Plant-based Ingredients Sector – Drivers Behind
Consumer Revolution – 21 April 2021
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Specialist:
Title:
Stacey Krawczyk (SK)
Former Senior Nutrition Manager at Kellogg Co and Current President & Principal Consultant
at FoodWell Strategies LLC
Moderator: Nyree Hinton (NH), Third Bridge Sector Analyst
Agenda:
1. Consumer adoption across plant-based dairy, snack and meat products
2. Plant-based ingredient industry overview and product innovation
3. Production techniques and nutrition dynamics
4. Competitive landscape
5. Growth outlook
Contents
Q: Could you provide an overview of the plant-based ingredients industry? What are some of the main
categories adopting this trend and some of the main ingredients throughout the supply chain? Which
categories are more mature than others, such as dairy or meat? Who are the top competitors in this market? 3
Q: Could you compare flexitarian vs vegetarian consumers? How do you traverse this difference when making
4
a plant-based product and trying to market it to as many people as possible?
Q: How have different companies approached plant-based solutions, given the explosion of soy and how that
5
differs from making a pea-protein-based product?
Q: Where do you think the big players are headed in their R&D and innovation? Where might they be
prioritising resources, perhaps in a specific category or a different technique used to produce these products,
5
besides plant-based meat?
Q: What is the impact of the negative environmental and health concerns associated with modern agriculture
on driving the adoption of plant-based ingredients? How does the carbon footprint of plant-based production
6
differ vs traditional agriculture?
Q: Does soy offer the highest amount of protein per given extraction? How would you compare it to other
6
ingredients used to gather proteins? Do you think soy is the easiest product to scale?
Q: Are there any difficulties around having the capacity to scale a product? I understand it is about finding the
7
soy concentrate within a particular commodity.
Q: How do plant-based-ingredient products compare to traditional meat or dairy products around clean
7
labelling and ingredient lists?
Q: How capital-intensive is the R&D in this industry? If Kellogg’s wanted to launch a plant-based snack, how
long do you think it would take for it to get to market? The company seemed to struggle with its Incogmeato
launch, which took quite a few years to get off the ground. Could you elaborate on the funding, R&D and
8
execution of plant-based products?
Q: Could you expand on the relationship between product manufacturers and ingredient suppliers? How
important is this relationship? What unique value-adds do ingredient providers supply to large product
manufacturers? What might a company such as Ingredion be offering a company such as Kellogg’s? Could it
8
be proprietary knowledge?
Q: Could you elaborate on the organic food trend and its importance in the consumer landscape? Are these
products typically for flexitarians or vegetarians? Could you describe the organic food production process and
9
how that differs from non-organic?
Q: How significant is the challenge of knowing what consumers want, if they don’t know what they want
themselves? If I go and buy a Beyond Burger today, do I call myself a flexitarian? How much of a challenge is
it to get the consumer up to speed? Vegetarians are likely better-positioned and more well-versed in this
9
market to know what they want and how this can be served by the products on offer.
Q: Are there any nutrients you think consumers could sacrifice when transitioning over to plant-based diets?
10
Could they accept consuming less fat but maybe higher sodium?
Q: What might be the differentiators between big players across the next few years, whether it’s ingredient
companies such as Cargill or ADM, or manufacturers such as Kellogg’s and others? What might be the key
10
technology advantages? Where is innovation headed?
Q: Are there areas where you’ve noticed some production efficiencies being utilised, perhaps in the supply
chain or production process for more mature plant-based products such as alternative meat? Can costs be
11
saved here by switching to a less potent ingredient?
Q: How have plant-based ingredients satisfied consumers with allergies to different ingredients?
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Q: Is there anything you think the investor community should know regarding the plant-based ingredient
11
industry that’s commonly overlooked?
Plant-based Ingredients Sector – Drivers Behind
Consumer Revolution
Transcription begins at 00:00:00 of the recorded material
NH: Welcome to Third Bridge Forum’s Interview entitled Plant-based Ingredients Sector – Drivers Behind
Consumer Revolution. I am Nyree Hinton and I will be facilitating today’s Interview with Stacey Krawczyk,
former Senior Nutrition Manager at Kellogg’s and current President and Principal Consultant at FoodWell
Strategies.
Stacey, before we get started with today’s Interview, please state I agree or I disagree to the following
statement: You understand the definition of material non-public information and agree not to disclose any
such information, or any other information which is confidential, during this Interview.
SK: I agree.
NH: Could you provide a brief introduction to your background?
SK: Sure. I am the President of FoodWell Strategies. It’s a food and wellness consultancy. I partner with
associations, organisations and brands to drive business through leveraging insights and evidence. My
background, as a registered dietician really focused on this plant-based space, notably through time that I
spent at the University of Illinois at the National Soybean Research Lab, where I really honed in on
understand soy-based foods and nutrition related to that and then capitalised that as I moved to Kellogg’s and
was able to work on lots of various brands, including Special K, MorningStar Farms, Kashi, really being able to
help understand commercialisation piece related to concept to launch to support in the retail sector. I am a
fifth-generation farmer and so we still have the family farm that’s been in our family for over 100 years and we
farm conventional soy and corn. This is really more I live in the space of farm to fork, most definitely, and I’m
a passionate believer that food is more than nutrients, it’s also a compilation of our celebrations, our
memories and our culture and so it helps to really put the whole value proposition under the umbrella that it’s
more than just nutrition, it’s also a part of who we are.
[00:02:33]
Q: Could you provide an overview of the plant-based ingredients industry? What are some of the main
categories adopting this trend and some of the main ingredients throughout the supply chain? Which
categories are more mature than others, such as dairy or meat? Who are the top competitors in this market?
SK: That’s a lot to cover, so if I miss something, circle back and make sure I catch it. What’s really interesting
about this space is that this market is continuing grow exponentially. For example, just in the sales of plant-
based foods in 2019, the Plant Based Foods Association and Spins put out data recently that showed just in
2019 it was USD 4.5bn in sales, that’s 11% growth, when the rest of the retail food growth was only at 2% in
2019. That’s a significant space to be in. Most recently, especially in 2019, the categories that are growing the
fastest are in the area of dairy food and beverage alternatives. While the more mature space of, say, meat
alternatives from legacy brands such as MorningStar Farms which from the 1970s launched its products to
now that we have this huge revolution in especially the burger space and the ground space with Impossible
and Beyond. You’ve got this really interesting combination of people are interested in alternative proteins
from either a health halo perspective or from other spaces like sustainability and transparency, but it gives us
a window into that some estimates are that by, in 10 years protein alternatives could be 10-20% of the market.
That’s huge in comparison to we know that vegetarians are really only about at most maybe 10%, it’s growing,
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of the population, but you really have the space that is the significant growth is the flexitarian. People that still
enjoy meat but want to have more plant-based offerings in their diet.
[00:05:17]
Q: Could you compare flexitarian vs vegetarian consumers? How do you traverse this difference when making
a plant-based product and trying to market it to as many people as possible?
SK: Absolutely. True vegetarians that consume no animal products whatsoever are vegans. They’re a very
small percentage of the population, some say 1-2%. It also tends to be growing a little bit, people flex in and
out of that. Vegetarians as a category have various meat proteins or dairy proteins that they consume. Some
vegetarians consume milk and eggs, some consume fish, so it just varies in the respect of what particular type
a vegetarian that somebody may lean into, as well as then when I mentioned the flexitarians, those people that
are omnivores, they eat everything, but they may choose to eat more plant-based, whether it’s due to health or
sustainability issues, but they still may enjoy meat, dairy, eggs, cheese, etc. What is really interesting in terms
about the opportunity here, first and foremost we know that people eat because they know the food is
delicious. It’s interesting, way back in the mid-2000s I was able to fool my own father, a meat-and-potatoes
Midwestern farmer with a MorningStar Farms corn dog and afterwards I told him that he ate soy. Maybe he’d
even grown the soybeans. He couldn’t believe it. This is an extreme example, but it shows the value of taste
first. We also have to be taste-led with regard to any of the foods that we are creating, because it’s not nutrition
unless somebody actually consumes it. Whether somebody is eating for delight or eating for nutrition, taste is
the first and foremost driver.
The second piece is that it needs to be convenient or accessible. We are all educated well above our level of
obedience. We generally know what we should do and what we should eat and what we should not and having,
starting to use these words about accessibility might be a little bit better idea when we’re thinking about this
space, because it’s a dual meaning. “Accessible” means I have access to it, so whether it’s food security or if it’s
related to, “Does my market have this particular product?” Accessible often means that it’s something that is
easy, takes the fear out of it, takes the guesswork out of it. I think that’s where flexitarians really lean in, is
because they like the meat mimics, the foods that make me feel like I’m eating a hamburger but it’s a plant-
based burger. That’s why Impossible and Beyond really elevated the conversation, more so than some of the
legacy brands that didn’t have that true meat feel, whether it looked like meat or, quote, bled like meat. I think
that’s where the flexitarians have really brought forward this opportunity space that Impossible and Beyond
filled that niche and really made it easy for folks to try it.
I think also the space really can benefit from understanding value-adds. Value-adds can come from the
perspective of general nutrition, so we’re balancing the positives and negatives. This is where some of the
pushback has been on the burger alternatives that are high in fat and sat fat and sodium, as well as protein is
king, because it’s about quality and not just quantity. Protein is not a controversial nutrient compared to carbs.
Protein has inherent satiety, so that provides a functional benefit for us. Protein is always going to be leading
in this space of alternative, plant-based foods. Another space could be is we are adding value from additional
fruit and vegetable servings. Fruits and vegetables are a part of the product offering because we know that
people are chronically under-consuming fruits and vegetables in this country. Plant-based offers a logical
space to dial this up. Additionally, because of that lack of fruits and vegetables, we’re also having a deficit in
fibre. Fibre is important to gut health, it’s important to our microbiome and we’re finding more and more out
about how that symbiotic relationship with the microbes in our gut helps to support or deter our own health.
About 4% of the US gets the recommended amount of fibre. That is also a potential place where plant-based is
a logical fit, because fibre exists in plants. It makes perfect sense for it to be a part of the food solution.
In this space also we’re starting to see in some of the food product launches is fermentation. Not only does it
have the ability to provide probiotics in the diet, but as well as digestibility because we know a lot of plant-
based foods have anti-nutrients in them, things that need to be broken down either by processing or by our gut
microbiome. How do we promote that digestibility is it seems that we ferment ahead of time some of the
products related to yeast and fungi. Vitamins and minerals are important because we know that there are so
many available in the plant world. It allows us to approach tailoring or personalisation because we can take a
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target, say women or children, and lean into the nutrients that are typically under-consumed and are maybe
inherently available within the food system and do we just dial them up a bit so they become claimable. Lastly,
some of the other value-adds in this space are clean label, transparency, sustainability, provenance. If you’re
using soy, where is the soy coming from? Is it enhanced by biotechnology? Is it organic? Is it extracted by
hexane or not? Lastly, it always comes down to cost. Is this affordable by the masses? If not, what could make
it be, or is there a different formulation that you might have for different price points?
[00:12:27]
Q: How have different companies approached plant-based solutions, given the explosion of soy and how that
differs from making a pea-protein-based product?
SK: I think it comes down to diversification, whether it be diversification of a portfolio, you want to have
different solutions for different people’s needs and wants, that’s where we start getting into some of the other
ingredient solutions, whether it be pea or oat or some of the newer ingredients, or is it from the legacy
perspective? Then it comes down to, like I mentioned before, what are you trying to accomplish with this
particular food system? Is it you’re trying to get as much quality protein in there and your particular target is
not necessarily caring as much over the provenance, they just want more and higher quality, such as in a sport
powder, where it’s already down to its base ingredients and they mix it with something else and they’re not
necessarily as concerned, or is it somebody who is leaning in more into the wholefood space? Is it edamame in
a frozen food item? Is it tofu? Is it something, roasted chickpeas, etc? I think you see trying to get an entire
picture of the market based on what the particular consumer wants and needs are. That’s always critical to
understand, who your target is and what insights you have about that target. You can have generalised pictures
of the marketplace, but for it to be successful, you really need to understand your target. That’s why the big
companies spend so much time and money on understanding their consumer.
[00:15:17]
Q: Where do you think the big players are headed in their R&D and innovation? Where might they be
prioritising resources, perhaps in a specific category or a different technique used to produce these products,
besides plant-based meat?
SK: I think pre-COVID it was a little bit of the Wild West. You had a lot of people out there trying to be in this
space, trying to leverage riding the trend, and didn’t really understand a lot of the intricacies of the market or
intricacies of the food systems, because a lot of plant-based ingredients, they have a lot of off notes, whether it
be grassy or beany. You have to think about the food system and that’s where a lot of these big companies have
huge R&D budgets and they can leverage a lot of the ingredient companies’ expertise to be able to find, quote,
cleaner ingredients that have less off notes, that can provide a utilitarian ingredient as a part of the food
system, whether they’re looking at protein or whether looking at another space, like I said, dairy and not only
the dairy alternatives but cheese is a huge place growing and egg, etc. You have some of those more milder
food systems that you really have to be concerned about the off notes that could come as a part of using some
of these ingredients.
I think diversification is definitely the trend that you’re seeing from the larger companies, because you see it in
the meat companies, the traditional meat companies, now all of them have some form of plant-based space
that they’re looking in and that really showcases, whether it be truly one or the other, or I think the next big
space that we’re going to see is the blended space. We’ve seen a few companies play here and been successful
or contracted a bit. I think, through COVID, things have been a lot harder because we couldn’t do as much
marketing and education. People just weren’t in the marketplace. They were online or just not shopping as
much, they’re shopping differently. I think the blended space, because it enables those flexitarians, remember
that bigger chunk of the population, blended food enables you to get all of the flavour of the meat but you’re
going to have half of maybe some of the negatives, whether it be fats or saturated fats, etc. You’re going to get
the health halo of those plant-based ingredients. Whether it be a blended milk (audio cuts out 18.32) (awaiting
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reconnection 18.32-18.51) not only be in meat, it can definitely be in other products as well. You can have
blended dairy products, blended cheese, blended all sorts of opportunity spaces here, beverages, etc.
I think this really fits well with the flexitarian groups, because not only are you get to overcome some of the
negatives of a solely plant-based offering of some of the taste implications, etc, but you’ve got to really extend
that, whether it be the base nutrition, for example, in a dairy milk, because it’s really hard to get close to that
nutrition profile in a plant-based offering, soy milk is really the only thing comparable, all of the other nut
milks and oat milks and chickpea milks and everything else that’s coming along have a harder time getting
closer to the nutrition delivered by the dairy milk. I think this blended space is a place that you’re going to see
the larger companies leaning into, especially post-COVID where we start to have an opportunity to do
leveraging more messaging, more marketing, more education. It’s just like with anything new, we have to do a
lot of heavy lifting with regard to messaging and helping people understand the value proposition of why.
People like me, that’s where I exist. I exist in nutritional wellness marketing, to be able to understand the
science and the evidence and the inherent nutrition and be able to speak the marketing language, something
that is going to be transparent and pass the red face test, it’s not just puffery, but that it has grounded in this
evidence in some way, so that you continue to build trust with consumers, especially in a novel area, novel
food, novel space.
[00:21:00]
Q: What is the impact of the negative environmental and health concerns associated with modern agriculture
on driving the adoption of plant-based ingredients? How does the carbon footprint of plant-based production
differ vs traditional agriculture?
SK: I think the evidence is still evolving in this space. We’ll probably see more granularity of just the
differences in terms of carbon footprint, as people start doing lifecycle analysis. Some brands have done that. I
believe there are a couple of companies that have put their lifecycle analysis about their products online.
Helping to understand just what are the contributions of the way agriculture has evolved in this country and
then the spaces that you need to go. I think it’s really interesting, as we start to understand, for example, the
Certified Transitional farming certification that’s created that helps some farmers who want to get into the
organic space, but you have to wait a certain amount of time, so you can build a market for them as they’re
trying to transition. I think biotechnology or the unfortunate nomenclature that was used when it was
launched about genetically modified organisms sounds very scary and scientific and it really is the first
generation of what now we’re starting to get into the biotechnology related to Crispr. I think helping people
understand that it’s science, it’s helping to make happen things that we’re trying to leverage out of the plant to
either increase yield or to make it less susceptible to pests.
How does all of this fit together to be able to offer a bigger, better, modernised approach to agriculture? The
plant-based space is always going to continue to lean in here, because it’s grown. It’s grown out of the ground
and so we have to have this relationship of how we pick the seeds and plant them and grow them and harvest
them and process them, because I mentioned on the back end, when you have the ability to get to isolates for a
lot of these proteins, like soy is notable in this space, but having to use chemical extraction to get there, to get
to the isolated component so that you can add that claimable amount of protein in a 30-gram bar, it is an
opportunity to understand the marketplace, where we’ve been, where we’re at now and what the future may
hold for us.
[00:24:38]
Q: Does soy offer the highest amount of protein per given extraction? How would you compare it to other
ingredients used to gather proteins? Do you think soy is the easiest product to scale?
SK: To understand the difference in the protein landscape, protein is either complete or incomplete, means
has all of the amino acids or it’s missing some. Traditionally, in the plant kingdom, when you have grains
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they’re generally low in the sulphur amino acids like methionine and cysteine, I’m sorry they’re high in that
and low in lysine, that’s what grains are, and legumes are the opposite of that. That’s why traditional foods
were complementary, like rice and beans, in a lot of cultures, because then you put them together and they
become complete. What’s unique about soy is that it happens to contain all of the amino acids and when you
isolate it, you get down to a complete protein on its own. There aren’t any other plant-based proteins that can
get you that. Some can get close, like quinoa does have a lot of this opportunity, but it takes a lot of quinoa to
be able to deliver on a quality protein claim. I think that’s another space where you’re going to see more blends
of plant-based ingredients coming together to be able to fill in those gaps. Soy is unique in the perspective that
it has all of the amino acids in it at a claimable level at an isolate level, so it can mimic the standard for quality
protein is an egg and the amount, the amino acids available to that.
[00:27:01]
Q: Are there any difficulties around having the capacity to scale a product? I understand it is about finding the
soy concentrate within a particular commodity.
SK: Sure, because it’s an agricultural product and it’s beholden to being grown in our climate. When we have
weather issues, that’s always going to play a factor in the supply chain. Whether somebody is converting their
acreage over to chickpeas or lentils or split peas or what have you, first of all it takes time. Second of all, you
have to grow it in the climate that it’s meant for and the ability to have an agricultural product that could be
destroyed by hail or tornadoes or what have you, that’s always the risk-reward of being a farmer, is that you
have this ability to nurture the environment, but ultimately you’re beholden to that environment that you’re
growing the crops in. That’s going to play a role. The issue about soy is that it’s ubiquitous, it’s been grown for
millennia around the world and so we have a lot of familiarity with the product, it grows really well in large
chunks of specific countries and so I think being able to either supplement that with some of these newer
protein legumes, grains, etc, being able to offer the acreage as the marketplace grows, will enable that cost to
come down. That’s why soy is so inexpensive relatively, is that it’s just grown more. There’s just more acreage
of it.
[00:29:16]
Q: How do plant-based-ingredient products compare to traditional meat or dairy products around clean
labelling and ingredient lists?
SK: I’ll start there first. They compare, it’s depending on the food system. In terms of if you have dairy milk,
it’s dairy milk and maybe some vitamins and minerals in it. When you have a plant-based milk, you’re going to
have to have stabilisers and thickeners generally and the vitamins and minerals added to it, so it’s going to be
less of a clean label. If somebody has a dairy allergy or if somebody is a vegan and they solely need a plant-
based offering, that’s when they start making those trade-offs. They’re going to look at the label, but what are
they using the food for? I think that as people become more familiar in this space and wanting more plant-
based offerings, in general companies who are able to lean into making foods that have cleaner labels are going
to benefit. It’s just helping consumers understand the trade-off. Is it a shorter shelf life? Is it going to have to
be a refrigerated product vs a shelf-stable product?
I just think in general the nutrition offering that we have is dependent on what you’re needing this food for.
It’s whether you are wanting to pursue plant-based meat alternatives because you want to have less saturated
fat, the trade-off is probably you’re going to have more sodium. The reason salt is used in the food matrix,
because it’s either from a food preservation or it’s partly taste, there are a lot of functions that sugar and salt,
we quote more negative nutrients, have in a food matrix that contribute to food technology. A food
technologist definitely could go on and on about that and that some of the negative sides of a wholefood, like a
meat muscle or a dairy milk, are related to the fat and the saturated fat because it’s an animal product,
cholesterol, etc. I’m going to pause there because I don’t think I covered everything, so I want you to go back
and remind me what part of the rest of the question was.
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[00:32:53]
Q: How capital-intensive is the R&D in this industry? If Kellogg’s wanted to launch a plant-based snack, how
long do you think it would take for it to get to market? The company seemed to struggle with its Incogmeato
launch, which took quite a few years to get off the ground. Could you elaborate on the funding, R&D and
execution of plant-based products?
SK: I think companies that are going to be successful in this space, again, it comes back to getting a very clear
understanding of who your target is and what they want and need and being able to deliver that. Doing that
upfront research is vital, partnering with your insights team and helping to understand what your particular
consumer is looking for, because for example if you are a cereal brand that targets women and maybe has a
legacy of weight loss or weight management, you are going to create products that are different than somebody
who is a flexitarian who is wanting to eat more plant-based foods. Having a better understanding of that space
then helps you to identify concepts that connect with that consumer and then the ingredients that support that
concept. Is it the particular consumer is heavily into protein and we want as much hearty protein that we want
to pack in there, then you know you’re going to have to probably use soy ingredients and isolates, concentrate,
etc, or is it in the sports place, the sports nutrition space, where again they’re trying to lean into that delivery
upon less about a clean label and more about functional benefit? What functional benefit am I going to get out
of this food? Then it gives you a little bit more understanding.
When it comes to the cost, it all depends on what your end consumer is looking for. If it’s a cleaner label, it’s
probably going to be more expensive because you’re going to be looking at more novel ingredients and more
whole ingredients. If it’s something that is more functional, it depends, it still could be expensive because
you’re trying to get some of these, I’m going to have branched-chain amino acids in there, or I’m going to get
MCT oil in there. Those are going to be more expensive than a whey or another ingredient. I think the big
companies can leverage their large R&D teams, because they may have people on there who have a speciality
in one particular area than others, than a smaller company with a few people that are trying to come up to
speed in some of these other areas. Then they have to leverage their partners like their ingredient companies.
Again, the space is wide to be able to play here, it comes back to you really need to understand who your
consumer is, so that then that builds everything from what ingredients you want to use to how you want to talk
about it. That stream along can take two years to come to market. Smaller companies can be a little bit more
nimble and get products to market a lot faster. Again, to do the due diligence, to understand what value
proposition you want to offer with this food, so that it’s successful, because so many launches aren’t successful
either from the perspective they didn’t understand the consumer, it didn’t taste good or they didn’t adequately
talk about and market the particular food, so that it connected with their consumer.
[00:37:43]
Q: Could you expand on the relationship between product manufacturers and ingredient suppliers? How
important is this relationship? What unique value-adds do ingredient providers supply to large product
manufacturers? What might a company such as Ingredion be offering a company such as Kellogg’s? Could it be
proprietary knowledge?
SK: Absolutely. I think what is important about understanding the relationship with ingredient companies,
obviously they’re wanting their ingredients to get into different foods, plus also they’re very focused on that.
They’re going to be able to do some of the legwork of doing some research, whether it be applied research or
just background research in the area. They want to become experts in their particular ingredient. Then they
can bring that in as the expert to the teams, so that the R&D folks can come up to speed, whether they’re
already, say for example, a protein expert and they can quickly take that information and run with it, or if it’s a
smaller R&D group, that helps them bring the education. Leveraging the expertise of these ingredient
companies enables the education of your in-house staff a whole lot more effectively and efficiently. They are
also, again, a great partner because they’re trying to help you be successful because they want you to purchase
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their ingredient. There are times that internally there might be a partnership to even do more specific
research, because we can’t make claims on food about the food unless we’ve done research on it. We can talk
about the ingredients, we can talk about functional claims, but to talk about the food doing X, we have to do
research on the X. Sometimes ingredient companies will want to do that and partner with you on that.
I think what’s great about the industry partners in general, whether it be ingredient companies or trade
organisations, everybody is trying to help build the market towards this particular ingredient or space. For
plant-based, Good Food Institute and Plant Based Food Association are really important partners to have,
because they can do a lot of heavy lifting on research and consumer insights and really help build that evidence
base for companies, especially if they’re smaller. Larger companies have a little bit more dollars to contribute
to research, can help support those partners a little bit stronger. Coming back to that ingredient question, I
think it’s really important to leverage your ingredient companies because it’s a win-win for them as well as the
company, being able to provide the information you need to talk about your products based on the ingredient
that they’re providing and giving a lot of that basic research that you don’t have to do, you can jump over that.
[00:41:22]
Q: Could you elaborate on the organic food trend and its importance in the consumer landscape? Are these
products typically for flexitarians or vegetarians? Could you describe the organic food production process and
how that differs from non-organic?
SK: I’m not an expert in the area of organic, so I just want to make that disclaimer noted. However, again it
comes back to knowing your consumer, because you’re going to have consumers that are very progressive and
know all about this space and if that’s your target, then you need to meet them there. For the general
population, they have no idea other than, “GMO sounds scary and I don’t want that in my food,” but yet when
you try to talk with them and understand, they have no idea what it is. They just don’t want it, because that’s
what the fear-mongering has done. Fear is driven by a lack of understanding and knowledge. It’s not
necessarily that the food or the ingredient is bad or dangerous, etc, because we have many decades of research
understanding that biotechnology-enhanced soy is not a contributor to health issues.
We also know that, for example, when you have a group coming out and talking about the, quote, dirty dozen
of all of these fruits and vegetables that have pesticide residues on them and the unintended consequences of
the general population then saying, “I’m not going to eat any fruits and vegetables,” because research has
shown that those negative, quote, education and marketing campaigns that those groups do, do have an
impact on the general population that then they don’t eat as many fruits and vegetables. Yet the amount of
residual pesticides on products, it varies and it varies based on the food and if you’re eating the peel and if
you’re not eating the peel, etc. I think this is a big subject, more than I can address in one question and a quick
answer. I think, again, it comes back to, I’m going to drive it back to, know your consumer. What does your
consumer want of the particular food that you’re going after? If it’s a progressive space, then you probably
need to really know your stuff here and meet them where they’re at. If it’s general population, then that gives
you a little bit of a different profile to pursue.
[00:44:29]
Q: How significant is the challenge of knowing what consumers want, if they don’t know what they want
themselves? If I go and buy a Beyond Burger today, do I call myself a flexitarian? How much of a challenge is it
to get the consumer up to speed? Vegetarians are likely better-positioned and more well-versed in this market
to know what they want and how this can be served by the products on offer.
SK: No, you’ve nailed it. Everything in there you’ve nailed, is that as I already mentioned we are educated well
beyond our level of obedience and so we will say things to people because we want to sound better or look
better, so sometimes getting to that true answer is hard. It takes building multiple conversations in different
venues to be able to craft the entire picture and that’s why people who are experts in the area of insights are
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valuable, because they can get there, whether it be you supplement it with some in-depth ethnographies to
really understand the particular consumer, as you start targeting down and segmenting down. Yes, there are
generalisations, but many times, in my past history, we would think, “The insights are telling us this, so we
definitely have to go here,” even though intuitively we were saying, “I’m not so sure about this. I think we
should go in this direction just because this is what trends are showing, this is what we’re hearing in other
spaces,” and yet we guessed wrong because we should have gone with our intuition. I think that’s why it’s
important to have really smart people on your team, because rather than just simply trailing after what either
a trend is doing, because trends right now would say, “We need to be in the keto space,” and it’s no, not
necessarily. There is a certain segment of population that is in thrall with that, but they’re going to pick it up
and drop it very quickly. It’s not necessarily that we’re going to build a billion-dollar industry related to keto
here.
Is it more about let’s get more wholefoods and plants and fruits and vegetables and grains, etc, on plates? I
think it comes back to, and I danced around the subject because, yes, in previous life in my discipline of being
a registered dietician, we know that diet histories are not completely the picture, because people want to look
better and write down things that, “I didn’t eat that entire cake. I only had a little piece of it,” is a good
example of that. Again, having multiple data points to help drive that and then doing testing. As you come
together with the particular product, then you go out and take it to your consumers, because that’s where it
really hits, the rubber meets the road, is that if you have a product to show them and they can provide
feedback on that, you give them a little bit more of a balanced data gathering than if you’re just simply asking
them what they think about the space.
[00:48:35]
Q: Are there any nutrients you think consumers could sacrifice when transitioning over to plant-based diets?
Could they accept consuming less fat but maybe higher sodium?
SK: That’s actually a really good question, because I don’t see a negative with going more plant-based, other
than some of these more convenient plant-based foods are going to have higher sodium maybe and some
additional stabilisers, etc, like the methyl cellulose in a burger. I think there’s no negative perspective, other
than the fact that, again, it’s not nutritional unless somebody eats it, so when it’s not going to taste good. For
me, I personally don’t like the more ground meat, burger mimic than a traditional, old-school plant-based
bean burger or whatever. I prefer that effectively just because it’s a personal taste. To somebody else, they’re
like, “Oh my gosh, I can’t believe you ate those, they don’t taste as good or they don’t have a good texture. I
prefer to have something that completely mimics the burger-eating experience.” Yes, I’m just going to stop
there.
[00:50:22]
Q: What might be the differentiators between big players across the next few years, whether it’s ingredient
companies such as Cargill or ADM, or manufacturers such as Kellogg’s and others? What might be the key
technology advantages? Where is innovation headed?
SK: I think it’s always going to come back to taste and cost. Whoever can make something taste better for less
investment is going to be successful. Is it technology in the lab? Is it to be able to produce the products, is it
finding new ingredients that can deliver a better value proposition? What’s really exciting about this is that
everybody, this is kind of a revolution in the food space, it gives us something collectively all to lean into that is
exciting, that is exciting from the perspective of new and novel, but it’s exciting in the fact that it has such
bigger opportunities, having an impact on sustainability and having an impact on nutrition, obesity, etc. If we
lean in and really pursue this space in a logical and effective way, where hopefully the greater good is going to
be expanded. I think successful players will be the ones that can do that from the whole package of taste and
cost and nutrition.
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[00:52:41]
Q: Are there areas where you’ve noticed some production efficiencies being utilised, perhaps in the supply
chain or production process for more mature plant-based products such as alternative meat? Can costs be
saved here by switching to a less potent ingredient?
SK: It’s, again, a little bit beyond my scope of understanding, because I was always adjacent to the cost
considerations, because as a nutrition marketer I contributed to the cost of the products. I was trying to make
it more nutritious. I was trying to, “If you want to do this claim, then we’ve got to be able to put this ingredient
in there.” Then, when we start trying to trim down on things to save costs and improve the margins, I was
always fighting against that. I think there’s, yes, tons of opportunity to be able to reduce the cost along the
whole process, but then ultimately what are you trying to get at? Are you just trying to sell more with it? Are
you trying to meet new consumers’ needs and wants, because I have that on the experience, if you pull so
much out of the product that consumers notice and say, “Hey, this isn’t my same X. What happened to it? Quit
fiddling with my food, I liked it the way it was,” and it was fully a cost perspective rather than, “I’m trying to
continue to meet my consumers’ needs and wants. Yes, that’s the ultimate question, is how you produce these
foods in an affordable way that you make money and make your investors happy and your stockholders happy
and all of that. That’s always the fine line you have to walk.
[00:55:25]
Q: How have plant-based ingredients satisfied consumers with allergies to different ingredients?
SK: Yes, I think people who suffer from allergies and intolerances, those are people that may not have a full-
blown allergy attack that may still have issues with certain things, I think it is extremely important to have
options for them. In fact, my husband is coeliac and so we have to have gluten-free foods in our house for him.
It was originally, when he was diagnosed, very hard and then became much easier because there was a trend
that expanded in this area. I think for folks similarly in the plant-based space, either that have an intolerance
to some of the traditional products in meat and dairy, etc, whether it be from a taste or texture or, for example,
in the older Americans or younger children, it’s a textural issue or being able to chew the particular food and
eat it and enjoy it. Having these options is really important. The place that we have to be mindful of is, are we
introducing something that could potentially be a barrier? A good example is if you manufacture a particular
plant-based food, are you introducing any particular allergens in there that some people will have a problem
with as a part of a blend. As a part of a blend of different ingredients you’re putting together, are nuts a part of
that? Is soy a part of that? Of the top eight allergens, you do have some plant-based foods on there that you
could potentially be using. You want to be mindful of that.
If you introduce nuts into your food system, then you automatically have that in your production facility, so
you have to label that, unless you’re going to do an allergen clean after every time you run the line. Some
manufacturers will harmonise that line, they’ll actually put other ingredients in there so that people with
allergies won’t accidentally consume a particular food. Those are the kinds of things in this allergy space that
you have to look out for, because there are some people that it’s a life-and-death kind of proposition, so you
have to be very mindful of what ingredients you’re introducing into your manufacturing facility and then how
you’re going to deal with those on the back end.
[00:58:59]
Q: Is there anything you think the investor community should know regarding the plant-based ingredient
industry that’s commonly overlooked?
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SK: I think what continues to be overlooked is the importance of educating consumers. We may bring
products to the marketplace and we believe in them and they’re delicious and we think they’re filling this value
proposition, but if we don’t tell consumers about it, then either the retailer is going to discontinue it because
they just don’t have anybody buying it, or consumers can’t find you. I think having the opportunity to
understand how you message about your product, and it could be from packaging, it could be from leveraging
the retailer, there are a lot of ways that you can do that. I think the other space that I believe the plant-based
trend is going is what I mentioned before, is blends, whether it be blending multiple plant ingredients in a
particular food system or blending a half meat, half plant. Being able to deliver upon some better nutrition but
still have that meat taste or dairy taste or ice cream taste that they’re so used to and enjoy and is delicious, but
that you’re able to leverage plant ingredients to bring down some of the offsetting nutrition.
[01:00:49]
NH: Great. We will now end the Interview there. Let me close by saying thank you for your input, Stacey,
great Interview and lots of value-adds. Thank you, clients, for joining Third Bridge Forum’s Interview today. If
any clients would like to arrange a private meeting or consultation, please contact your relationship managers.
Goodbye.
Transcription ends at 01:01:03 of the recorded material
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