Is Nestlé Scaling Back on Plant-Based Products?
- Nestlé has halted production of Vegan KitKat and reduced Sweet Earth offerings.
- The plant-based meat sector is experiencing a downturn after its initial pandemic success.
- Significant brands like Heinz and Pret A Manger have exited critical categories.
- Despite these challenges, the global plant-based market remains valued at $28.38bn.
- The focus moving forward will center on health, clean-label products, and taste innovation.
Nestlé has long been a leader in food and beverage industry trends, particularly in plant-based innovation. From its popular Garden Gourmet line to Coffee Mate Natural Bliss Oat Milk, the Swiss company has actively engaged in the animal-free market, highlighting its enormous potential.
However, recent developments indicate a shift in the market’s dynamics. Evidence shows consumers are increasingly returning to animal-based products, prompting a reevaluation of the plant-based trend that once thrived.
Even though the plant-based sector continues to expand, the slowdown poses risks for major manufacturers like Nestlé, which had poured substantial investments into this sector. The recent discontinuation of Vegan KitKat raises questions about what other reductions might follow.
Global Struggles in Plant-Based Markets
The challenges in this market are underscored by the growing number of plant-based products being removed from shelves.
In 2024, Heinz discontinued its vegan salad cream to align with “changing culinary trends and tastes.” Similarly, vegan protein brand Quorn ceased its chilled bacon slices that same year. A spokesperson from market researchers Euromonitor International stated, “From soaring sales growth during the pandemic, plant-based alternatives – particularly plant-based meat – have slowed, with the largest market (the US) seeing negative growth since 2021. Big-name brands have suffered; some have exited the category altogether.”
This trend extends beyond retail; the service sector is also feeling the impact. British restaurant chain Pret A Manger closed its last Veggie Pret locations last year after a disappointing performance.
Moreover, Lewis Hamilton and Leonardo DiCaprio’s vegan burger brand, Neat Burgers, has shut down after incurring losses of £8m (€9.23m). It is no surprise that a proponent like Nestlé is reevaluating its plant-based strategy
Is Nestlé Exiting the Plant-Based Sector?
Last week’s announcement that Nestlé has stopped global production of its Vegan KitKat adds another layer to this conversation.
This decision follows the removal of Garden Gourmet from UK supermarket shelves in 2023 and comes on the heels of reductions to Sweet Earth’s plant-based offerings, including meat-free chicken strips in the US.
Such changes align with statements from CEO Laurent Freixe, who acknowledged that the company had relied too heavily on plant-based meat, only to discover the market wasn’t as expansive as initially projected, according to Reuters.
Does this imply that Nestlé is exiting the plant-based market entirely? While the company did not respond to requests for comment, it seems unlikely.
Despite a slowdown, the plant-based sector is still highly lucrative.
It currently holds a valuation of $28.38bn (€24.48bn) and is expected to reach $176.90bn by 2032, according to market analysts Data Bridge. This represents an impressive CAGR of 25.70%.
Additionally, Nestlé continues to invest in its Garden Gourmet line in other European markets.
The future will likely see Nestlé and other major food and drink companies adopting a more strategic approach, focusing on specific categories and consumer preferences instead of a broad-based commitment to plant-based products.
“Health is a major factor behind the shift to plant-based diets,” comments a representative from research organization Global Gurus.
However, concerns about ultra-processed methods in plant-based products have turned some consumers away. We anticipate a shift toward clean-label, minimally processed food items.
Moreover, innovations in taste and texture will likely receive increased emphasis as quality becomes paramount in the plant-based sector.
Price Sensitivity in the Plant-Based Sector
However, an increase in quality usually corresponds with a rise in price, which could hinder consumer adoption. Price disparities were among the reasons the Vegan KitKat faced challenges.
For instance, in Germany, regular KitKats could be purchased for as low as €10.18/kg, in contrast to the Vegan version, which was priced at €27.23/kg. In major supermarkets like Rewe, Edeka, and Kaufland, prices for KitKat Vegan ranged between €1.29 and €1.49 per bar, compared to just €0.99 and €1.19 for the regular variant.
“Plant-based’s higher price point has become a bigger problem as food price inflation has gripped countries around the world,” remarks Euromonitor International. “Simply put, paying a premium has become more difficult for consumers.”
What Lies Ahead for the Plant-Based Sector?
Nestlé’s retreat from certain plant-based products highlights a broader industry recalibration; however, a complete exit seems improbable.
The plant-based market is still expected to see robust long-term growth, and major players like Nestlé will likely seek to capitalize on this future potential.
Nevertheless, addressing essential health and cost challenges will be vital for manufacturers across the food and drink industry to fully exploit the growth opportunities in plant-based offerings.
