Consumers across the US and beyond are already well acquainted with plant-based dairy products. From the first commercial soy milk facility in 1917 in New York to Sweden’s Oatly oat milk taking coffee shop culture by storm, consumers worldwide have demonstrated an almost singular openness to experimenting with plant-based substitutes. Now experimentation is beginning to expand beyond the grocery store milk aisle to all aspects of dairy and egg products.
Plant-based dairy and egg products currently under development incorporate a broad range of ingredients, including peas, mung beans, soybeans, chickpeas, almonds, coconut, sunflowers, and sesame, among others. These alternatives are vying to replace traditional cheese, yogurt, ice cream, butter, spreads, and creamers, while a wave of new startups are attempting to produce a substitute for chicken eggs.
This revolution is being driven by an increasing focus on health, animal welfare, and climate change. The recent emergence of zoonotic diseases, such as the Covid-19 pandemic and the African swine fever, have also drawn attention to the growing animal-free food production industry, with plant-based foods taking center stage.
Sales of plant-based dairy spiked 75.3% YoY as US lockdowns began in mid-March 2020, softening to a still-strong 17.2% by mid-November 2020.
Sales of plant-based cheese also saw a 95% YoY spike in mid-March 2020 which remained elevated around 54% YoY over mid-April 2020.
In August 2020, Eat JUST reported plant-based egg sales equivalent to 50 million chicken eggs since launching in April 2019.
Most plant-based dairy startups focus on milk and cheese substitutes while plant-based butter has attracted less activity in part due to consumer aversion to plant-based fats over health concerns. Disruptors attempting to develop plant-based dairy alternatives from new ingredients—beyond a standard set of soy, almond, cashew, coconut and oats—have attracted significantly more funding compared to the rest of the industry.
More than half of the plant-based dairy startups we analyzed have brought a product to market with a few companies reaching the growth stage of business development. The plant-based egg industry, on the other hand, is far less developed with fewer new startups and only a handful successfully bringing a product to market.
The three most-highly funded startups in the plant-based dairy industry have already accumulated more than USD 800 million in total funding, with Perfect Day claiming USD 361.5 million of that figure for itself, followed by Califia Farms at USD 340 million, and Ripple Foods with USD 186.3 million. All three startups have brought their products to market across segments including plant-based milk, cheese, ice cream, and yogurt.
Established plant-based meat companies are also leveraging their expertise to produce plant-based dairy. NotCo launched a plant-based milk product in the US in November 2020, and Impossible Foods announced the development of plant-based milk in October 2020.
Only two plant-based egg startups have launched their products, a leading cause of the lack of funding in the sector. Eat JUST leads the industry with USD 220 million in funding and a widely available “JUST Egg” flagship product that has already sold more than 50 million egg equivalents since its 2019 launch. Eat JUST’s work in developing cell cultured meat is also a significant reason for its industry-leading fundraising efforts, becoming the first global firm to bring a cell cultured meat product to market in Singapore in December 2020.
Perfect Day produces animal-free dairy products using fermentation techniques. The startup uses microflora (microorganisms such as bacteria, yeast or, in this case, fungi) to create the protein blocks of milk-casein and whey via fermentation, which is later combined with fat and water to produce genetically identical substitutes to animal milk. Perfect Day has developed the microflora to produce milk proteins with a similar genetic blueprint corresponding to casein and whey. The startup launched its first product in 2019, a limited line of animal-free ice cream. Perfect Day has also developed animal-free substitutes for cream cheese, feta, and cheese spreads, in addition to milk.
The startup intends to focus on ingredient supply and partnerships with food manufacturers, adapting a business-to-business (B2B) model. In May 2020, Perfect Day announced a collaboration with Smitten Ice Cream to produce and launch an animal-free and dairy-free ice cream, which was later called “N’Ice Cream.” Smitten Ice Cream launched four flavors priced at USD 12 for a 16 oz container, on par with the other animal-free ice cream products. Since its first funding round in December 2019, Perfect Day reported a doubling of production capacity while significantly reducing costs.
Plant-based dairy: The industry is crowded with a number of companies producing plant-based dairy alternatives using soy, almond, coconut, and oats. Most companies have turned to almond milk as the main protein source for their plant-based dairy products, pivoting from the initial industry favorite of soy milk. In recent years oat milk has gained traction in the market due to the similar taste and texture to cow’s milk.
Major consumer packaged goods manufacturers such as Nestlé have moved on to pea-based beverages which have a similar nutritional profile to cow’s milk and are favored by many disruptors in the industry.
Plant-based egg: Plant-based eggs are a relatively new industry compared to plant-based dairy and therefore has fewer incumbents. No company has brought an all-purpose complete plant-based egg substitute to market so far.
Nestlé has a strong presence in the plant-based food industry with a range of products in both the plant-based meat and plant-based dairy industries. In the US, Nestlé’s Haagen Dazs brand debuted its non-dairy line of ice creams produced with soy, almond or cashew milk in 2017. Haagen Dazs is owned by Froneri International, a joint-venture formed between Nestlé and PAI partners (a private equity group based in France) in 2016.
Nestlé-owned, Coffee Mate launched its first vegan creamer line “Natural Bliss” in 2017 with flavors such as Hazelnut Almond Milk, Caramel Almond Milk, and Sweet Crème Coconut Milk. In 2019, the brand expanded the product line by introducing “Half & Half” creamer made from almond milk and coconut cream. Two new flavors are expected to be added to the Natural Bliss line in January 2021. In July 2020, Nestlé launched a plant-based substitute for condensed milk under its Carnation brand. The product labeled “Carnation Vegan” is produced from a blend of oat and rice milk. The product can be used to replace condensed milk when making dairy or caramel-based sweets and desserts. According to Nestlé, its Carnation Vegan mimics the taste, texture, and appearance of condensed milk made from cow's milk. Also in 2020, Nestlé launched its first fully pea-based beverage under the Nesfit brand in Brazil. The company claims the product includes as much protein as cow’s milk per serving, and includes significantly less sugar compared to similar products.
Nestlé further expanded its plant based offerings with the launch of plant-based eggs and shrimp under its plant-based brand Garden Gourmet in 2021. The chicken egg substitute produced in liquid form, made from soy protein; and the plant-based shrimp is made from seaweed, peas and konjac, will initially be available in a limited number of stores in selected European markets.
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