SPOTLIGHT ON BRAZIL Plant-based foods, beverages: 'We're sensing a tremendous business opportunity,' says GFI
While the market is underdeveloped, says São Paulo-based Guadagnini, who joined the GFI in January and is in the early stages of building connections with key stakeholders, the growth trajectory of some players in the space has been pretty meteoric over the past two years, and investors and retailers alike are sensing a “tremendous business opportunity.”
“GFI [a non-profit which supports plant-based brands, proponents of cellular agriculture, and ‘clean’ a.k.a. cultured, meat] is working in Brazil to help companies with product development, funding, and promotion because we strongly believe that this market will grow exponentially in the coming years simply because the consumer demand is so strong – including and especially from non-vegan demographics.”
He adds: “Until 2014, the only option for plant-based cheese in Brazil was basically a powder mixture, and a couple of soy-based alternatives. In 2015, Superbom [a leading supplier of vegan and vegetarian products in Brazil supplying 25,000+ locations] launched vegan cheese made of potatoes [water, potato starch, palm oil, carrot concentrates, apple and pumpkin, salt and cheese aromas] and this product's success really marked a turning point in our market.”
Superbom also makes soy-based canned plant-based meat products (meat balls, Bolognese sauce); egg-free mayo using soybeans, starch, gums and mustard oil, and sells the British plant-based milks (oat, almond, rice) from British brand granoVita.
“In 2016 and 2017, a handful of startups were launched to produce and sell more plant-based products to meet the latent demand for plant-based alternatives,” says Guadagnini. “Now we have several kinds of cheese (including some cashew-based cheeses of excellent quality), milk, yogurts, and more – you can buy soy, rice, coconut, cashew, oat, rice and almond milk.
“There’s also more focus on nutrition because some of the early products were pretty high in carbs.”
Simple, clean labels
As in the US, there is also a new focus on simplicity and clean labels in this market, with cashew nut milk brand A tal da Cashanha making much of its short ingredients list (water, cashew nuts) and non-GMO credentials, while the marketing of such brands is also moving beyond appealing to vegans or people with dairy allergies and focusing more on other attributes, from health to variety.
“Vegan cheese brands like NoMoo cater for vegans, but they don’t just market to vegans," says Guadagnini.
“Companies operating in the plant-based market sector are reporting strong positive growth, and the number of retailers interested in selling these products is increasingly dramatically,” he claims.
“Nowadays it is much easier to find plant-based dairy products not only in major cities, but also smaller cities from São Paulo, Rio de Janeiro, and some other states in Brazil. From here, it’s just a matter of time before these products are prolific in the whole country.”
Right now, owing primarily to high import costs and the challenges of navigating the Brazilian supply chain, most of the successful brands are domestic, he says, but that could change if retailers dealt directly with overseas suppliers.
“We’d like retailers to import directly.”
Labeling conventions in the plant-based dairy market in Brazil
There is an ongoing debate in Brazil – as in the US – as to how best to label plant-based dairy alternatives; should manufacturers use the words ‘milk’ or ‘cheese’ for example?
"ANVISA's [Brazilian equivalent of the FDA] position on this has not been discussed deeply yet, so companies are being treated individually so far," says Gustavo Guadagnini, managing director at the Good Food Institute (GFI), Brazil.
"There are definitions for cheese and milk that include where it comes from... which don't fit to vegan products, but we still don't know for sure if they are going to change the definitions or if they are going to block these names for the plant-based industry.
"Superbom is the biggest [vegan cheese] brand in the market, that's probably why their product attracted attention from ANVISA inspectors and they were forbidden to use the word "queijo" [cheese in Portuguese]. They created the trademark 'vegan cheese' and are selling their products with that name in English.
"Other brands are investing in the idea that 'cheddar,' 'provolone' and others are flavor names and can be used to any kind of product. Novah, for example [which makes a vegan cheese from cashew nuts] uses the word ‘cheddar’ but not ‘cheese’ on its labels... So far I'm not aware of any problems with that strategy, but it's an uncertain scenario until ANVISA really regulates the industry."
According to Euromonitor International, retail sales of 'other milk alternatives' (non-dairy milks excluding soy) in Brazil grew by 59.6% in 2016.
While the market is small, “plant-based meats were being sold in Brazil long before dairy alternatives were, mostly because of the influence of the Adventist church," explains Guadagnini. As consumer interest in plant-based meats has grown outside of that niche, sales have been expanding and new companies are being launched. In fact, companies in the sector are growing at a rate of around 40% per year – and that’s without any major investments and little other support.
“With funding, technology, promotion, and support from organizations such as GFI, we see this market expanding quickly.”
But there’s still a lot of work to do on marketing, packaging and formulation, he observes, noting that soy-based products still dominate (sometimes in combination with wheat gluten, as with frozen meat-free brands Vegabom and Goshen), whereas new developments in the US market are more focused around pea protein.
“There’s a huge need to improve the quality, taste, and price of these products. As my US-based colleagues tell me, plant-based options in Brazil right now look a lot like the ‘dark ages’ of plant-based meat in the US, when most of the options were canned, unappetizing, and expensive.”
Sustainability, safety, animal welfare
So what about clean (a.k.a. cultured) meat, produced by growing animal cells in a growth medium? Does Guadagnini see consumers in Brazil embracing it?
“Yes. Of course,” he says, although as with any consumer market, “it will be necessary to communicate clearly about the benefits and safety of clean meat.
“The meat industry in Brazil also has a dramatic impact on the environment globally. The cattle sector in the Brazilian Amazon is the single largest driver of deforestation in the world. There is a huge opportunity for businesses to be successful while addressing this problem with plant-based and clean meat.
“Considering the positive environmental impact, improvement for animal welfare, and the better quality expected from these products (this meat will be free from contaminants like foot-and-mouth disease and salmonella, which are problems in conventional meat production), there is no reason why Brazilians wouldn't welcome clean meat."
He adds: “After Brazilian media reported on developments in clean poultry by Memphis Meats, there was tremendous positive reception in social media. After becoming informed about clean meat and learning how important this technology is for our future, people were very open minded.
“In fact, the business publication that broke the news about Memphis Meats (EXAME.com) published multiple follow-up articles on the same topic, since its original piece was so popular.
“Especially in light of the recent corruption and sanitation allegations rocking Brazil’s largest meatpacking companies [both JBS and BRF deny all wrongdoing, however], I think people are more open than ever to considering safe and smart new ideas for meat production."
“Companies operating in the plant-based market sector are reporting strong positive growth, and the number of retailers interested in selling these products is increasingly dramatically.”
Gustavo Guadagnini, managing director at the Good Food Institute (GFI), Brazil.
Investment in plant-based meat and dairy
So where do we go from here?
While the Brazilian economy is clearly struggling, this is not necessarily what is holding the plant-based meat and dairy market back, contends Guadagnini.
“There’s a lot of interest in this market, so our focus right now is building connections and helping companies build partnerships with investors such as New Crop Capital [a venture capital fund investing in plant-based and cultured meat, dairy, and egg companies].”