Beyond Meat and Impossible Foods Reach Expansion Consumer Segments
Plant-based foods are growing rapidly, up an estimated 40% from 2019 to 2020, ending the year at an estimated $7 billion in sales. This rapid growth means that a robust customer segmentation template is needed for brands targeting the plant-based market.
A current, updated customer segmentation template is particularly important for categories like meat and cheese, with many new consumers experimenting with these foods and entering the category.
Historically, milk alternatives have been the largest part of the plant-based market (40% of the market in 2019 and growing at 5%), but meat alternatives are growing faster.
Meat alternatives are now estimated at over $1B, and growing at 18%. Plant-based cheese also presents an interesting category with revenues lagging its potential ($189M in 2019).
The Silk brand customer segmentation case study illustrates how one of the original plant-based food and beverage brands (Silk soy milk) expanded its consumer targets as the category grew, and the Silk product line successfully expanded from soy milk to almond milk to coconut milk and creamers and yogurt.
Customer Segmentation Template for Plant-Based Foods Including Expansion Targets
When building a customer segmentation template for a rapidly growing category, we highly recommend moving beyond current users, who are usually early adopters, to also include expansion targets who are open and interested but haven’t tried the category yet.
The Silk case study provides a good example of this. The Silk brand’s initial consumer target started with the early adopter “Believers” consumer segment who focused on health and nutrition for the breakfast replacement situation with Silk soy milk.
As the category grew and expanded, Silk’s new products like Silk PureAlmond almond milk brought a new consumer segment into focus, the “Convincibles.” The “Convincibles” focused on great taste and nutrition for a mid-morning or mid-afternoon snack occasion.
Of course, it’s important to distinguish the consumers who are truly open and likely to try the new category from those who will not try the category. One way to do this is to look at their underlying motivations and needs – how strongly do they need or want to try the product? Another way is to look at whether they have tried products in adjacent categories.
Plant-Based Foods Customer Segmentation Template: Understanding Motivations for Meat Alternatives
Beyond Meat is following the approach of reaching out to broader expansion targets, with a reported consumer target and goal of:
“to appeal to a broad range of consumers, including those who typically eat animal-based meats, positioning us to compete directly in the $1.4 trillion global meat industry.”
For a plant-based food like Beyond Meat who targets a category as broad as “all meat,” there are a wide range of consumer segments that will be found. We’d expect to see several segments:
- Flexitarians or “Dabblers” who are interested to try specific, plant-based meat alternative applications for specific need states. As a good example of a need state, a “Dabbler” may first try a Beyond Meat or Impossible Burger product in a food service environment such as:
- Taco Bell – announced a partnership with Beyond Meat in 1/21
- McDonald’s – McPlant plant-based burger announced 2/21
- KFC – spicy beef wrap developed with Beyond Meat announced 6/21
- Burger King’s Impossible Whopper
- White Castle Impossible Slider announced in 2019
- “True Believers” who are hard-core meat alternative purchasers, interested to dedicate more of their total purchasing to Beyond Meat and its plant-based competitors.
- “Processed Food Rejecters” who reject any sort of processed foods, sometimes called “Twigs and Nuts” in other segmentations
- “Meat and Potatoes Traditionalists” who believe that animal meat is the best choice for them, for taste and other reasons
It will be interesting to see how the plant-based meat alternatives perform on the QSR (quick serve restaurant) menus over time. Slower-moving menu items, typically healthier choices like salads, often become money losers for operators. The top-performing core menu items for McDonald’s (such as Big Mac, Quarter Pounder, Chicken McNuggets and World Famous Fries) make up over 70% of sales.
Plant-Based Foods Customer Segmentation Template: Diet Preferences for Meat Alternatives
While motivations are most important, the plant-based food segmentation should also clearly identify consumers who are following particular dietary practices, such as vegans, vegetarians, flexitarian, lactose intolerant, gluten intolerant, avoidance of GMOs and more. It’s also helpful to understand the reason(s) behind the dietary practice, e.g., medical with doctor advice, sustainability and environment, animal rights, etc.
Motivations can also change in different need states and at household life stages. In our household, for example, my high-school-aged daughter shifted over to vegetarian, and we changed all shared meals (in this case dinners) to meet her requirements.
The impact of a diet group or practice can punch well above the size in the population. Estimates of the number of vegans vary from 0.2% to 7% of the US population, depending on the study, but the vegan impact on foodservice menus is much greater as evidenced by the menu placement by Taco Bell, McDonald’s, KFC, Burger King and White Castle. For instance, 50% of Santa Barbara school district menus offered vegan options.
Plant-Based Foods Customer Segmentation Template: Product Performance for Meat Alternatives
Taste and texture performance are critical to acceptance for healthy food products. Taste and texture performance will be different by consumer segment and according to the frame of reference. Today, considerable room for improvement remains in plant-based meat alternatives, with some products performing better than others.
There are several examples from other packaged goods categories that offered healthier alternatives through avoidance of a negative (e.g., sodium, fat) rather than presence of a positive (e.g., plant-based).
In 2019, the Wall Street Journal found that sales of products labeled GMO-free at $13 billion (i.e., absence of a perceived negative) surpassed sales of products labeled as organic at $11 billion (i.e., presence of a perceived positive). The high level of consumer desire for GMO-free poses an interesting question for Impossible Foods, since Impossible is a GMO product.
Years ago, the Healthy Choice brand recognized that consumers’ palates adjusted when they adopted a lower sodium diet. After consumers choose a lower sodium diet for a period of time, they adjust and no longer require the high levels of added sodium that many processed foods contain. Interestingly, the Healthy Choice brand was developed by ConAgra after then-CEO Mark Harper had a heart attack in 1985.
Providing healthier product options that are consumer accepted can be tricky. Many foodservice and CPG (consumer packaged goods) brands have lowered the sodium content in their mainstream products over the years but have chosen not to promote this information, based on the widespread consumer perception that lowering sodium lowers taste. In this case, the lowering of sodium is a stealth health initiative.
The fat-free category provides another example, as historically many consumers translated fat-free into free-of-taste in categories like salad dressing, mayonnaise and cheese.
As product performance changes to become more appealing, new consumers may enter the category, as the Silk case example illustrates.
A customer segmentation template for plant-based foods– particularly meat alternatives– should examine and be informed by motivations, expected category expansion, product performance, dietary preferences and more.