What is plant-based food and is it more than a fad?

Food manufacturers ranging from startups to leading CPG companies to the world’s largest meat companies are innovating rapidly in the plant-based market. Next-generation plant-based meat, egg, and dairy products are increasingly competitive with animal products on taste, price, and accessibility, though more opportunities remain. But what is plant-based food exactly and what does it mean for investors?

What is plant-based food?

Plant-based food refers to a diet that primarily consists of foods derived from plants. This includes fruits, vegetables, legumes, whole grains, nuts, seeds, and products made from these sources. It typically excludes ingredients such as meat, milk, eggs, or honey.

The concept of plant-based diets has been around for centuries, with roots in various cultures and religions. However, it has gained popularity in recent years due to growing awareness about health, environment, and animal welfare issues.

Plant-based foods

Source. Plant based health professionals

There are various types of plant-based foods:

  • Meat alternatives: There are essentialy two types of meat alternative: those that mimic the taste and texture of meat, and those that offer a new, veg alternative to meat. While both are vegetarian alternatives, relying on ingredients like soy, peas, and lentils, they take a different route to substituting meat. La Vie, for instance, is a French brand that offers plant-based bacon, ham and lardons, and aims to match the flavour and taste of the original products. Gosh!, on the other hand, delivers natural and clean label plant-based alternatives, such veg as burgers and sausages. While Gosh!’s the focus is more on delivering delicious alternatives, La Vie aims to replicate the exact flavour and texture of meat. To different approaches with a common goal of reducing meat production and consumption.
  • Egg alternatives: Made from ingredients like mung beans or flaxseeds.
  • Dairy alternatives: Milk, cheese, and yogurt alternatives made from nuts, soy, oats, etc. Take Mondarella: founded in Germany and inspired by European cheese tradition, Mondarella is delivering cheese alternatives made from 100% natural and vegan ingredients. Bon Vivant, a french biotechnology startup, is rethinking the way milk is produced. The company is using precision fermentation to produce animal-free dairy proteins.
  • Whole foods: Unprocessed or minimally processed plant foods like fruits, vegetables, nuts, seeds, and grains.

Benefits of plant-based food

Plant-based food serves several major advantages:

  1. Nutrition: Plant-based diets are rich in fiber, vitamins, and minerals, which can help maintain a healthy body.
  2. Sustainability: Health: Animal welfare: Choosing plant-based options reduces the demand for animal products, contributing to animal welfare.

Why Plant-Based Food is a Necessity for Everyone in the Food Ecosystem

Plant-based food is more than just a trend or a fad. It represents a necessary shift in the way we produce and consume food for the benefit of our health, the environment, and the economy. Here’s why it matters to everyone in the food ecosystem:

1. Farmers

If the world adopted a plant-based diet we would reduce global agricultural land use from 4 to 1 billion hectares. Per unit of food consumed, meat and dairy has anywhere from three to 100 times the environmental impact of plant-based foods. For farmers, growing plant-based crops can be more sustainable and profitable. Crops like legumes and grains require less water and land compared to raising livestock. Additionally, the rising demand for plant-based foods creates new market opportunities for farmers.

2. Consumers

For consumers, adopting a plant-based diet can lead to improved health. Plant-based foods are rich in fiber, vitamins, and minerals, and low in saturated fats. Numerous studies have linked plant-based diets with lower risks of heart disease, obesity, diabetes, and certain types of cancer. Cardiovascular disease is the major cause of premature mortality in the diabetic population and many trials have demonstrated the benefits of plant-based diets in preventing and treating cardiovascular disease. Vegetarian diets have been associated with 24%–32% reductions in ischemic heart disease incidence and mortality relative to omnivorous diets.

3. Retailers

For retailers, stocking plant-based products can boost sales and customer loyalty. As more consumers seek out these products, retailers that offer a wide variety of high-quality plant-based options can attract new customers and retain existing ones.

4. Food Manufacturers

For food manufacturers, developing plant-based products can drive innovation and growth. The plant-based food sector is rapidly evolving, with new technologies and ingredients enabling the creation of plant-based products that mimic the taste and texture of animal-based foods.

5. The Environment

For the environment, a shift towards plant-based diets can significantly reduce our carbon footprint. Raising livestock for human consumption generates nearly 15% of total global greenhouse gas emissions, plus water pollution, and deforestation. In contrast, plant-based foods generally have a much lower environmental impact.

6. The Economy

For the economy, the plant-based food industry is generating jobs and contributing to economic growth. The sector is expected to continue its rapid expansion, creating new employment opportunities and stimulating local economies. 

Are plant-based foods more expensive?

While it is a common perception that plant-based foods are more expensive, the reality is more nuanced. Plant-based products tend to be sold at a significant price premium compared to conventional products, but the cost of plant-based foods varies widely and is influenced by factors such as the type of product, brand, ingredients, and location.

Source. Good food Institute

The cost of plant-based food is decreasing due to factors like increased demand, advancements in production technology, and economies of scale. As more people embrace plant-based diets, the demand for these products grows, leading to increased production and lower costs. Additionally, technological advancements are making the production of plant-based foods more efficient, further reducing costs.

Plant-based vs. vegan food

While both plant-based and vegan diets emphasize on plant foods, they are not exactly the same. Veganism extends beyond diet and is a lifestyle choice that avoids all forms of animal exploitation, including non-food items like leather and cosmetics tested on animals. On the other hand, a plant-based diet focuses solely on the consumption of plant foods and may still include some animal products.

How is plant-based food produced?

Plant-based food production is characterized by several key traits, including sustainability, innovation, and health-consciousness. Producers often strive to use sustainable farming practices and prioritize the use of organic, non-GMO ingredients. There’s also a lot of innovation involved, particularly when it comes to creating plant-based alternatives to traditional animal-based foods. The production of plant-based food is a meticulous process that depends on the specific type of product being created. However, the general process can be outlined in several key stages:

1. Cultivation, harvesting and cleaning

The first stage involves the cultivation of plant-based ingredients that will be used in the final product. This could be anything from soybeans, peas, and wheat to fruits, vegetables, nuts, and seeds. Once the crops are ready, they are harvested and thoroughly cleaned to remove any dirt or impurities. This ensures the highest quality and safety of the final product.

2. Processing

This can involve a range of techniques, including milling, blending, cooking, and fermenting. For example, soybeans might be processed into tofu, tempeh, or soy milk, while wheat might be processed into seitan. The processed ingredients are then mixed together according to specific recipes to create the final product. This could be anything from a plant-based burger patty – like Gosh!’s burgers, that recently made the Top 10 list of The Times for healthiest foods to try in 2024 –  to a dairy-free cheese. It’s at this stage that flavorings, seasonings, and other ingredients are added to give the product its desired taste and texture.

3. Packaging and distribution

Once the product is ready, it’s packaged and prepared for distribution. Finally, the packaged products are shipped to retailers, where they can be purchased by consumers.

Is Plant-Based good for investors?

Investing in plant-based companies can be a wise financial decision for several reasons. Firstly, the plant-based food market is experiencing rapid growth: The global market is forecasted to grow with 10.95% CAGR by 2023-28.

The global plant-based food market size was reached at USD 42.86 billion in 2023 and it is expanding by around USD 87.12 billion by 2032, growing at a CAGR of 8.2% from 2023 to 2032.

Source: Precedence Research

As more people become aware of the environmental, health, and ethical benefits of plant-based diets, demand for these products is increasing. This growth is expected to continue in the coming years, making plant-based companies a potentially lucrative investment.

Secondly, many plant-based companies are at the forefront of food innovation. They are developing new products and technologies that have the potential to disrupt the food industry and create significant returns for investors.

Lastly, investing in plant-based companies aligns with the principles of sustainable and ethical investing. By investing in these companies, you can contribute to positive environmental and social change while also potentially earning a return on your investment.

Therefore, whether you are motivated by potential financial returns, environmental concerns, or ethical considerations, investing in plant-based companies can be a beneficial and rewarding decision.

How Sparkfood promotes plant-based foods

At Sparkfood, we are committed to promoting healthier and more sustainable dietary habits, and plant-based foods are a significant part of this mission. Here’s how we help promote plant-based foods:

1. Investing in Plant-Based Start-ups

Sparkfood is an active investor in plant-based food companies. We recognize the potential of these innovative companies to transform the food industry and make plant-based diets more accessible. By providing them with the necessary capital, we help these companies scale and reach more consumers.

2. Providing expert guidance

Beyond financial support, Sparkfood offers strategic guidance to the companies in its portfolio. With our deep industry knowledge and network, we help these companies navigate the market, overcome challenges, and maximize their growth potential.

3. Advocacy and education

Sparkfood is a strong advocate for plant-based diets. Through our digital content, we educate our audience about the benefits of plant-based foods, dispel common myths, and provide practical tips for incorporating more plant-based foods into their diets.

4. Showcasing success stories

By highlighting the successes of our portfolio companies, we demonstrate the potential and viability of plant-based foods. These success stories serve as inspiration for other entrepreneurs in the space and evidence for potential investors.

By investing in innovative start-ups, providing expert guidance, advocating for plant-based diets, and showcasing success stories, we help promote plant-based foods and contribute to a healthier, more sustainable food system.

Plant-based food is not just a passing trend but a necessity for our health, our planet, and our future. At Sparkfood, we recognize the importance of this shift and are committed to supporting the growth and success of the plant-based food industry.

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