New Plant-Based Meat and Dairy Are Disrupting the Traditional Industry

By Sam Cohen (New York University - Leonard N. Stern School of Business)

Trend Summary

Across the globe, the meat and dairy industry is undergoing a transformation as traditional products experience increased competition from plant based alternative products. Historically, plant-based meat and dairy substitutes aimed to capture a very specific consumer, opting toward these products regardless of their flavor. More recently, a surge in consumer demand has indicated increased inclination towards these products for reasons including health, environmental effect, and moral concern. While traditional meat and dairy alternatives have experienced additional growth, this trend appears to have been accelerated by developments of new products that aim to replicate the experience of authentic meat and dairy consumption. The growth in plant-based alternatives’ market share has prompted dominant players in the meat and dairy business, such as Tyson and Cargill, to increase involvement in this expanding sector. More recently, the COVID-19 pandemic, has accelerated these trends as the plant-based alternatives industry experienced an influx of consumers shifting away from traditional meat consumption as marketplaces endured meat shortages and greater emphasis was placed upon health.

Figure 1: Total US Plant-Based Food Market (Market Research)

Key Drivers

It is evident that consumers have become increasingly more ethical and health-conscious.

Health Benefits of a Plant Focused Diet. There has been a rise in adoption of flexitarian dieting, a practice in which individuals generally consume vegetable based foods, but do not explicitly exclude meat. Increased consumption of vegetable products in place of meats is considered to be a healthier standard for eating. Improvements in heart health, weight, and vitamin intake are just a few of the attributes associated with this diet. Recently, various studies have concluded that a plant-based diet can reduce blood pressure, thereby reducing risk for conditions such as diabetes, heart disease, and strokes. Similarly, a 2019 study published by the Journal of the American Heart Association found that eating a plant-based diet may reduce the risk of developing cardiovascular disease by 16 percent and their mortality rate by 31 percent.

Figure 2: Plant Based Foods Have Gone Mainstream (PlantBasedFoods)

Figure 3: Who is the Plant-Based Shopper? (PlantBasedFoods)

Environmental Concern. Consumers have also become more aware of the environmental impacts linked to the products they consume, which plant-based alternatives help to mitigate. Specifically in the Gen X and Millennial consumer demographic, sustainability is an important factor in their purchasing of goods. The manufacturing process of plant-based meat and dairy substitutes requires substantially less use of energy, water, and results in less emissions of byproducts deemed harmful to the environment. For example, The Center for Sustainable Systems at the University of Michigan concluded that “a plant-based burger generates 90% less greenhouse gas emissions, requires 45% less energy, has 99% less impact on water scarcity, and 93% less impact on land use than a ¼ pound of traditional U.S. beef”. Livestock farming alone contributes to 18% of human produced greenhouse gasses and, understanding this, it is evident that reduced consumption of related products is likely to significantly reduce environmental damage. With conversations on the topic of global warming and environmental degradation being at the forefront of our political and scientific climates, such implications have become incredibly impactful upon consumer preferences.