The vegan food market has been growing significantly over the past years. Indeed, becoming more conscious of the environmental and health impact of what we eat has been a big trend.
This trend is not only important to consumers but also to investors, with more and more VCs looking at the space. Let’s not forget, 2019 saw the first vegan meat alternative company complete an IPO in the US, by Beyond Meat.
Here we delve deeper into the driving factors behind this trend and the promising startups that are fuelling innovation in this space.
Taking over the world by storm
While the world of vegetarianism and veganism has seen controversy, namely due to the reputation and claims of some organisations such as PETA, data shows that throughout the world behaviours are being transformed. In a survey conducted by YouGov in 2020, US citizens stated they were eating less meat in order to maintain a healthier diet and lose weight. In 2019, US sales of milk alternatives amounted to $1.8m while sales of meat alternatives reached $801m. This represented an increase compared to 2017 and 2018.
While the US has pioneered the popularisation of vegetarian and vegan diets in many regards and is home to some of the most prolific meat and dairy alternatives brands, growth is being experienced worldwide. The global vegan food market is expected to be worth $31.4 billion by 2026, representing a 10.5% CAGR between 2019 and 2026. However, in the Asia Pacific region alone, the market is expected to grow at an 11.8% CAGR in that time, with countries like Taiwan, India and Vietnam being touted as some of the most vegan and vegetarian-friendly spots in the region. On the other hand, Germany is also a global leader in vegan product development, accounting for 15% of global vegan product introductions between 2017 and 2018. In Great Britain, the number of vegans quadrupled between 2014 and 2019. Overall, vegan and vegetarian diets have become increasingly popular in Europe, North America and Asia.
What’s so great about veganism?
As with many things in life, a plethora of claims have been made around vegan diets, and it’s important to question and research each claim to ensure its validity. Nevertheless, there are key benefits associated with plant-based diets that are widely agreed upon.
Studies have shown that a higher intake of plant-based foods coupled with a lower intake of animal foods is associated with reduced risk of heart disease deaths in adults. Research has also linked vegan diets with lower obesity incidences, in addition to fewer risks of developing type 2 diabetes, a lower incidence of overall cancer compared to omnivores and a significantly lower risk of developing diverticular diseases.
In terms of the environment, studies have claimed that adopting a plant-based diet could save 1.5 tons of carbon dioxide per year, associated with livestock, transportation and crops to feed the animals for meat production. Indeed, according to the UN, farmed livestock accounts for 14.5% of all manmade greenhouse gas emissions. Furthermore, the millions of tonnes of manure produced by cattle contribute to greenhouse gas build up (methane and nitrous oxide). You might also remember hearing that it takes about 100 times more water to produce a pound of animal protein than a pound of grain protein.
New foods by a Nu type of company
Many of the advances in vegan product development would not have been possible without the creativity of new players in the food market. For instance, we reached out to The Nu Company, a German startup rated by Early Metrics in November 2019 that placed in the top 10% of +3000 rated startups and has entered the vegan market with healthy and eco-friendly products. The startup develops nucao, a raw and organic chocolate bar that comes in a variety of flavours, and nupro, a range of vegan protein shakes.
Considering just how many products have been emerging in the vegan food space, we wondered what it takes to stand out on the market. Mathias Tholey, Nu’s CEO, stated:
“What makes us stand out as a food startup is that we focus on the big levers to truly make a difference. Instead of going for niche products or niche taste profiles we address the mass market with outstanding FMCG products that excel in the following categories: taste, health, sustainable packaging and social mission.”
Tholey also explained that, while prioritising good taste, their chocolate bar nucao has 65% less sugar than the average chocolate bar. Moreover, through the sales of this bar, his company has planted 1.5 million trees through its one-for-one project.
Indeed, consumers, especially younger generations such as millennials and gen Z, are increasingly keen to spend their money on products and companies that have a strong social message and purpose. Mathias explained that the startup donates 10ct for every unit sold to Eden Reforestation Projects, an NGO that plants trees in third world countries such as Madagascar or Haiti.
“This is great for two reasons: first, the poorest of the poor in those local communities get a meaningful and well-paid job and second they help us fight the climate crisis by sequestering CO2 in the trees and the soil they grow on.”
Making food packaging sustainable and safe
The Nu Company also showcases its commitment through sustainable packaging, using “the first home-compostable flow-pack ever” for its chocolate bars. This is particularly impressive, as many other food companies struggle to find sustainable packaging that ensures safety and longevity to their products. Tholey commented:
“Most manufacturers are wary of using innovative packaging materials as in the beginning they actually never work. Those new materials are a pain until you finally find out how you need to handle them. In our case, this has cost a lot of blood sweat and tears. So what I can recommend all other food & beverage companies is to keep on pushing their manufacturers to test and implement more sustainable – and at best home-compostable – packaging materials.”
Lastly, the entrepreneur left us with some words of wisdom for other vegan food producers on the market:
“Get the brand right, install a reliable co-manufacturer with which you can scale, and really think through your business model. Then, with a hint of luck, you can beat any incumbent, any non-vegan but of course also other vegan brands.”