In the first part of a two-part feature yesterday, Andy Coyne looked at the growth of the German packaged vegan food market. Today, we weigh up the outlook for the category.
The rise of packaged vegan food in Germany has some fairly unique catalysts, as we described in the first part of this feature yesterday.
But although there are market conditions unique to Germany and launches often involve smaller, innovative domestic businesses, that does not mean larger food companies and foreign players cannot capitalise on demand and the potential of a market that amounted to 15% of the world’s vegan product launches between July 2017 and June 2018.
Large, established food companies have their own way of dealing with fast-moving trends in the market that have caught them by surprise. They can use their resources to try and get up to speed quickly by launching specialist products or divisions of their own or they can invest in – or even buy – the disruptive innovators leading the charge.
In their response to the growth of vegan packaged food in Germany we have seen a mixture of these approaches, sometimes both from the same company.
German confectioner Katjes Group has established Katjesgreenfood, a fund investing in fast growing, on-trend companies in categories such as vegan food at home and abroad but it has also changed the nature of its own business.
Meanwhile, since 2016, Katjes’ own products – including fruit gum and liquorice – have been vegan.
The fund’s chief marketing officer Volker Weinlein, who is also managing director of another Katjes Group arm – Katjes International – said the decision was right ethically but has also proved beneficial financially.
“We’ve seen a tremendous growth in sales since then. It shows how big this movement is,” he says.
Decisions taken to enhance exposure to the vegan space are not always taken for entirely altruistic reasons of course and this is perhaps best emphasised by the activity of the large meat companies.
PHW Gruppe is one of Germany’s largest poultry farmers and processors, selling products under well-known brands such as Wiesenhof and Bruzzler.
But it has also – like meat giants in other markets – become an investor in vegan, meat/fish-alternative businesses, such as US plant-based ‘seafood’ firm Good Catch.
And it has announced a distribution deal with much-heralded US vegan protein company Beyond Meat which is intended to help it bring its popular Beyond Burger to the Europe.
It is a fair assumption PHW, a business that continues to kill around 4.5 million chickens a week, has not gone through some sort of Damascene conversion to veganism, which suggests it is making such moves because they make good business sense in the present and act as a hedge against the growth of alternative protein and the reduction of meat consumption in the future.
The potential for this to happen more quickly in Germany than anywhere else hasn’t been lost on foreign entrants in the market.
One might think that the sheer number of German food producers active in this area would make it difficult for non-German providers to gain a foothold but that appears not to be the case.
Kay Uplegger of Uplegger, which distributes the products of Dutch vegan food group Vivera in Germany, said: “The German market is not really focused on German products. German consumers and also German buyers are very open for any new product. There is a normal competition between foreign producers and German producers.”
Magnanimously, Uplegger says the largest German providers of vegan food have gained their market share because of the quality of their products rather than through any prejudice in favour of domestic products.
“The very important position of Rügenwalder as a German producer in Germany is done not by the fact that Rügenwalder is a German company, but just that they did a very good job for branding and appeared at the right time on the market,” she says. “If you have a good product you will be successful and the consumers decides case by case.”
Vivera started out in the German market providing products for the discount supermarkets to sell on a private-label basis but has been pushing branded lines there since early last year.
“Our forecast is to be by the end of 2020 at a minimum 2,500 tons [of product sold in Germany] and we are not really so far away from this goal,” Uplegger says.
The positive picture Uplegger paint is reinforced by the experience of UK meat-free producer Quorn Foods.
Quorn’s products – based on the ingredient mycoprotein – have been available in Germany since 2012, initially through a Dutch distributor but since 2015 through its own operation in the country.
Those products are now available in some of the country’s largest supermarket such as Edeka and Rewe. Not all of Quorn’s products are vegan – with some containing egg – but the company does market vegan foods such as nuggets and fillets.
Bernd Klaffschenkel, Quorn’s commercial manager for Germany, said: “Shoppers in Germany (like in most other Western countries) are trying to look for national/ regional products but are open for convincing, high-quality products.
“The global leading market position of Quorn, of course, helped us to establish the brand locally. The Quorn idea from its beginnings in the 1960s – how to feed a strong and quickly growing world population with high-quality protein from an animal-free source – hasn’t been more up-to-date than today.
Perhaps unsurprisingly, vegan food producers operating in the German market see the category’s growth as a trend that is here to stay rather than a fad.
“Vegan products aren’t perceived as niche products any longer”
Quorn’s Klaffschenkel says: “Vegetarian and vegan products aren’t perceived as niche products any longer. Millennials are open for health and sustainability topics and are aware about the global concerns.
“Due to worldwide growing demand for meat prices will rise, therefore meat-free products will become more attractive for price-conscious consumers. Meat-free brands will be able to move into new segments and categories such as frozen foods or fishless products.
“And retailers with focus on the category will be able to grow strong and attract loyal shoppers, buying also other groceries in the same stores.”
Uplegger, representing Vivera, also takes a macro view when predicting growth in the German packaged vegan food market.
“In the long term anyway we will have no choice to go to vegetarian and vegan products,” she says.
“If you look at the whole world we will not in the long term be able to feed the population by feeding animals with plants and then getting protein out of meat and dairy.”