NESTLE ACQUIRES SWEET EARTH-PLANT BASED FOODS FOR VEGANS
Sep. 13, 2017
In response to shifting consumer trends, Nestlé, the largest food company in the world, has secured a significant presence in the plant-based food sector through the acquisition of Sweet Earth - a California-based plant-based food manufacturer- for an undisclosed amount.
"One of Nestlé's strategic priorities is to build out our portfolio of vegetarian and flexitarian choices in line with modern health trends," said Paul Grimwood, Nestle USA chairman and CEO. "With unique and nutritious food for all times of the day, Sweet Earth gives Nestlé a leading position in this emerging space."
Founded in 2011 in Moss Landing, California, by co-founders Kelly and Brian Swette, Sweet Earth has a product portf olio of 48 vegan products including Harmless Ham, Benevolent Bacon, and other frozen meals, burritos, breakfast sandwiches, chilled burgers, and proteins that are sold in more than 10,000 major retail stores.
The acquisition will give Nestlé an immediate channel through which to tap into a consumption shift toward plant-based proteins and a globalization of flavors and ingredients including seitan, legumes, tofu, lentils, chickpeas, and beans.
"In the United States, we're experiencing a consumer shift toward plant-based proteins. In fact, as many as 50 percent of consumers now are seeking more plant-based foods in their diet and 40 percent are open to reducing their traditional meat consumption," said Grimwood.
The Plant-Based Narrative
Alternative protein sources have been increasingly on the radar of consumers, food manufacturers, and investors in recent years. Global protein consumption is expected to climb at a compounded annual growth rate (CAGR) of 1.7 percent, reaching 943 million tons by 2054, according to Lux Research. Over this same time period, alternative protein sources are forecast to command up to a third of the protein market as they fill the void created by slowing growth in meat and seafood production, and demand shifts within the consumer market.
This narrative is not lost on the world's biggest and most iconic food brands, as Nestlé joins ranks with other major mainstream names in securing a foothold from which to capitalize upon the rising popularity of plant-based foods and beverages in Western diets.
In October of last year, Tyson Foods - the company whose very name is synonymous with the meat industry - surprised all when it announced that it would be the first key meat company to invest in a meat alternative startup that is aiming to reduce meat production and consumption with plant-based alternatives - when it announced that it had acquired a five percent stake in California-based plant-based protein company, Beyond Meat.
Although quite small in comparison to Tyson's 2014 acquisition of Hillshire Brands for $7.7 billion, this move by Tyson carries significant weight in what it signaled.
In February of this year, Canadian meat company Maple Leaf Foods followed suit, announcing its acquisition of U.S.-based plant-based protein food manufacturer LightLife Foods Inc. for $140 million.
"Expanding into the fast-growing plant-based proteins market is one of Maple Leaf's strategic growth platforms and supports our commitment to become a leader in sustainability," said Michael McCain, president and CEO of Maple Leaf at the time. "Consumers are increasingly looking to diversify their protein consumption, including plant-based options."
And even more recently, in July of this year, Cargill announced it had entered into a strategic partnership with Delacon - the pioneering global leader in plant-based feed additives - to advance the market presence of natural plant-based animal feed on the global market.
This wave of preference for plant-based proteins by consumers, combined with a deepening knowledge about the food supply chain, has resulted in consumers not only wanting more plant-based proteins in their own diets, but in the diet of the chickens that lay their eggs, and the livestock that are raised for consumption.
The shift has become so prevalent that major CPGs ignore it at their own risk - and acquiring an established, leader in the plant-based space is often a more efficient move in regard to time and cost than developing a new plant-based food platform from the ground-up.
Sweet Earth posted revenue of $25 million last year from the sale of its products through stores such as Whole Foods, Target, Kroger, and Walmart. However, with Nestlé's massive global presence behind the brand, the company is bound to see its presence in the plant-based food segment only strengthen.
"Our products meet the demands of flavor-forward consumers who want more plant-based foods, especially millennials, who want convenient, real food, and flexitarians, who are looking to include more vegetables and plant-based proteins in their diet," said Kelly Swette, Sweet Earth CEO. "Nestlé's acquisition validates what forward-thinking consumers and retailers have been demanding for a while - more wholesome and sustainable choices."
Kelly and Brian Swette will stay on after the closing to run Sweet Earth, which will remain an independent company with support from Nestlé USA's Food Division.