Beyond Meat, Impossible Foods, Oatley: The alternative food brands that defined COVID-19 era eating
It has been quite a year for the food industry as the COVID-19 pandemic decimated the restaurant industry while also giving an unexpected boost to certain types of foods that have become increasingly popular with domestic consumers.
After an explosive 2019 fueled by the demand for healthier options, plant-based brands like Beyond Meat (BYND), Impossible Foods and Oatley have benefited from health conscious consumers. Along with traditional comfort foods, these alternative brands are better known today than ever as the rising cases of coronavirus threaten new restrictions on public life.
Kroger (KR) presented its top food forecasts for 2021, with "future-proof" products (nutritious products that support the immune system, stress management and energy levels) leading the trends for the next year.
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The plant-based boom isn't expected to go away anytime soon. However, it is clear that 2020 represents a period of consolidation for the industry. Large corporate partnerships and product innovations point the way to a strong recovery from the pandemic.
Beyond Meat, which Beyond Meatballs launched in select grocery stores this fall, recently partnered with Costco (COST) to sell the savory supplement in locations across the United States. The deal was added to its already impressive list of brand alliances like Subway, TGI Friday's, Dunkin 'and Pizza Hut (YUM).
The meatballs are the company's fourth 2020 product launch after Beyond Breakfast Sausage Patties, Cookout Classic Burger and Beyond Breakfast Sausage Links.
Beyond Meatballs to hit select Costco stores as the plant-based meat boom continues (Courtesy Beyond Meat)
Meanwhile, Impossible Foods struck a mega-deal with Disney (DIS) in February. The product’s next stops include Disneyland in Anaheim, Disney World in Orlando and the Disney Cruise Line.
That agreement followed two massive partnerships Impossible entered into earlier this year. Starbucks (SBUX) announced in January that it would be offering an Impossible Sausage breakfast sandwich in its stores nationwide, and Burger King unveiled an Impossible Whopper (QSR) that got the fast food chain too excited in 2019.
The fake meat trend continues because it's not just about meat and impossible foods. There are other packaged food companies entering this space like Tyson (TSN), Nestlé (NSRGY), Kellogg (K) and more, ”CFRA analyst Arun Sundaram recently told Yahoo Finance.
Independent grocery chains are adopting and adding more plant-based products as well, with consumers "fully embracing" the trend, added Sundaram.
A booming sector
January 27, 2020 Sunnyvale / CA / USA - Beyond Burger and Beyond Beef packages, all Beyond Meat products, available at a supermarket on San Francisco Bay
In the first few months of the pandemic, plant-based meat sales rose 264%, according to Nielsen data, recently quoted by the Wall Street Journal. According to the food intelligence platform Tastewise, Beyond Meat saw a year-on-year growth of 83% in menu mentions and 19% in consumer interest.
And the competition is only getting tougher as the alternative meat producer wants to catch up with food service chains.
In the first three quarters of 2020, the company's global food service revenues declined nearly 17% year over year - in large part due to the closure of pandemics.
But McDonald's (MCD) recently announced they would be creating their own plant-based burger, appropriately titled McPlant - with a little help from Beyond Meat.
The McPlant announcement caused some initial confusion as McDonalds didn't confirm whether or not Beyond Meat would deliver the entire patty. The company later confirmed that it will be involved in the project - although the extent of its role is still largely unclear.
Whether it's Beyond Meat or some other counterfeit meat producer, "these companies can have a competitive advantage in [research and development] to differentiate and grow," Sundaram said.
He affirmed that Beyond Meat could hit the jackpot by constantly improving its taste, quality and nutritional value - while lowering the price.
Do you have (oat) milk?
TIANJIN, CHINA - 2020/04/25: A customer is ready to drink the oat milk before trying the Beyond Meat buns filled with alternative beef and vegetables. On April 23, Starbucks began selling pasta and lasagna made with vegetable alternative beef products from Beyond Meats and oat milk beverages from Swedens Oatly in most stores in China. (Photo by Zhang Peng / LightRocket via Getty Images)
Oat milk is growing in popularity as large coffee chains like Dunkin and Starbucks (SBUX) choose the protein-rich alternative. Despite Pepsico's (PEP) decision for 2019 to discontinue its Quaker Oats drink less than a year after it was launched, the market has grown by leaps and bounds.
Back in August, Dunkin, which was recently acquired by Inspire Brands, officially launched an Iced Oatmilk Latte with Planet Oat, owned by milk giant HP Hood.
Starbucks also jumped on board by partnering with Swedish vegan food brand Oatly. In April, Starbucks partnered with Beyond Meat and Oatly to expand its plant-based offering in stores across China. The start in April included new specialties made from milk lattes, matchas and a macchiato.
At the beginning of December, the coffee giant announced plans to bring oat milk to the menu nationwide in the spring of 2021. Oat milk is currently available regionally in US chains in the Midwest and California. Starbucks is also planning to debut a new Shaken Iced espresso drink.
On Starbucks Investor Day earlier this month, COO Roz Brewer said the new option "speaks to how we are addressing the generational shift in consumer tastes while addressing the needs of the health conscious."
Indeed, it's been a big year for companies sowing their oats in a foamy market where sales more than tripled year over year, according to Nielsen. In July, Oatly sold a $ 200 million stake to a group led by private equity giant Blackstone Group Inc. (BX) - a move that sparked backlash from its socially conscious consumers. However, Oatly defended the decision as a good bet for investors and consumers alike.
According to Tastewise, social interest in oat milk has increased 93% since last December, with an average increase of 5% from the previous month. It also now appears on 2.23% of restaurant menus in the United States. Big box grocers and retailers like Target (TGT) or Walmart (WMT) are also jumping on the oat milk cart.
In the meantime, Nestlé's own Coffee Mate brand is expanding the Natural Bliss line with two new dairy-free creams. These include Brown Sugar Oat Milk and an almond-sweet-crème flavor arriving in January. Coffee Mate launched its first line of vegan creams exclusively at Target back in 2017, and Danone's Silk launched its own brand of oats in 2018.
Not to be outdone, Nestlé (NSRGY) and Starbucks expanded their dairy products with the introduction of Starbucks Non-Dairy Creamers, both made from a blend of almonds and oats. And Chobani recently added two new oat coffee creams to its existing line of oat milk products, which include yogurt.
Although oat milk is attracting attention in 2020, milk alternatives are becoming increasingly important. Taste data showed that interest in almond milk increased 30% year-over-year, while cashew milk increased 43% over the same period. Meanwhile, hemp milk is up 15% year over year.
Editor's Note: Updated to include Beyond Meat's specific product launches in 2020
Alexandra Canal is a producer and entertainment correspondent for Yahoo Finance. Follow her on Twitter @ alliecanal8193. Brooke DiPalma is a producer and reporter for Yahoo Finance. Follow her on Twitter at @BrookeDiPalma.
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