Unilever is aiming to increase its annual sales of plant-based meat and dairy alternatives to €1bn in five to seven years, intensifying the battle for the plates of climate-conscious consumers.
The target far exceeds the €200m of sales the consumer goods group expects from plant-based substitutes this year. Unilever said its Vegetarian Butcher brand acquired two years ago was growing “explosively”.
Hanneke Faber, president of Unilever’s food division, which generated sales of €19.3bn in 2019, said: “It’s the right thing for the world to figure out how we can eat more plant-based, versus eating as much animal protein as we do today. That way we may not lose the planet.”
Unilever will focus on products such as milk-free ice cream and mayonnaise as well as soyabean and algae-based meat substitutes.
The group was a relative latecomer to technologies, started by “food-tech” entrants, which use plant proteins to replicate the taste and texture of meat, but with lower greenhouse gas emissions. It scored a coup a year ago when it was chosen over rival Nestlé and specialist Beyond Meat to team up with Burger King in Europe on a plant-based burger.
Ms Faber said: “I think we are at the very beginning, for meat and dairy substitutes, of their market growth — they are still tiny compared to the overall meat and dairy markets. In the most developed countries it’s 5 per cent of meat or dairy — some predictions say it could go to 50 per cent.”
She added: “It’s a very, very crowded market, but we’re up for it.”
Multinationals pushing into this area — with their production and distribution capacity — would probably result in cheaper plant-based products and eventual consolidation, said industry experts.
“The big boys are entering the stage and there will be large movements in the industry,” said Frank Mitloehner, professor of animal science at University of California, Davis.
Plant-based foodmakers have battled for market share in supermarkets and through tie-ups with restaurant and fast-food chains.
Burger King has a US partnership with Impossible Foods, while Beyond Meat is developing products with McDonald’s in the US for its McPlant platform. Nestlé supplies McDonald’s German outlets with plant-based burgers.
Unilever is open to acquisitions but is mainly focused on organic growth, Ms Faber said, with a focus on meat substitutes and milk-free ice-cream and mayonnaise, rather than milk substitutes such as those produced by rival Danone.
Unilever produces soyabean-based imitation meat and will also look to use microalgae nutrients through a partnership with UK-based specialist Algenuity. “Algae is going to have a big role in providing nutrition to us all,” said Ms Faber.
Soy does have links with deforestation, but Ms Faber said Unilever was committed to remove deforestation from its supply chain by 2023.
Meat alternatives are expected to become a $21bn industry globally this year, a rise of 13 per cent, while milk substitutes will reach $16.9bn, up 5 per cent from last year, according to Euromonitor.
Consumption of such alternatives has kept rising during the pandemic: sales of meat substitutes were up 61.5 per cent in the UK in the year to August 5 from a year earlier, according to Nielsen, and up 140 per cent in the US.
Shares in Beyond Meat plunged last week, however, when it reported far lower third-quarter sales than analysts had expected, saying consumers had decreased purchases after filling their freezers at the start of the pandemic, while restaurant and fast-food chains continued to suffer.
Unilever also said it would halve food waste in its direct global operations by 2025, five years earlier than its previous pledge.