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Beyond Meat, Impossible Foods, Oatly: The alternative food brands that defined COVID-19 era eating

·6 min read
In this article:
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It’s been quite a year for the food industry, with the COVID-19 pandemic decimating the restaurant industry, while giving an unexpected boost to certain types of foods that soared in popularity among home-bound consumers.

After an explosive 2019 fueled by a push for healthier options, plant-based brands like Beyond Meat (BYND), Impossible Foods and Oatly have all benefitted from the health-conscious consumer. Along with traditional comfort foods, these alternative brands are now more prominent than ever, as surging coronavirus cases threaten new restrictions on public life.

Kroger (KR) unveiled its top food predictions for 2021, with “future-proof” items (nutritious products that support immune health, stress management and energy levels) leading next year’s trends.

While the plant-based boom is not expected to go away any time soon, it’s clear that 2020 represented a consolidation period for the industry. Big company partnerships and product innovations are leading the way into what is shaping up to be a vigorous recovery from the pandemic.

Beyond Meat, which rolled Beyond Meatballs into select grocery stores this fall, recently partnered with Costco (COST) to sell the savory addition in store locations across the U.S. The deal 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 product rollout in 2020, following the Beyond Breakfast Sausage Patties, the Cookout Classic burger and the Beyond Breakfast Sausage Links.

Beyond Meatballs to hit select Costco stores as plant-based meat boom continues (Courtesy: Beyond Meat)
Beyond Meatballs to hit select Costco stores as plant-based meat boom continues (Courtesy: Beyond Meat)

Meanwhile, Impossible Foods landed 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 arrangement followed two massive partnerships Impossible struck earlier this year. Starbucks (SBUX) announced in January that it would offer an Impossible Sausage breakfast sandwich at its stores nationwide, and Burger King unveiled an Impossible Whopper (QSR), which hit the fast food chain to much fanfare in 2019.

The fake meat trend “is here to stay because it’s not just Beyond Meat and Impossible Foods. There are other packaged food companies entering this space, like Tyson (TSN), Nestlé (NSRGY), Kellogg’s (K), and more,” CFRA analyst Arun Sundaram recently told Yahoo Finance.

Independent food chains are also adopting and adding more plant-based products with consumers “fully embracing” the trend, Sundaram added.

A booming sector

Jan 27, 2020 Sunnyvale / CA / USA - Beyond Burger and Beyond Beef packages, all Beyond Meat products, available for purchase in a supermarket in San Francisco bay area
Jan 27, 2020 Sunnyvale / CA / USA - Beyond Burger and Beyond Beef packages, all Beyond Meat products, available for purchase in a supermarket in San Francisco bay area

During the early months of the pandemic, sales of plant-based meat surged 264%, according to Nielsen data recently cited by The Wall Street Journal. Year-over-year, Beyond Meat has experienced 83% growth on menu mentions, and 19% in consumer interest, according to food intelligence platform Tastewise.

And the competition is only heating up, as the alternative meat maker looks to make up ground with food service chains.

Through the first three quarters of 2020, the company's global food service revenue was down nearly 17% year-over-year — due, in large part, to pandemic closures.

But McDonald’s (MCD) recently announced it would be creating its own in-house plant-based burger appropriately titled the McPlant — with a little help from Beyond Meat.

(Courtesy: McDonald's)
(Courtesy: McDonald's)

The McPlant announcement spurred some initial confusion, as McDonald’s did not confirm whether or not Beyond Meat would supply 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.

Yet whether its Beyond Meat or another fake meat producer, “having a competitive edge in [research and development] is how these companies can differentiate and grow,” Sundaram said.

He reiterated that Beyond Meat could “hit the jackpot” by steadily improving its taste, quality and nutritional value — while also lowering the price.

Got (oat) milk?

TIANJIN, CHINA - 2020/04/25: A customer is ready to drink the oat milk, before tasting the Beyond Meat rolls stuffed with alternative beef and vegetables.   On April 23, Starbucks started to sell pastas and lasagna made with Beyond Meats plant-based alternative beef products, and oat milk beverage from Swedens Oatly,  in most of its stores in China. (Photo by Zhang Peng/LightRocket via Getty Images)
TIANJIN, CHINA - 2020/04/25: A customer is ready to drink the oat milk, before tasting the Beyond Meat rolls stuffed with alternative beef and vegetables. On April 23, Starbucks started to sell pastas and lasagna made with Beyond Meats plant-based alternative beef products, and oat milk beverage from Swedens Oatly, in most of its stores in China. (Photo by Zhang Peng/LightRocket via Getty Images)

The popularity of oat milk is creeping higher, as major coffee chains like Dunkin’ and Starbucks (SBUX) adopt the high-protein alternative. In spite of Pepsico’s (PEP) 2019 decision to discontinue its Quaker Oats beverage less than a year after it 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 dairy giant HP Hood.

Starbucks also jumped on board by teaming up with Swedish vegan food brand Oatly. In April, Starbucks joined forces with Beyond Meat and Oatly to expand its plant-based offerings in stores across China. The April launch included new specialty out milk lattes, matchas and a macchiato.

In early December, the coffee giant announced plans to bring oat milk to its menus nationwide in the spring of 2021. Currently, oat milk is available regionally in U.S. chains in the mid-west and California. Starbucks also plans to debut a new Shaken Iced Espresso drink.

Speaking at Starbucks’s investor day earlier this month, COO Roz Brewer said the new option “speaks to how we're meeting the generational shift in customers' tastes while addressing the needs of the health-conscious.”

Indeed, it was a big year for companies sowing their oats in a frothy market, where sales have more than tripled year-over-year, according to Nielsen data. In July, Oatly sold a $200 million stake to a group led by private-equity giant Blackstone Group Inc. (BX) — a move that drew backlash from its socially-conscious consumers. Oatly, however, defended the decision as a good bet for investors and consumers.

According to Tastewise, social interest in oat milk grew 93% since last December, with a 5% increase month-over-month on average. 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 bandwagon.

Meanwhile, Nestlé-owned brand Coffee Mate is expanding Natural Bliss line with two new dairy-free creamers. Those include Brown Sugar Oat Milk and an Almond Sweet Crème flavor that arrives in January. Back in 2017, Coffee Mate launched its first line of vegan creamers exclusively at Target, and Danone-owned Silk launched its own oat brand in 2018.

Not to be outdone, Nestlé (NSRGY) and Starbucks expanded their creamer options with the launch of Starbucks Non-Dairy Creamers, both crafted with a blend of almond and oat. And Chobani recently added two new Oat Coffee Creamers to its existing line of oat milk products that includes yogurts as well.

Even though oat milk is stirring up attention in 2020, dairy-alternatives are gaining more ground. Tastewise data showed that interest in almond milk is up 30% year-over-year while cashew milk is up 43% during the same period. Meanwhile, hemp milk is up 15% year-over-year.

Editor’s Note: Updated to include Beyond Meat’s specific product rollouts in 2020

Alexandra Canal is a producer & entertainment correspondent at Yahoo Finance. Follow her on Twitter @alliecanal8193. Brooke DiPalma is a producer and reporter for Yahoo Finance. Follow her on Twitter at @BrookeDiPalma.