In-house brands take on Beyond Meat with R&D and lower prices
Big grocers in the US are creating their own meatless meats as demand is expected to triple again in 2020
Chicago — Cashing in on rising demand for imitation meat, major retailers, including Kroger and Walmart, recently began to carry Beyond Meat’s plant-based burgers and sausages.
Now, several stores are creating similar products that will compete with Beyond Meat.
On Wednesday, Kroger, the biggest US grocer, rolled out its own line of plant-based imitation meat burgers nationwide under its Simple Truth in-house brand. The retailer said its pea protein-based products would be sold at “more affordable prices” than competing brand-name imitation meat.
A Kroger spokesperson said a two-patty pack would sell at about $4.99 to loyalty card-holding customers.
German-owned discount supermarket Aldi US, which sells Meatless Meatballs and Chickenless Patties, said it keeps its plant-based meat products at prices ranging from $3 to $4.
In comparison, a package of two Beyond Burgers sells for about $5.99 at some major big-box stores.
Aldi, which plans to launch more products this year and is testing a meatless breakfast sausage, told Reuters that sales of its store-brand plant-based meats were up 300% last year.
“It wouldn’t surprise me if it was up 300% again this year,” Scott Patton, who co-heads corporate buying at Aldi, said. “If a customer is going to purchase a competitor’s plant-based product versus an Aldi one, ours will be significantly cheaper.”
For years, major retailers including Target and Walmart have invested in their in-house brands, lining up contract manufacturers to produce private-label food ranging from macaroni and cheese to ice cream.
As a result, companies, including Kraft Heinz, have reported multi-quarter sales losses as they lose share to private-label brands. Grocers typically do not give own-brand products better shelf-space, preferring to compete with lower prices.
Albertsons, whose grocery store chains include Safeway and Jewel-Osco, told Reuters that it prices its imitation meat at 50c to $1 cheaper than products sold by Beyond Meat or Maple Leaf Foods’ Lightlife — another big plant-based meat maker.
Private-label brands will need to sell plant-based products at a net wholesale cost that is about $1.25 lower than Beyond Meat and other rivals, private label consultant Jim Wisner of Wisner Marketing Group said. “Product, of course, needs to be equally good or better.”
Give peas a chance
Vegan burgers made from beans and other ingredients have been around for decades, but Beyond Meat said its 10-year investment in making peas taste like meat won’t be easy for grocers to replicate. The company’s proprietary food technology helped it list in a splashy initial public offering (IPO) — Beyond Meat is now valued at about $5bn, with its share price having more than tripled from the IPO.
“You can put something in the shape of a patty and put it on a shelf where we are, but the barriers to entry are low and the barriers to success are high,” Beyond Meat chair Seth Goldman told Reuters in a recent interview. The company said it has rebuffed approaches by several US grocers to create plant-based meat sold under their private-label banners. “We’ve seen several retailers launch plant-based burgers that were private label and they just weren’t ready.”
A Kroger spokesperson said the company’s own-brand plant-based meat was developed by an in-house R&D team and produced by a third-party. “Really, the pivot-point for the whole industry was the Beyond Meat IPO,” said Danny Goodman from Don Lee Farms, a food maker that has supplied a variety of products to top US retailers over the years, including Kroger, Whole Foods and Albertsons. “I think it made a lot of companies sit up and put more resources into working on my plant-based line.”
Kroger shares were unchanged at $28.59 in pre-market trading.