Plant-based foods accounted for almost $5 billion in sales in 2019, up 11.4 percent, according to data released in early March. But as the movement mainstreams, it needs distribution and branding scale many pure-play startups lack.
That could signal consolidation and buyouts in the months to come, especially as large food companies including Nestle, Tyson, Perdue and Cargill cultivate their own plant-based alternatives.
Enter LiveKindly, a new venture fronted by former Unilever North America President Kees Kruythoff as chairman and CEO and funded with a eye-opening $200 million contributed by founder Roger Lienhard with investment firm Blue Horizon Corporation, which already has backed dozens of alternative protein startups including Impossible Foods and Beyond Meat.
LiveKindly’s strategy is to create a “collective” of plant-based brands through acquisitions, starting with two companies that market alternatives to chicken, The Fry Family Food Co. from South Africa and LikeMeat from Germany.
“We are using the funding to acquire the companies and for brand positioning,” Kruythoff told me. “We are coming to America later this year.”
The organization also includes a media component, with which LiveKindly intends to build awareness for plant-based foods through content such as news and recipes; and an equity stake in Puris Holding, which uses peas to make plant-based ingredients that can be used by LiveKindly portfolio companies.
The Puris connection is particularly intriguing. The company is the largest North American producer of pea protein. Not only does the company supply high-profile company Beyond Meat, in 2019 it received an additional $75 million in funding from Cargill to more than double its production capacity.
The vertical integration from production to distribution will help LiveKindly scale its impact more quickly, Kruythoff told me. “What you need to do in a young industry is create total systems change.”
He added: “You have all kinds of startups, but many of them are not designed for scale.”
At least 40 percent of the sales of plant-based food are for milk alternatives. There, almonds still rule the category, although oat-derived alternatives are catching up quickly.
But the plant-produced alternatives to meat, especially ground beef, grew almost 18 percent last year, and revenue is approaching $1 billion, according to the research by the Plant Based Foods Association and The Good Food Institute.
While many of these sales are from smaller stores that cater to a particular sort of consumer with a focus on vegan and vegetarian offerings, interest is mainstreaming, according to the researchers, with at least half of American consumers eating some sort of plant-based foods. A major market harbinger: The largest U.S. grocery chain, Kroger, began adding plant-based proteins to its meat aisles last fall.
“From the data, we see a steady rise in plant-based products year over year across regions, which indicates that this is not a bubble or a fad, but a real change in consumer behavior,” said Caroline Bushnell, associate director of corporate engagement for The Good Food Institute, in a statement. “This is a tipping point and there is so much product innovation to hit the market, well beyond the burger.”
Plant-based burgers get a lot of attention, thanks to menu items at quick service restaurants including Burger King and McDonald’s. Cargill, one of the largest beef producers in North America, introduced its own private label line in late February, which it will start selling to restaurants and retailers in late April.
LiveKindly is focusing first on chicken because it is a larger market globally than beef, and consumers tend already to think of it as a healthier protein alternative, Kruythoff said.
Per-capita consumption of red meat accounted for 51 percent of animal protein eaten by American consumers in 2017, according to the U.S. Department of Agriculture, compared with 41 percent for chicken and turkey. Beef and pork largely split the red-meat amount.
LiveKindly doesn’t intend to limit itself to chicken alternatives. Fry Family makes vegan prawns, sausage rolls, burgers, falafel balls and schnitzel, while LikeMeat has made alternatives for pulled pork, kebabs and mince, among other dishes.
Unlike many newer players in plant-based protein, LiveKindly is launching with several veterans that have substantial experiences scaling large consumer products companies. Aside from Kruythoff, the company’s chief marketing officer, Mick Van Ettinger, also hails from Unilever. Its chief research and development officer, Aldo Uva, formerly worked at Nestle, Firmenich and Ferrero.
As the market matures, big food companies are looking for their own taste of the market. Perdue Foods, which produces the top chicken brand in the U.S., introduced a blended plant-based item (in the form of nuggets) in June but it’s not entirely vegan — it’s made from cauliflower, chickpeas and plant protein and chicken breast. Tyson, the world’s second-largest meat producer, is also putting substantial R&D money and energy behind alternative forms of protein, and in January, it helped launch the Coalition for Sustainable Protein to help stimulate collaboration among major players in the industry.