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PLANT BASED FOODSGROWTH OPPORTUNITIES IN RETAIL

OUR PRESENTERS

Jeff Crumpton

Retail Development Manager

SPINS

Kora Lazarski

Strategic Alliance Manager

SPINS

Michele Simon

Executive Director

Plant Based Foods Association

SPINS

TRACKING THE INDUSTRY

Our mission is to increase the presence and accessibility of products that

contribute to a healthier and more vibrant America. We carry out our mission by

providing information, insight, and a common language for the industry with

which to understand and analyze consumer, retail, and broad marketplace

dynamics.

SPINS MISSION

SPINS is the leading provider of retail consumer insights, analytics, and consulting for the Natural, Organic, and Specialty products industries.

We transform raw data into intelligent and actionable business solutions.

• Retail Sales Data & Analytics

• Business Intelligence (BI) Tools

• Research & Advisory

• Consulting Services

• Consumer Insights

• Digital and Mobile Applications

• TrendWatch & Industry News

WHO IS SPINS?

SPINSscan Natural, Specialty Gourmet, Conventional, 52 weeks ending 4/17/16 versus Year Ago

SPINS CROSS-CHANNEL REPORTING

Only SPINS segments each retail channel by Natural, Health & Wellness, and Conventional products to isolate industry

dynamics. We capture the natural & specialty stores where many health & wellness products originate alongside the traditional

supermarkets and mass retailers such as Walmart and Target.

NATURAL SPECIALTY GOURMET CHANNEL CONVENTIONAL MULTI OUTLET

$7.8B Channel Sales

Total Channel Sales+8%

$8.3B Channel Sales $606.5B Channel Sales

Natural Products (NPI)+8%

Specialty/Wellness

Products (HWI)+8%



Specialty/Wellness

Products (HWI)+8%



Specialty/Wellness

Products (HWI)+8%

HOW WE TRACK PRODUCTS – SCIENCE

Retail data is segmented in our Product Library – a database of nearly 2 million UPCs. Every product with a barcode is hand-

coded for an expansive list attributes, allowing for trillions of nuanced trend insights.

95

489

70+

Categoriese.g. Energy Bars, Non Dairy Beverages, Meat

Alternatives, Homeopathy, Herbal Formulas

Subcategoriese.g. Medicinal Teas, Cheese & Alternatives,

Yogurt and Kefir, Functional drinks and

Kombucha

Attributese.g. Functional Ingredient, Gluten Free,

Vegan, Hormone Free, Allergy Free, Paleo,

Sprouted

Certificationse.g. Non GMO Project, NOP Organic, Fair

Trade USA, B Corporation, Whole Green

Council

Health Focuse.g. Blood Sugar, Bone, Joint,

Cardiovascular, Immune, Digestive,

Prenatal, Prostate, Weight

Ingredientse.g. Chia, Fish Oil, Fiber, Plant Sterols,

Vitamin D, Probiotics, DHA Products,

Protein, Glucosamine

7

24

640+

Copyright © 2016 SPINS, LLC. All Rights Reserved.

SPINS

STATE OF THE PLANT BASED

FOODS INDUSTRY


1

3

5

Cheese Alternatives

Meat Alternatives• Refrigerated + Frozen

Meatless Jerky & Snacks

Non-Dairy Beverages• Refrigerated + Shelf Stable

Meat Alternative Dishes Other Dairy & Alternatives

7

Tofu

Vegan Mayonnaise and more…

2

4

6

8

Categories Largely Replacing Meat & Dairy Products in the Diet

State of the Industry

PLANT BASED FOODS PRODUCT CATEGORIES


ABSOLUTE DOLLAR

GROWTH

+$4.6B

+$90M

+$207M

PERCENT

GROWTH

+3.4%

+7.5%

+10.7%

MULO

Specialty

Natural

INNOVATION

CHANNELS

Plant based food product sales topped $4.9B in 2016,

growing 3.4% since prior year.

THE INNOVATION CHANNELS ARE DRIVING THE GROWTH OF PLANT BASED FOODS

Plant Based Foods Growth Drivers

SPINSscan Natural, Specialty Gourmet, Conventional MULO, 52 weeks ending 6/12/16 versus Year Ago


+4.4%

+6.6%

+3.4%

Growth Rate

67%

17%

10%

8%

2%

2%6%

2%3%

83%

$160 M$4.9 B

Dollar Sales Contribution to

Growth

SHELF STABLE NON-DAIRY BEVERAGES

REFRIGERATED NON-DAIRY BEVERAGES

REFRIGERATED MEAT ALTERNATIVE

CHEESE ALTERNATIVES

FROZEN MEAT ALTERNATIVES

TOFU

+2.7%

+8%

+11%

-1.0%

The Refrigerated Non-Dairy Beverages, Shelf Stable Non Dairy Beverages, and Frozen Meat Alternative categories are

driving nearly all plant based food sales.

- 5%

5%

CONTRIBUTION TO SALES AND GROWTH

Plant Based Foods Growth Drivers



Time Description Geography Dollars Dollar % Growth

13Quads End 2016-Jun-12

NON DAIRY BEVERAGES $4,197,623,092.92 2.91%

REFRIGERATED NON-DAIRY BEVERAGES $3,278,479,981.37 4.37%

Total US - MULO $3,149,094,847.31 4.18%

Total US - Natural Channel $71,706,104.24 10.60%

Total US - Spec Gourmet Channel $57,679,029.82 7.30%

SHELF STABLE NON-DAIRY BEVERAGES $919,143,111.55 -1.97%

Total US - MULO $872,475,211.94 -2.00%

Total US - Natural Channel $38,488,564.81 -1.68%

Total US - Spec Gourmet Channel $8,179,334.80 -0.41%

Refrigerated milks dominate the category with no signs of slowing

Shelf stable beverages see declines across all channels

Soy and Rice Milks hardest hit in both RF and SS


Category Insights

NON DAIRY BEVERAGES

New Sources, Technologies, And Formats Of Milk

And Dairy Replacements

• Macadamia and Tigernut milks emerging

• Omega-rich walnut milks and blends

• Vegan + Paleo friendly

• High Pressure Pasteurization (HPP) crossing over

• Prebiotic content claims

• Cold-pressed claims

• Carrageenan free

• Not just for home cooking anymore – RTD sizes popping up

everywhere

NON DAIRY BEVERAGE INNOVATIONS

Copyright © 2016 SPINS, LLC. All Rights Reserved. SPINSscan Natural, Specialty Gourmet, Conventional MULO, 52 weeks ending 6/12/16 versus Year Ago

Dollars Dollar % Growth

FROZEN MEAT ALTERNATIVES $477,164,508.07 2.68%

Total US - MULO $436,335,841.82 1.97%



Natural Channel Driving the Growth

Categories inclusive of meat alternatives all saw positive growth in the last year

Meat only category (meat, poultry, seafood in FR and SS) sales all dropped more than 3x the total

combined category sales volume of all Frozen Meat Alternatives in the US!

Meatless jerkies growing 7x faster rate than animal-based jerkies

Frozen meatballs and refrigerated burger patties taking off

Category Insights

MEAT ALTERNATIVES

Meat Alternative Snacks Making Over Every Store

Aisle

MEAT ALTERNATIVE INNOVATIONS

• Beyond Meat sizzles in the meat locker

• Mushroom-based meat alternatives promote meatless

and animal-based meat blends

• Abalone Mushrooms

• Jackfruit continues to climb

• Mock seafood CPGs continue to launch new fish and

shellfish alternatives – even Kelp Caviar!

• Tofu from hemp


Subcategory Insights


Time Description Geography Dollars Dollar % Growth

13Quads End 2016-Jun-12

CHEESE & CHEESE ALTERNATIVES

Grated & Shredded Cheese Alts.

Packaged Cheese Alts.

Sliced & Individual Cheese Alts.

Spreadable Cheese Alts.

$96,003,532.77 10.98%

Total US - MULO $67,436,248.44 2.81%



• Natural Channel absolute and percent dollar growth surging across other channels

• Cheese Alternatives just burgeoning in Specialty Channel

• Spreadable Cheeses are leading the pack

• Cheese Alternative sales growth is all positive for alternatives and falling or stagnant for same

category counterparts!

CHEESE ALTERNATIVES

A Small Category With Major Growth

CHEESE ALTERNATIVE INNOVATIONS

• Cheese alternative manufacturers expanding into

pasta entrees

• Cottage, Farmers, and Greek Cheeses begin to be

explored

• Major investments like General Mills in Kite Hill

promise this category will see a lot of activity in the

coming years

PROJECT SPECIFICATIONS

Supporting Data Parameters

Plant Based Food Categories:

• Frozen Meat Alternatives

• Refrigerated Meat Alternatives

• Refrigerated Non-Dairy Beverages

• Shelf Stable Non-Dairy Beverages

• Tofu

Plant Based Food Subcategories (Aggregated):

• Grated & Shredded Cheese Alternatives

• Packaged Cheese Alternatives

• Sliced & Individual Cheese Alternatives

• Spreadable Cheese Alternatives

Positioning:

• NPI (Natural Products)

• Not broken out

• Specialty

• Not broken out

• Conventional

• Not broken out

Geography:

• Total U.S.

Channels:

• Natural Channel

• Specialty Gourmet Channel

• Conventional MULO

MULO - Multi Outlet retailers spanning Food, Drug, Mass,

Walmart, Club, Dollar, and Military store.

Product Universe:

• All Items (TPL)

Timeframe:

• Past 52 weeks as of 6/12/16

Deliverables:

• PowerPoint presentation


SPINS CATEGORY ANALYSIS

MEAT ALTERNATIVES


THE CATEGORY REVIEW PROCESS

RETAIL PERSPECTIVE

Retailers use common measures to analyze performance of categories, subcategories, and brands. These measures

are considered to be growth factors, or, indicators of overall performance.

Dollars and Units

• Indicators of topline growth

ARP – Average Retail Price

• Rising ARP can suppress unit growth while growing topline dollar sales

• Declining ARP can suppress dollar growth while growing topline unit sales

TDP – Total Distribution Points

• Measures the depth and breadth of distribution for a given level in the category

hierarchy. This measure will go as low as item level in the data.

Promotional Dollars

• Dollars gained through promotion (trade spending) activities


INNOVATION INCUBATORS

CROSS CHANNEL INSIGHTS

As retailers think about plant based foods, we know that the vast majority of the innovation witnessed in the categories

that we’ve noted today occur within natural focused retailers.

Brands with a high concentration of ethically focused consumers understand that

these natural retailers are essential proving grounds for product innovation and

growth.

These natural retailers are at the beginning of a product lifecycle which will migrate

through various types of retailers and ultimately gain widespread acceptance by the

majority of consumers.

Being able to identify, segment, and analyze these various retailer formats are critical

for emerging brands and items.


MEAT ALTERNATIVES

CATEGORY LEVEL

Frozen and Refrigerated sales in Natural are growing at an even rate

Refrigerated is growing at a faster rate for Specialty and Conventional channels indicating that those

products represent innovation and interest from those consumers.


MEAT ALTERNATIVES

SUBCATEGORY LEVEL

Looking at the Natural Channel only, subcategories such as Refrigerated Meatless Nuggets,

Strips & Cutlets has strong triple digit growth.

Meatless grounds should also be highlighted with growth at 55% vs. YA.


MEAT ALTERNATIVES

PRODUCT TYPE

Coding for the product type attribute provides further clarity into the growth of the

Refrigerated Meatless Nuggets, Strips & Cutlets Category.


MEAT ALTERNATIVES

ANIMAL TYPE

Product attribute coding also unlocks the perceived animal type of each product.


SPINS CATEGORY ANALYSIS

CHEESE ALTERNATIVE

SUBCATEGORIES


CHEESE ALTERNATIVES

SUBCATEGORY

The Cheese Alternative category highlights the migration and innovation of products which start within

Natural retailers and then move through other retail segments

Grated and shredded cheeses were in vanguard of product innovation within this category

Spreadable and Packaged Cheese alternatives are fairly consistent for all (3) channels

Sliced and Individual Cheese Alternatives show stronger growth for Natural retailers emphasize the point that innovation occurs within

this incubator channel for new product development.


CHEESE ALTERNATIVES

PRODUCT TYPE

Nut based cheese alternative products is growing the fastest for specialty retailers supported with a

massive amount of trade spending. Pricing for these products all report double digit increases which

drive up the topline numbers.


CHEESE ALTERNATIVES

PRODUCT FORM

What’s driving growth? The expansion of products beyond the traditional Cheese

Alternative product forms.


CHEESE ALTERNATIVES

FLAVOR

Beyond the standard cheese flavors, notable increases occurring across several flavors.


PLANT BASED FOODS CATEGORY REVIEW

The category review process allows retailers and brands critical insights into areas of growth,

innovation, and decline to determine their strategy in growing the market for plant based foods

across

Departments

Categories & Subcategories

Product Types

Flavors

Forms

RECAP

A big new factor growing this industry:

THE PLANT BASED FOODS ASSOCIATION


CONSUMER TRENDS & INTEREST

CONSUMER TRENDS IN PLANT-BASED EATING

36% of Americans eat at least one vegetarian meal per week

SOURCE: Harris interactive poll, 2015

26% of consumers say they ate less animal meat in the last 12 months

SOURCE: Nutrition Business Journal’s Food Tribes Report

1 in 10 millennials are vegetarian or vegan


CONSUMER TRENDS IN PLANT-BASED EATING

36% of consumers buy plant-based meats

SOURCE: Mintel’s Meat Alternatives Report, June 2013

36% of consumers prefer plant-based milks


60% of millennials consume plant-based meats

SOURCE: Survey conducted by 210 Analytics


35%

23%

13%

12%

11%

8%

Healthy/Health Food

Animal Welfare

Cleaner Ingredients

Weight Loss

Environmental Responsibility

Social Responsibility

SOURCE: Nutrition Business Journal; Special Diets, May 2015

DRIVERS OF CONSUMER INTEREST

Copyright © 2016 SPINS, LLC. All Rights Reserved. SOURCE: Survey conducted by Califia Farms and BerryCart, January 2015

DRIVERS OF CONSUMER INTEREST

67% of consumers choose plant-based milks because they like the taste

65% of consumers choose plant-based milks because it’s healthier than dairy


GROWING

THE INDUSTRY

Why was PBFA formed?

To provide a collective voice in policymaking and to promote a growing industry

To ensure a fair and competitive marketplace for businesses selling plant-based foods intended to replace

animal products such as meats, dairy, and eggs,

by promoting policies and practices that improve conditions in the plant-based foods industry, and educating

consumers about the benefits of plant-based foods.

What is PBFA’s mission?


FOUNDING BOARD MEMBERS

STAFF

Michele Simon, Executive Director

Elizabeth Kucinich, Policy & Partnerships

Noelle Callahan, Member Relations

Offices in San Francisco and Washington, D.C.

WHO LEADS PBFA?


50 VOTING MEMBERS INCLUDING

Packaged food companies

Ingredient suppliers

Restaurant chains

Meal delivery services

WHO ARE PBFA MEMBERS?


THREE PROGRAM AREAS

Consumer Access: increasing opportunities in retail and food service

Policy: leveling the playing field, creating a conducive regulatory environment to meet

the growing consumer demand

Public Relations: media outreach to establish PBFA as the go-to experts and leading

authority on the plant-based foods industry

WHAT DOES PBFA DO?


Education: trends, opportunities, category dynamics, terminology

Visibility: making it easier for consumers to locate within the store, e.g., better signage

Certification: Enable retailers to leverage with consumers and drive differentiation

CONSUMER ACCESS IN RETAIL


Problem: inconsistent words being use to describe products

• “non-dairy cheese”, “American-style”, cheese alternative”,

“cheeze”

• California, “cultured nut product” (Miyoko’s Kitchen)

Solution: Create common industry terms that consumers will understand

Work with federal (and state) agencies to accept these terms and

definitions

PBFA POLICY PRIORITIES

UPDATE LABELING REGULATIONS


Problem: various federal policies favor animal agriculture over plant-based foods

• Subsidies result in artificially low pricing of animal products compared to plant-

based foods, creating a disadvantage in the marketplace for plant-based food

companies

• Federal “check-off programs” create large generic marketing campaigns for beef,

pork, eggs, milk and other dairy foods, creating marketing disadvantages

Solution: Remove these unfair and anti-competitive advantages so that consumers have

equal access to affordable, healthier, and more sustainable plant-based foods.

PBFA POLICY PRIORITIES

CREATE A LEVEL PLAYING FIELD


Dietary Guidelines for Americans – every 5 years – still emphasizes meat & dairy

POLICY PRIORITIES

GIVING VOICE TO OUR INDUSTRY

School meals – ensuring federal program allows for more plant-based options

Ag-gag laws – Submitted “friend of court” brief in constitutional challenge


WHAT ARE OUR BIGGEST CHALLENGES?

Representing a young industry still learning and in flux

Competing with entrenched and politically powerful meat, egg, and dairy industries

Consumer acceptance of unfamiliar foods

CHALLENGES


WHAT ARE OUR BIGGEST OPPORTUNITIES?

Momentum from growing consumer interest

Start-up fever is driving next generation of companies to innovate

Food movement as partners in “meat reduction” strategies

OPPORTUNITIES


WHAT DOES THE FUTURE HOLD?

Working with policymakers and industry partners to grow plant-based

Maturity of industry plus consumer movement will drive political change

More growth opportunities as consumer demand increases

FUTURE


THE PLANT BASED FOOD REVOLUTIONSOWING SEEDS FOR CLIMATE FRIENDLY EATING

Our presentation will be continued at Natural Products Expo East this year!

Join us on:

Thursday, September 22nd

1:30 – 2:45pm ET

FUTURE

http://www.expoeast.com/ee16/public/enter.aspx

THANK YOU!

Michele Simon, JD, MPH510-465-0322

[email protected]

@growplantbased

Kora [email protected]

Jeff [email protected]

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