PepsiCo Is Making 'A Much Bigger Play' In The Burgeoning Plant-Based Market
Tuesday, January 4th, 2022 | 48 Views
The CPG giant has made several acquisitions and introduced new products in an effort to scale quickly and build what it hopes will become household names in the category.
PepsiCo is accelerating the development of plant-based foods it hopes could one-day rival sales generated by some of its popular chip, tea and soda brands.
The CPG’s snack portfolio, which includes everything from Doritos and Sun Chips to Sabra hummus and Quaker oatmeal, has long depended on plant ingredients such as corn, chickpeas and oats. But PepsiCo is moving aggressively to expand its offerings to prioritize the use of plants that provide functionality attributes and have a more environmentally friendly footprint.
“Our core brands utilize agricultural commodities, but this is more than that. This is also positive nutrition on top of that,” said René Lammers, PepsiCo’s chief science officer. “Ultimately, we want to make this a much bigger play for us.”
During PepsiCo’s February earnings call, CEO Ramon Laguarta singled out plant-based snacking as a category the company is using to generate future growth. PepsiCo posted sales of $70.37 billion in 2020, an increase of 5% from the prior year. Organic revenue is forecast to increase in the mid-single digits in 2021, in line with its long-term outlook.
Giving consumers more choice
Retrieved from PepsiCo.
Boylan said with the latest surge of consumer interest in plant-based foods in its infancy, he’s keeping a close watch on PepsiCo to glean more information on its long-term strategy compared to that of its competitors. While the company’s success is far from certain, PepsiCo’s dominance in snacking will at least cause retailers to listen about the new items it plans to introduce.
“The one thing to keep in mind is this is still kind of the wild west out there with a lot of innovation and a lot of opportunities for a number of players involved, but it’s going to take time to unfold,” he said. Plant-based food retail sales totaled $7 billion in 2020, posting a 27% growth rate overall for products that specifically replace animal-derived options, according to SPINS data released by the Good Food Institute and the Plant Based Foods Association. A total of 57% of U.S. households purchased plant-based food in 2020, up from 53% in 2019. Investment firm UBS predicted in 2019 that plant-based food would be an $85 billion industry by 2030.
Overcoming obstacles with plants
As companies incorporate more plant-based ingredients, there are a series of hurdles they need to overcome. Lammers said before PepsiCo can incorporate a pea, rice or other alternative protein into a new or existing product, it must closely study the ingredient. Scientists not only review the “nutritional credentials” it brings, but also determine how and where it’s grown, the impact on the environment when it comes to inputs like water and, of course, its impact on taste, he said.The snack and beverage maker also needs to ensure it can procure enough of the ingredient, determine how it will be processed and manufactured and whether new equipment will be needed to do it. “There are always a couple of overarching challenges you face when you switch significantly an ingredient,” he said. “We need to think completely end to end when when you switch some of these ingredients.”
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