Key Development

Nestlé is scaling back its plant-based food offerings after demand fell short of expectations. The company had invested heavily in the category, launching products like Garden Gourmet meals, oat milk creamers, and the Vegan KitKat to tap into the growing interest in animal-free alternatives. However, shifting consumer preferences and market pressures have prompted a strategic reset.

Market Slows After Pandemic-Driven Surge

Plant-based foods saw a rapid rise during the pandemic, driven by health and sustainability trends. But growth has since slowed, especially in key markets like the U.S. and Europe. Several major brands have responded by scaling down or exiting the space entirely:

• Heinz discontinued its vegan salad cream
• Quorn dropped its vegan bacon
• Pret A Manger shut down its Veggie Pret stores
• Neat Burgers closed after financial losses

Nestlé has followed suit—discontinuing the Vegan KitKat globally, pulling Garden Gourmet from UK shelves, and reducing its Sweet Earth range in the U.S.

Nestlé Refines Plant-Based Strategy Amid Market Challenges

Nestlé’s CEO acknowledged the company had overestimated demand for plant-based meat alternatives. Rather than pursuing further expansion, Nestlé is now adopting a more focused strategy—concentrating on products and regions with consistent demand. The company isn’t exiting the category but is realigning its efforts to better match market realities.

This shift comes as the global plant-based sector faces key challenges that have slowed mainstream adoption:

• Health Concerns: Many consumers perceive plant-based products as overly processed, leading to a preference for cleaner, more natural options.
• High Costs: Plant-based alternatives often come at a premium. In Germany, for example, a Vegan Kit Kat costs nearly three times more per kilo than the regular version. With rising food inflation, affordability has become a significant barrier.

Despite these issues, Nestlé remains confident in the long-term potential of the category. The plant-based market, currently valued at $28 billion, is projected to grow to $176 billion by 2032—underscoring opportunities for smarter, more sustainable innovation.

Future Outlook: Quality Over Quantity

Industry analysts expect the next phase of plant-based innovation to prioritise quality—improving taste, texture, and nutritional value—rather than pushing for product variety. However, enhancing product quality may drive up prices, potentially limiting broader appeal. Nestlé’s recalibration reflects a broader market correction, not a retreat. By focusing on what works, the company aims to build a more sustainable and profitable future in plant-based foods.

Source: Foodtech News