Plant-based meat volumes slow as category reset plays out
Growth in plant-based meat revenues and volumes is anticipated to slow further over the next few years as the category undergoes a reset.
Both have come off the peaks reached in 2021-22 when Covid spurred additional consumer demand for health-related foods such as meat-alternatives. However, many products have not lived up to expectations in terms of taste and quality, and the premium price has also deterred consumers as the cost-of-living crisis took hold.
Repeat rates have been low because of those factors, with the perceived health benefits trumped by what is often a long list of ingredients, many unfamiliar to consumers, who are increasingly scrutinising food labels.
The category has not been helped by a lack of innovation and differentiation, with the space mainly dominated by start-ups offering similar products. Many have jumped onto the bandwagon, as such, to take a slice of the growth pie without a clear conviction about product evolution and quality.
Plant-based meats have long been criticised over their taste, texture, quality and price, and those shortfalls have yet to be fully addressed. Consequently, value growth and volumes have tailed off and food retailers are now trimming listings as a myriad of similar manufacturers compete for shelf space.
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Industry analysts argue there are too many compared to market demand and many are now going out of business, whether due to self-inflicted deficiencies or external factors such as the economic climate and access to funding.
Monde Nissin, the Philippines-based owner of Quorn, warned this week that the vegan brand continues to face challenges as it flagged a fourth consecutive quarterly decline in sales.
In an in-depth feature on Just Food discussing the category’s possible future trajectory, John Baumgartner, a managing director at Japanese investment bank Mizuho Securities, said: “When Covid came in, you had a lot of distortion in the market with this massive sales pop and you’ve had a steady bleed down ever since.
“I think the biggest problem for the category is still a lack of innovation.”
McCormick rolls up sleeves to target volume growth
US spices and sauces major McCormick & Co. reported a 9% rise in sales for 2023 but the growth came off the back of pricing. The challenge for the Lawry’s and Cholula brand owner will be to try to get volumes back into positive territory.
Announcing McCormick’s fourth-quarter and full-year results this week, president and CEO Brendan Foley said the company had seen "sequential improvement in volume trends" during the "better part of the year"
Announcing McCormick’s fourth-quarter and full-year results this week, president and CEO Brendan Foley said the company had seen “sequential improvement in volume trends” during the “better part of the year”.
Foley acknowledged volumes took a step back in the fourth quarter amid “a pressured consumer exhibiting more value-seeking behaviour” but he added: “Our prioritised investments drove volume improvements in several key areas within our portfolio. In areas that were below our expectations, we understand the challenges, are addressing them, and are confident we will drive improved volume trends in 2024.”
After successive quarters of food and beverage companies looking to up prices to cover cost inflation, the impact on elasticity is being closely watched by investors and volumes will be a key talking point as the sector’s publicly-listed majors publish their 2023 financial results.
McCormick saw its operating profit rise last year and Foley also pointed to “significantly improved” cash flow. The company will look to put some of those resources to use to fund investments to try to drive its volumes.
Unilever job cuts amid low-growth market
The FMCG behemoth is set to cut jobs at a factory in Germany, according to local trade-union officials.
The cuts, upon which Unilever did not directly comment but which they alluded in statements to Just Food, are apparently being lined up a soup-making facility in the east of the country.
According to the Unilever website, the site in Auerbach produces foods including instant soups, ready meals and croutons.
Perhaps unsurprisingly, the market in Germany for dried soups is one of low growth, apart from a spike related to the changes in consumption across markets during the depths of the Covid-19 pandemic.
A Unilever spokesperson said “strategic changes” the company planned to make at the Auerbach site would “secure the future of the factory in a highly dynamic market”.
“I can affirm that, through our strategic decisions, we successfully averted the shutdown of our eastern German facility in Auerbach, preserving 95 jobs in the process,” the spokesperson added.
Cloetta CEO bows out
Cloetta, the confectionery group behind the Sportlife and Candyking brands, is looking for a new CEO after Henri de Sauvage-Nolting handed in his notice.
The Sweden-based group announced yesterday (25 January) de Sauvage-Nolting – who has been at the helm for seven years – had resigned from the roles of president and CEO. He will stay in post until 1 September.
In a statement, Cloetta sought to emphasise the improvements in sales and profits the company had seen during de Sauvage-Nolting’s tenure while moving from “primarily acquisition-driven growth” to organic expansion. He joined Cloetta in February 2017, the same month the company snapped up fellow Swedish confectionery Candyking Holding.
The statement pointed to net sales growing from SKr6bn ($573.8m) to a “rolling-12-month” figure of more than SKr8bn. Profits rose from SKr600m to “close to” SKr800m in the “corresponding most-recently reported” period.
Cloetta reported its full financial results for 2023 today.
Publicly-listed Cloetta, which also counts The Jelly Bean Factory confectionery brand and Sportlife chewing gum line in its portfolio, confirmed annual revenue surpassed the Skr8bn mark for the first time.
Sales rose 20.8% on a reported basis through December to Skr8.3bn and were up 15.7% in organic terms. Fourth-quarter sales increased 14.5% and 11.7%, respectively, to Skr2.2bn.
Split between Cloetta’s branded and pick-and-mix business, the former, which accounts for around 75% of group sales, posted organic growth of 11.1% and 14.1% over the quarter and the year. Pick-and-mix was up 13.6% and 20.7%, respectively.
On a call with analysts, Cloetta’s management said they had kicked off 2024 with more moves to increase prices.