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Unilever Wants Bigger Bite of Plant-Based Market

11/17/2020 | 07:16pm

By Saabira Chaudhuri

The race to dominate the market for meat and dairy substitutes is heating up with packaged-foods giants launching new products and increasingly investing in alternative sources of protein.

Unilever PLC, owner of Ben & Jerry's ice cream and Hellmann's mayonnaise, this week announced a target to increase its sales of meat-and-dairy alternatives to $1.2 billion over the next five to seven years -- a fivefold increase from current levels.

It plans to sell more vegan and dairy-free versions of its mayo and ice cream and expand the Vegetarian Butcher, its meat-alternatives brand that supplies soy patties and nuggets to Burger King in Europe. It also is exploring algae as a potential source of protein.

Unilever's move is the latest from a consumer-goods company capitalizing on surging demand for products perceived as more climate-friendly and humane. The global market for meat substitutes is forecast to hit $23.81 billion by 2023, a 28% rise over last year's sales, according to Euromonitor. The milk-substitutes market will climb 23% over this period, the research firm estimates.

Unilever already sells vegan mayonnaise in 30 markets, and a pea-protein based vegan Magnum ice cream, which it says have sold well.

Nestle SA in September launched what it said was a plant-based version of a bacon cheeseburger, using yellow pea protein for the patty and plant-based fibers to resemble cheese. It has also started selling an oat-and-pea nondairy version of its Nesquik powdered drink in Europe.

Elsewhere, General Mills Inc. has invested in plant-based alternatives to seafood, while Kellogg Co. recently launched a new line of plant-based burgers, bratwurst and sausages. Danone SA, which owns the Alpro and Silk dairy-substitute brands, said in May it would create a new division dedicated to more than doubling its plant-based sales to the equivalent of almost $6 billion a year by 2025.

The moves mean many of the world's largest food companies are now jockeying with startups like Impossible Foods Inc. and Beyond Meat Inc. for a foothold in a plant-based market that is growing much faster than that for traditional meat. Seeking an edge, companies are searching for protein sources -- beyond existing alternatives like pea, rice mung bran and faba bean -- that can offer lots of nutrients with a low environmental footprint.

Unilever has high hopes for a microalgae called chlorella vulgaris, which it says is rich in nutrients. The problem so far is that chlorella vulgaris tastes bitter because it is high in chlorophyll -- the pigment that gives plants their color -- hindering mainstream adoption. Unilever has invested in a biotech startup, Algenuity, that says it can reduce the chlorophyll content of microalgae without reducing the nutrients.

"It's definitely worth experimenting with given it's such an excellent source of protein in food," Hanneke Faber, head of Unilever's food business, said in an interview. Algae could be used in Unilever's ice cream or soup, she added but said it was too soon to tell.

One concern for companies, including Unilever, is whether consumers will take to these lesser-used protein sources -- what Ms. Faber calls "the yuck factor." She previously worked at Stop & Shop owner Koninklijke Ahold Delhaize NV when the company experimented with using insect protein but says ultimately it didn't take off because consumer acceptance was low. "That's our challenge too," she said.

Another big hurdle for Unilever and others developing meat-and-dairy substitutes are the legal challenges posed by these industries.

Last month, the European Parliament ruled that meatless products can continue to label themselves sausages, steaks or burgers, rejecting a meat-industry backed proposal to disallow this because it is misleading.

Ms. Faber said she was disappointed by a less-favorable ruling saying nondairy products can't use terms like "cheese" or "milk," even as reference points for consumers. "Those things are really important because they are nudges" that encourage consumers to switch over, she said.

Write to Saabira Chaudhuri at saabira.chaudhuri@wsj.com

(END) Dow Jones Newswires

11-17-20 1915ET

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