefits for those who exchange meat for meat alternatives, with savings of €6 per kilo.   

However, in the UK, with many plant-based products coming from younger, less-established businesses, and plant producers getting less government support than meat producers, the uncertain economic climate is likely to cause issues. We spoke to Indy Kaur, plant-based food consultant, founder of Plant Futures and former plant-based food strategy lead for Tesco. She says the area most likely to struggle is chilled meat-alternatives: “There is no real incentive for somebody who’s not currently buying plant-based meat alternatives to now start buying it when they’re facing a cost-of-living crisis. We know from Kantar consumer data that consumers are also now struggling to afford to eat healthily, which is one of the key drivers in switching to plant-based food. I think we need to be sensible and understand that there are a lot of people that don’t earn a lot of money and they are going through a hard time. I think getting new people to buy chilled meat-alternatives is going to be difficult right now unless brands can invest in promotional mechanics and leverage Veganuary’s campaign where plant-based sales always spike. It must also be said that veg-led products like pulses, lentils and legumes may do better if consumers can learn how to cook with them.”  

There has been a flurry of innovation in the chilled meat-free category in recent years, with companies competing to produce the most realistic and tasty substitutes. Indy Kaur believes it will be a difficult time for these products. “Compared to the chiller space given to meat, the room for plant-based meat alternatives is small. This means retailers are having to arrange many brands and formats into just two or four chiller bays. Over the past four years there has been a strategy from retailers to embrace new product development, but with sales starting to plateau as consumer demand flattens, retailers are having to reassess and justify the space against retail sales. Ultimately, the consumer will decide which brands and products will thrive. It will be a turbulent year, and I expect next year is going to be difficult too. This is not triggered just by the cost-of-living crisis. It is the natural dynamic of an emerging market but made harder by the cost-of-living crisis.”  

Just as retailers are creating value meat ranges to ride out the cost-of-living crisis, there is a need for more value plant-based items. This has already emerged within supermarket own labels. Tesco Plant Chef, Aldi and Lidl have successfully pushed down the price of vegan ranges. Another example is Alpro, widely available and relatively affordable yoghurt, which for a large pot is the same price as its dairy equivalent.  

Indy Kaur believes there is an appetite for more value mainstream ranges: “There is a need for more commodity-style unbranded components. Dehydrated textured vegetable protein chunks are cheap but are mainly found in health food shops. Canned jackfruit and banana blossom are good base ingredients that could be used to create new dishes, but they’ve not been adopted by the mass market yet. There are also opportunities for more frozen bulk-buy ranges. Quorn does well with its big bag format that is ready the freezer when needed, and there is room for more value pack options.”   

A look at the demographics of plant-based shoppers suggest that they tend to be more affluent than average. A 2021 survey published by the Good Food Institute found that compared to the average consumer, buyers of plant-based products tend to be younger, higher earning and are more likely to have a college or graduate degree. Indy Kaur says there are still some market segments that could be better served: “Products tend to be aimed at single or double higher-income households, young professionals, and empty nesters. There are fewer branded products targeted at families and children at affordable price points. That’s the whole area that hasn’t been explored at all.”  

Despite the harsh economic climate Indy Kaur believes it is right for mission-driven innovators to focus on meat-alternatives: “animal-free proteins are key to getting where we need to be in the long term. In 2020, the market share of meat substitutes in European retail was just 0.7% of the meat market. If we want a more sustainable food system in which, let’s assume, 50% of meat is from plants and 50% from animals, we’ve only just scratched the surface. I think we’ve benefited in the industry with a short-term boom that saw real growth very early on, driven by vegans and flexitarians. To get those products into the mainstream is a whole different ballgame. We need to understand it is a long-term transition not a short-term win.”  

Supermarkets are still crying out for new products and one necessary area of innovation is around costs. One area to explore is the use of by-products as ingredients. This has been done by Israeli company More Food that makes a white label high protein meat-alternative from by-products from sunflower oil production. Integrated supply chains is something that the meat industry does well, with by-products routinely become ingredients. Indy Kaur says this is not yet embedded into the plant-based industry: “We still have a long way to go. It’s difficult because there’s such a buoyancy in innovation. We’re still learning and developing new products all the time. But it absolutely needs to be part of the strategy.”  

One thing needed for plant-based businesses to thrive is a consolidated voice to push for government support, like the way the meat industry lobbies for support. The UK Plant-based Food Alliance campaigns on behalf of the sector. The coalition, whose members include Oatly, Alpro, Upfield, The Vegan Society and the Good Food Institute, are calling on the government for recognition in policies around food production. The organisation’s CEO Marisa Heath says supporting farmers to shift to producing more ingredients for plant-based food would help to reduce costs and prices: “Government subsidies have supported the production of meat and dairy and now that the objectives are changing around public funding for farms to try to support biodiversity and other environmental goals there is an opportunity to support more regenerative systems where there can be multiple outcomes. Being able to source ingredients close to the manufacturer should help to reduce costs.” 

The group would like to see the government set targets for the public sector procurement of plant-based food, which would help producers: “It would give the sector some financial stability in receiving a proportion of the £2b+ spend on food for schools, prisons, local authorities, and the NHS. Scaling up is important as the bigger a business gets the costs per unit should reduce. Government support through foreign investment and export opportunities would also help with this.”  

The organisation would also like to see food included as a key factor in net zero planning.  Marisa Heath adds: “If the government made that the case, all food strategies being developed across the country by large business, local authorities, universities and so forth could include plant-based in their sustainability plans. This would boost plant-based companies and help with scaling up. It would be great to see the Government come out with a public campaign to nudge people to think about their diet and indicate their faith in the plant-based sector to deliver good, nutritious food through wider policy. Other countries are doing this, and it is proving successful.” 

With Christmas fast approaching many plant-based businesses are wishing for a seasonal sales boost to help with the uncertainties of recent years. The festive season is traditionally a time for feasting and vegan brands in retail and foodservice are hoping for increased spending on the big dinner, home gatherings, office parties and evenings out.  

For retailers the busy Christmas season is not mid-winter but July. That is when their Christmas ranges are finalised and launched, in time for the crucial October-December shopping period. Given that products generally need a twelve-month lead in period, now (December 2022) is a good time for food suppliers to think about Christmas 2023.    

Plant-Based Dishes on the Table  

A report from the Vegan Society last year found that 20% of Britons were planning on including vegan dishes in their Christmas meal. 16% said they would eat meat, but with some vegan options, 3% said they were eating vegetarian and 1% said they would eat a fully plant-based dinner. The top three items were meat-alternatives (such as seitan, tempeh or plant-based chicken), nut roast and roast potatoes. 11% said they were looking forward to making a plant-based dessert, while 13% admitted they were worried about serving a vegan cheese board. When asked for reasons for consuming these items at Christmas, 52% said taste, 42% said price and 27% said carbon footprint.  

The supermarkets know that many people want to reduce meat consumption and have steadily improved meat-free options. This year’s festive items in the UK include M&S mushroom parfait and plant-based turkey, Tesco’s maple & bourbon no-gammon joint, Asda’s breaded vegan brie, sweet chilli bites and soya-turkey crown, Aldi’s no-turkey crown, and Sainsbury’s nut roast with orange and cranberry glaze. Most offer meat-free ‘pigs in blankets’. OGGS, the aquafaba egg replacer, has plant-based mince pies in Tesco.  

Gaps in the Market 

Indy Kaur is the founder of Plant Futures, a UK plant-based food advisor and consultant, and former plant-based strategy lead at Tesco. She says she has noticed huge changes to plant-based offerings over the past four years: “Base ranges have got bigger across all retailers, spearheaded by Tesco and Wicked Kitchen in 2018/19 and paving the way for the rest of retail. The big trend over the past two years has been carve-able centrepieces, and we’ll see more of that this year, as well as fun and quirky party food.   

“There are still gaps in the market like the classics, Yorkshire puddings, infused cream, and panettone but I am assured products are on the way! What I am most excited about is seeing premium nut-based cheeses hit supermarket shelves for the first time in the run up to Christmas. Previously available online only, almost all sites would sell out in the weeks up to Christmas and I’m glad to see retailers are taking note. Cheese-alternatives has been the one major category lacking in taste, something that nut-based cheeses are able to deliver on. They are made using a handcrafted, artisanal process, mastered by start-ups in the UK. These aren’t cheese-alternatives, they are nut-based ‘cheeses’ adding a whole new dimension to traditional cheeseboards everywhere.” 

Surprise and Delight 

Indy says supermarket buyers are always on the look-out for something new and special: “They will have development teams for their own brand products, working alongside suppliers, so from outsiders they are looking for exceptionally creative and innovative items. As well as the traditional items that people buy every year, they are seeking an element of surprise and delight. They want to entice consumers into their store with a really great product. They want to offer new culinary experiences, new formats, new flavours but importantly, create memorable moments.”  

Indy Kaur warns hopeful suppliers against pigeonholing themselves as ‘vegan’: “As soon as you say vegan or plant-based you risk narrowing down your audience. Only a small proportion of consumers are vegan, so you need to appeal to the mainstream and talk about how great your product tastes. I think it is important to be careful on the messaging and to focus on indulgence. Because at Christmas time people don’t really want to think about health. They want to spend their money wisely and indulge.” 

Beyond the Christmas Dinner 

Claire Roper is a marketing and innovation consultant for the foodservice sector who was previously Head of Marketing at Quorn. She agrees that Christmas is all about indulgence: “Families and groups of friends want enjoy food together, so retailers and other outlets need plant-based options. Christmas also offers several different occasions for businesses to focus on, from the big meal on the day, to party food, to festive snacks and sandwiches. They need credible alternatives that taste good and offer a comparable experience to the non-plant-based version. Nobody wants to be let down at Christmas. Using flavours that taste good will ensure there is an option that sells well because it makes the customer feel they are being treated to something special.” 

One trend Claire Roper has noticed in recent years is premiumisation – the segmenting of ranges by price: “Something that is now common in supermarkets is the tiering of offerings and Christmas is no exception. It is an opportunity for brands to produce higher end items, alongside more affordable ranges. We’ve seen added value as well, such as M&S’s musical biscuit tins that are useful as a gift. Flavours can be presented as higher end too, with rich indulgent tastes, like truffle, that add something different.” 

For plant-based brands Claire Roper has the following advice: “Embrace Christmas! It’s a great opportunity to showcase something different and allow new customers to experience how tasty plant-based food can be. There are lots of opportunities so see what works for your brand and put some thought into how you can make something tasty and special.”  

Interest in plant-based eating has grown dramatically in the United Arab Emirates (UAE) over the past five years, with new products arriving on supermarket shelves and menus every month. According to Global Data the value of meat-substitute products in the UAE rose from $8.2m to $12m in 2019 and is predicted to reach $15m in 2023. Many vegan brands familiar in the West are now available in the UAE such as Beyond Burger, Meatless Farm, Impossible Burger, V-Bites, Violife and Quorn.   

Divyesh Bhatia is the Co-founder of Vegarian, a Dubai-based vegan food distribution operation in the Middle East, South East Asia and the UK. He partners with vegan brands across Europe, helping them grow their businesses by supplying their products to retailers and foodservice companies, and handling distribution, logistics, warehousing and sales and marketing. Vegarian’s current portfolio includes Meatless Farm, VFC, Mr Freed, and Fellow Creatures. He explains: “When a plant-based company is looking for someone on the ground I’m here to help them distribute and promote and their products, whether for retail or foodservice. We have contacts with the relevant retailers, hotels, restaurants, and cafes. I act as a partner on the ground who represents their best interests and helps grow their brand.”   

The UAE’s interest in plant-based food is driven by several factors. Due to limited arable land, climate issues and water shortages, around 90% of food is imported, with produce coming from South Africa, India, Europe and beyond. The market is heavily influenced by dietary trends overseas.   

The UAE’s unusual demographic lends itself to an openness to different foods. With a population of 9.8m, around 90% of inhabitants are expats. The community is multicultural including many Europeans and South Asians who bring their culture and food preferences. South Asians bring a tradition of vegetarian cooking, with around 35% of people in India estimated to be vegetarian and many more avoiding meat on certain days.   

The most populous city, Dubai, is a popular destination for social-media-influencing visitors, whose posts enhance its reputation as a foodie destination. There are more than 150 vegan-friendly restaurants in the city. This includes fully vegan places like Seva, Bounty Beets and Soul Sante. In addition, Emirates airline has recently announced a multimillion-dollar investment to improve vegan options in its onboard catering.  

Divyesh Bhatia explains that interest in plant-based food is driven largely by health and environmental concerns: “I’ve noticed a change in attitude since the pandemic started. People want a healthier diet. Many consumers are taking a more conscious approach in what they choose to eat. People are aware of the links between Covid and animal agriculture, and that eating meat can cause health problems. There is also a strong interest in sustainability and there are initiatives from the government and retailers to support sustainable choices, such the banning single use plastics. The government is also supporting the manufacture of cell-based meats and non-dairy cheese.” 

A recent example of this is government support from the Ministry of Economy’s NextGen FDI initiative, which is enabling the development of a new production facility for animal-free dairy in Abu Dhabi. The innovative US/Australian company Change Foods will be scaling up production of animal-free casein milk protein at the plant. This will speed up the production of dairy-alternatives that are bio-identical to their dairy equivalent, resulting in more realistic vegan cheese in shops.  

Divyesh Bhatia points out that making vegan food appealing to non-vegans is crucial for the success of the sector: “There are not so many pure vegans here, but plenty of consumers who are leaning towards being flexitarian. One of the tasks for us is educating local consumers. In the past there has been a stigma around vegan food. People didn’t expect to like it. That’s why whenever we onboard new products we are very selective regarding quality. We are always looking to bring in new products to fill gaps in the market. For example, we don’t yet have enough vegan creams and plant-based honey alternatives. Consumers here like variety and to try new things so we would love to see new innovative products.”   

For brands looking to enter the UAE market Divyesh Bhatia is keen to point out that just like everywhere else, price is an important factor: “When people hear about Dubai and expats they assume that everyone wants luxury brands. But contrary to popular belief consumers are price sensitive. I tell potential brands that we want to price products close to the non-vegan counterparts. For example, we are working with Fellow Creatures who produce vegan Swiss chocolate and we explained our thinking to their team when signing them and priced it in the range of other non-vegan chocolates. We want everybody to try it so we set a price that will encourage consumers to take a chance to explore vegan and plant-based options.”  

As demand grows and plant-based food scales up, he is optimistic about the future growth of sector: “When products become more appealing because they taste great and are a reasonable price retailers and restaurants really take an interest. In terms of eating out – in the last six months we’ve seen a lot of chains adding plant-based options and several new plant-based restaurants. That is a big indicator of how consumer tastes are changing, and it is very nice to see as someone who supplies solely vegan and plant-based products in the UAE.”