Why North America's Largest Food Companies Are Betting Big On The Plant-based Innovation

Dec. 20, 2019

NEW YORK, Dec. 19, 2019 /PRNewswire/ --  The plant-based food market is growing exponentially and completely disrupting the global meat and dairy sector, causing major meat producers Maple Leaf Foods Inc. (TSX:MFI) (OTCPK:MLFNF), Tyson Foods Inc. (NYSE:TSN) and packaged foods company ConAgra Brands, Inc. (NYSE:CAG) to shift their focus and create plant-based meat alternatives to satisfy consumer needs. Even fast-food giant McDonald's Corp (NYSE:MCD) has changed gears after seeing an 80% increase in vegetarian orders over the last year. Meanwhile, the global plant-based milk market is worth an estimated $14 billion USD and growing at a CAGR of 8%, offering 100% plant-based companies like Else Nutrition (TSX-V:BABY) (OTCQB:BABYF) a lucrative opportunity.

While other companies focus on infiltrating the saturated alt-meat market, Else Nutrition (TSXV:BABY) (OTCQB:BABYF) is looking to disrupt the $90 billion global infant formula market by 2025 with its 100% plant-based non-dairy non-soy products for babies and children

Plant-based products, which were previously reserved for the niche consumer and warranted limited shelf space, have now gone mainstream. In fact, 80% of Americans plan to replace at least some meat for plant-based alternatives. Naturally, food companies are moving quickly to gain a piece of the global plant-based food and beverage alternatives market, which is on track to hit $80 billion by 2024 due to an uptick in health-conscious consumers, rising concerns for animal welfare and increasing demand for food safety.

Plant-Based Milk Market Still Holds the Top Spot

Despite the endless buzz surrounding the alt-meat market, the plant-based milk sector takes the cake in terms of sales revenue. Last year, plant-based milk sales grew by 9% from the previous year, netting $1.8 billion in sales.

According to experts, consumers are making the switch to plant-based milk for health reasons, intolerance to dairy, ethical concerns about animal abuse in dairy farming, or for simply wanting another alternative to dairy, even if it comes at a premium.

At the same time, parents are shying away from dairy products for their babies because of the antibiotics, hormones, and pesticide traces found in cow's milk, as well as the impact the dairy industry has on the environment and animal welfare. Fortunately, Else Nutrition (BABY.V – BABYF.QB) is swooping in to provide a much-needed 100% plant-based dairy-free and soy-free alternative.

According to a 2018 study, 50% of food allergic babies under the age of one are allergic to cow's milk and a further 40% of those babies are also allergic to soy.

Else Nutrition (BABY.V – BABYF.QB) patented baby formula is made from a combination of three plants which constitute 95% of the formula, has a clean label compared to its competitors, is free of antibiotics, gluten, hormones, and GMOs, has a minor ecological footprint, and has no external addition of purified oils.

The company's proprietary formulation has been granted composition patents in 19 countries including the US, Australia, South Africa, Japan, Israel, Eurasia, and New Zealand and has an additional 47 patents pending.

Else Nutrition (BABY.V – BABYF.QB) also just received a favorable regulatory assessment of its toddler formula ingredients from EAS Consulting Group, which conducted a preliminary review of the Else formula in view of U.S. Food and Drug Administration (F.D.A.) requirements.

Major Meat Companies Jumping on the Plant-Based Bandwagon

While companies like Else Nutrition (BABY.V – BABYF.QB) are strictly 100% plant-based, food giants like Maple Leaf Foods and Tyson Foods are moving into new territory in a bid to launch plant-based products to the ever-growing alt-meat market. Strategic investments and M&A activity have heated up in the sector, with $17 billion being invested in U.S. plant-based meat, egg, and dairy companies since 2009, including $13 billion in 2017 and 2018 alone and major corporations like ConAgra Brands, Inc. (NYSE:CAG) are acquiring plant-based companies to round out their alt-meat product offerings.

Canadian consumer packaged meats company Maple Leaf Foods Inc. (TSX:MFI) (OTCMKTS:MLFNF) entered the plant-based market race in 2017 after acquiring Lightlife Foods Holding Inc. and Field Roast Grain Meat Company to serve as a foundation for its meatless protein business. Since being acquired by Maple Leaf, Lightlife has amped up its product portfolio and is now available in over 12,000 retailers across the US, as well as in restaurants like Dave & Busters. Meanwhile, Field Roast Grain Meat partnered with Pizza Pizza to launch the chain's first-ever plant-based pizza. Then in April, Maple Leaf announced its plan to build a $310 million USD plant-based food processing facility in Indiana to double its current production capacity.

Major U.S. meat producer Tyson Foods Inc. (NYSE:TSN), which was an early investor in Beyond Meat, honed in on the plant-based market with the launch of its Raised & Rooted brand in June, offering plant-based nuggets and a blended burger in over 7,000 stores. Then in September, Tyson Foods invested in New Wave Foods to produce plant-based shellfish for food service operators in early 2020.

No End in Sight for Plant-Based Food Adoption

As the global meat sector continues to face unprecedented competition and disruption, investors will likely see more companies like Maple Leaf Foods IncTyson Foods Inc. and ConAgra Brands, Inc. entering the plant-based food market. At the same time, major fast-food chains like McDonald's Corp (NYSE:MCD) will likely continue to add plant-based options to their menus in a bid to capture this growing market.

The dairy sector will also face major changes in the coming months and years, as dairy farms continue to shut their doors due to lackluster sales numbers and as consumers shift to plant-based milks for health reasons. Major companies like Nestle have begun creating products for the $14 billion USD plant-based milk market, but Else Nutrition (BABY.V – BABYF.QB) is already ahead of the game with its toddler formula expected to launch in early 2020 in the U.S. in powder form. The company's infant formula is estimated to reach the market in the next two or three years.

For a free research report on Else Nutrition (TSX-V:BABY) (OTCQB:BABYF) visit microsmallcap.com.

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