The cooperation agreement announced this week between fast food giant Kentucky Fried Chicken (KFC) and plant-based meat substitute manufacturer Beyond Meat is no trivial matter. It is true that the agreement involved the sale of new special products such as Nuggets Beyond at only one branch in Virginia, but it constitutes a foothold.
KFC is following in the footsteps of other food chains, which have realized that the demand for vegan meals cannot be ignored even under the roof of a fast food chain that is likely to be considered an enemy of veganism and vegetarianism.
This insight is also shared by leading US meat substitute manufacturers: Beyond Meat manufactures a vegan burger already sold in Israel, and Impossible Foods, which has yet to do business in Israel, became famous after entering a Burger King branch. Burger King reports that it is having trouble supplying the demand for the Impossible Whopper. Also jumping on the bandwagon is the Wendy's chain, which has announced that it plans to launch its own vegan burger.
Beyond Meat's burgers entered Israel seven months ago, and are now being sold nationwide. 60 tons of burgers have been sold to date.
Kaya, which imports Beyond Meat products into Israel, said that it expected to double its sales within a year, according to the burgeoning demand. McDonald's is also taking part in the vegan trend, after developing a vegan burger in Germany in cooperation with Nestle. This product was brought to Israel two months ago, The company does not disclose its sales figures, but reported, "In view of the success of Big Vegan, the chain is expanding the launch of its vegan burger outside the greater Tel Aviv area."
"We're suddenly seeing sales in Karmiel and Nahariya"
Two and half months ago, Israel fast food chain Burger Ranch launched its own vegan burger, 18 months after beginning its development (in cooperation with vegan food manufacturer Teva Deli. Vegan burgers, among them those of Beyond Meat, can also be seen at branches of the SUSU & Sons chain, and chains of the BBB group, which include the Burgerim and Moses brands, have been offering vegan burgers for a long time, including that of Beyond Meat.
The numbers at BBB, for example, speak for themselves. Sales of vegan burgers accounted for 3% of all of the group's hamburger sales in 2018, and this proportion has leaped to 7.5% in 2019. Furthermore, BBB co-owner and CEO Ahuva Turgeman told "Globes," "While most vegan burger sales used to be in branches in central Israel, with an emphasis on Tel Aviv, we are now suddenly seeing sales in Karmiel and Nahariya. This is something that didn't exist 4-5 years ago."
The increase in sales is also appearing in other areas. "This is not public relations or a marketing fig leaf; it's long-term strategic thinking," says food journalist Ori Shavit, author of the "Vegans on Top" blog. "These huge chains, whose market and marketing research capabilities no one doubts, are zeroing in on today's fastest growing target audience - people looking for a healthier, more ecological, and more moral alternative to fast food that is fast, cheap, and accessible.
"These people are not necessarily passionate vegans; they are groups like vegetarians or flextitarians who are reducing their consumption of animal products. This is an enormous category. Surveys in Israel estimate that 35% of consumers define themselves as flexitarians, compared with 5% vegans."
Turgeman comments, "As a chain of 95 branches, you have to provide a response to a variety of groups. There will always be a vegetarian or a vegan in a family coming for a meal. If we don't have something for him or her, the entire family will stay away, and that's significant. In the past six months, we have felt the trend picking up steam: 70% of sales in the Burgerim chain are takeaway, and every second order contains a vegetarian dish. A lot of young people go to Moses and BBB, and they also order vegetarian or vegan burgers. This didn't use to happen."
The demand for vegetarian and vegan dishes went beyond a passing trend a long time ago, and it is getting stronger. A survey conducted among 1,700 consumers in the US found that 50% of consumers eat vegetarian or vegan dishes at least once a month. The survey reveals an equally interesting figure: 27% of consumers believe that restaurants are failing to provide a satisfactory and tasty selection of dishes.
The survey was conducted by Technomic, which deals in consumer trends. The motives of consumers for eating vegan or vegetarian food are not necessarily ideological; meat eaters are also looking for healthier and more diverse food alternatives.
Another study published last week by the NPD research group in the US found that meat eaters accounted for 216 million of the 286 million vegetarian burgers sold in fast food chains last year - 95% of total sales.
The volume of sales in the vegan segment in hamburger chains is 10% higher than in the preceding year. Meat hamburgers clearly still account for an absolute majority of the hamburgers sold in the chains, but according to the study, the volume of sales in the segment is no greater than in the preceding year. The study concludes that sales of vegan and vegetarian products are being spearheaded by meat eaters looking for alternatives.
"Consumers are willing to pay for something that healthy"
Consumers are responding in spite of the high price of Beyond Meat's burgers. To illustrate the point, on the menu of the Moses chain in Israel, a Beyond Meat burger costs NIS 69, the same price as for the chain's special hamburgers and more expensive than the NIS 56 price of the regular 200-gram hamburger. "Consumers are willing to pay for something that's healthy," Turgeman says. "Beyond Meat's burgers are more expensive than even the hamburgers we make every day from fresh meat. It doesn't deter people."
"Awareness and demand are on the rise, and it's clear to me that it's not a passing trend. What I can definitely state is that Beyond Meat will have many competitors. Suppliers are knocking on our doors trying to offer vegan burgers prepared from all sorts of vegetables and legumes, and even from a printed molecule," Turgeman adds.
Burger Ranch VP marketing Moshe Ephraim explains that the idea of adding a vegan burger to the menu, a process that takes 18 months to complete, came in response to demand. In the relatively short time that the vegan burger has been on the menu, sales have grown, he says. "Every summer sales increase 5-10%. The rate of increase this summer was higher, and we attribute it to vegan burger sales.
"Vegan burgers already account for 5% of total hamburger sales, and that's pretty substantial. We have unquestionably reached a segment to which were not previously relevant," Ephraim says. Burger Ranch has 57 branches, and 25% of its sales are deliveries. "In deliveries, we have a direct connection with the customers," Ephraim says. "There, we discovered that at least 25% of the people ordering vegan were meat eaters. Some of them are ordering for people who are vegans, and also order it for themselves. Others are simply tired of meat."
Yossi Yakobovitch, co-owner of vegan food marketer Mendi Tivonut, says, "All of the big players realize that this is a growth engine, and that the vegan community is a market segment that can no longer be ignored… With all of the desire to provide a response for vegans and offer healthier food, keep in mind that all of these chains are businesses seeking to make a profit. The increased presence of vegetarian dishes proves that they are achieving their goal, although I really don't see hardcore vegans buying from chains that sell mostly meat."
The business potential can be seen in the cautious and calculated progress by chains that sell meat. Shavit says that McDonald's first offered vegetable burgers in its branches in Sweden, and went on from there to Germany and Israel. Burger King tested the readiness for the measure in a few isolated branches in Chicago. Within a month, after seeing success and a 30% jump in sales, Burger King expanded the measure to all of its US branches. Shavit comments, "The success and the huge investment in these actions speak for themselves. When you look at global economic trends, such as the skyrocketing price of Beyond Meat's share (a 40% gain in June when the company published its reports, M.R.-C.), there is no doubt about which way the global food market is headed. The food chains are aware of it, and don't want to be left behind.
"At this stage, they are expanding what is offered in their menus. With time, they will consider the weight they want to give to it in order to maximize profits. The meat companies also know that it will be easier, more efficient, and cheaper for them to manufacture vegetarian burgers than to raise cattle for meat. Many of them are therefore now investing in ventures for developing vegetarian food, or cultured meat."
To this should be added the bad public relations acquired by red meat, which is being blamed for the fires that raged last week in the Amazon forests in Brazil. The fire began with approval for cutting down some of the forests, the green lung of the world, in order to expand the grazing area for raising cows for beef. In addition to the international chains with their thousands of branches around the world, independent local vegetarian and vegan restaurants are operating throughout the world, and their number is increasing. It is interesting that the tourist industry is calling Tel Aviv the vegan capital, and there is a good reason for that.
"Globes": Do the independent restaurants account for most of the activity, or are the chains taking away their market share?
Yakobovitch: "Chains like McDonald's and KFC have big budgets for marketing campaigns on a much larger scale than an independent restaurant, and that also affects sales volume."
Shavit adds, "Since the flextitarians are the largest target group for vegan products, and because most vegans also eat at restaurants that are friendly to vegans that still keep vegetarian products, the vegan restaurant segment was never the main segment in this market."
"The vegan restaurants are important, but it's clear that most people are being exposed to vegan options in restaurants that aren't completely vegan. Making this accessible enables everyone to satisfy his or her curiosity, try things out, and taste vegan dishes, even when they go to a 'regular' restaurant. This experimentation, which is positive in most cases, is the growth engine and success of these dishes among large groups.
"When Beyond Meat began doing business in Israel, it was first sold at a few vegan restaurants. The vegans crowded into these places and increased awareness and discourse on the social networks. The mainly meat chains very quickly adopted the vegan burger, and made it far more accessible to the general public," Shavit explained.
Published by Globes, Israel business news - en.globes.co.il - on August 28, 2019
© Copyright of Globes Publisher Itonut (1983) Ltd. 2019