Keeping the faith : Why Nongshim, Oatly, CP Foods and more still believe in sector’s APAC's plant-based potential

Over the past two years, it has become painfully obvious that the enthusiasm for plant-based innovations and especially plant-based meat alternatives have significantly dimmed compared to the pandemic period.

According to GlobalData Key Accounts Director for ASEAN, Australia and New Zealand Tim Hill, the number of product launches, patents and deals in this area decreased by up to 50% year-on-year in 2023 versus 2022 numbers.

“It was previously thought that as economic growth and affluence increased, so would the plant-based sector growth – but in the past few years we have seen that even as the number of middle-income earners and affluence grew, the growth of the plant-based sector has been lower than expected,”​ he told FoodNavigator-Asia​.

“The primary factors behind this particularly in South East Asia have been shown to be the taste of these products as well as the high cost – the lack of affordability is very apparent as we have found that middle-income earners were in fact the demographic that cut the most spend on plant-based meat in the past year.”​

That said, there are still players in the industry that believe the ASEAN region is one of the best potential plant-based markets, as long as certain characteristics such as convenience and health are met.

“We believe that plant-based foods are the future of the food sector driven by multiple factors from climate to welfare to animal ethics, and that the reason it is currently slow is due to multiple general issues such as the economic crises, wars and so on,” ​Nongshim Taekyung Marketing Team Manager Seunghyun Lee told us.

“The important thing to remember is what consumers in Asia want, and two of the main characteristics to meet are those of health and convenience – which is why Nongshim Taekyung launched our Veggie Garden plant-based brand with various products such as the ready-to-heat bulgogi balls and other ready-to-eat options as well.​

“Veggie Garden is doing well in South Korea based on these factors, and we strongly believe that this can be expanded to the rest of Asia and particularly South East Asia as the demands and needs are generally similar.”​

The plant-based milk is still projected to see growth over the next few eyars (See Image), and within this oat milk has gained some of the most significant traction in the region, with Oatly more or less leading the charge in markets like China.

“Oatly entered the China market six years back and we have seen the category evolve significantly from being a little-known new protein to a very common and well-integrated plant-based dairy drink in Chinese society,”​ Oatly Greater China President David Zhang said.

“The thing about Oatly in China is that we are not looking at this as a separate dairy alternative, but as a beverage to meet more types of different consumption occasions so not only as a retail product in Ole and Hema supermarkets but also making it a common choice on the menus of well-known chains from Starbucks to KFC.​

“What we have learned is that it is not possible to rely solely on the messaging of being a plant-based, sustainable dairy alternative here in this market – what is important here is to communicate with consumers effectively and project creativity and fun in our products, as only then will we be able to bring new proteins such as oat milk to more consumers.”​

Estonian oat milk brand YOOK also views Asia as an important market for its expansion, and believes that placing an emphasis on clean production channels and pure, high-quality ingredients is the way to establish itself in the region.

"Estonian food is in general known to be some of the purest in the world, and YOOK is not only made in Estonia but also uses only organic oat flakes to make our oat drink so the purity and mouthfeel is undeniable,"​ YOOK Production CEO Katre Kovask told us.

"We also see that one of the driving factors for consumers switching away from dairy milk is allergies, and common food allergens tend to include not only lactose but also nuts, which is why we have decided at this stage that we will solely focus on oat drink production alone.​

"This will give consumers an oat drink that is not only high in purity but also absolutely safe from contamination from any of the usual allergens, so they can have peace of mind that they are consuming a cleanly made product."​

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One of the main markets in APAC that has continued to see comparatively strong plant-based interest is Australia, and experts here believe that this trend is likely to continue for the foreseeable future.

“In Australia plant-based interest remains strong,”​ Australia Institute of Food Science and Technology (AIFST) CEO Fiona Fleming told us.

“There is growing consumer adoption of vegetarian or ‘flexitarian’ diets and newer solutions such as alternative proteins - The future of these will depend on the strength of consumer demand for environmentally sustainable alternatives, the willingness to try new things and how those attitudes vary across regions and cultures. ​

“We are also seeing that plant-based, cell-cultured foods and genetically modified foods are attractive to Gen Alpha [consumers], who tend to buy on ethical and sustainable grounds. ​

“For this consumer group, I believe trust will be the most important purchasing driver [and the food industry will need to focus on] building consumer trust to draw them in.”​

Challenges and doubts​

Although the positivity looks to remain strong amongst these industry players, the challenges currently facing the plant-based sector cannot be denied, and there are companies such as Thailand’s CP Foods - with its plant-based brand Meat Zero - which have decided it would be best to take a step back to re-evaluate their strategy in this area.

“Plant-based innovations are still very important to CP Foods, and even though for the past few years the excitement in this sector has decreased after it did not perform as expected, it still goes to show that consumers have a healthy concern about food security and the environment,”​ CP Foods Head of International Trade Business Ekpiya Ua-wutthikrek told us.

“This ties back in with our sustainability focus and as such we are still working on introducing more plant-based product innovations, but have come to realise that it is best for us to really work on enhancing the appeal of the products to make sure they are what consumers really want, and this means going back to the drawing board and R&D for these.​

“We are also aware that as a big food company, we need to ensure that we are making products that are accessible to consumers at all levels of the pyramid from standard to super premium, and this is a principle that we will apply to all of our protein innovation.”​

This was echoed by CP Foods Director for Open Innovation Peemdej Utsahajit, who emphasised that product improvement is the only way forward for the plant-based sector to reach its next phase of growth.

“We tried the novelty factor and it didn’t work for long as the products did not impress flexitarians let alone staunch meat eaters,”​ he said.

“Now it has been proven that we need more than just launching many products into the market to make this industry work, so no matter how many new plant-based varieties are launched in Asia, nothing is going to change until we find the way to really improve on the product format.​

“The only solution is for manufacturers to knuckle down and find the required R&D and technology needed to push this industry forward.”​

Singapore-based Jungle Kitchen also highlighted that many current consumer concerns revolve around the use of artificial ingredients and over-processing.

“Some of the major countries that have seen rapid growth in plant-based products include China, India, and South East Asia, where regional adaptations such as plant-based dumplings in China or jackfruit products in Sri Lanka have gained traction,”​ Jungle Kitchen Co-Founder Surekha Yadav told us.

“[However], consumers are increasingly questioning whether highly engineered plant-based products are as natural or beneficial as they first seemed,” ​

“Concerns about artificial ingredients, additives, and industrialized production processes are leading people to seek more whole-food-based options.​

“There has been some discussion about a slowdown in the plant-based sector in parts of Asia, due to economic pressures on consumer spending leading some to prioritize affordability over niche products; or high competition where an influx of plant-based products has created a saturated market in certain regions.​

“Despite these challenges, I don’t see a complete slowdown - Instead, the market is becoming more discerning, [so] at Jungle Kitchen, we focus on differentiation [and have] seen success by leaning into our roots and offering products like Jungle Jack mince, which align with regional ingredients rather than mimicking Western plant-based products.”​

Long-time food industry consultant and Monash University Professor Paul Wood highlighted that alternative protein sectors such as plant-based and cultivated meats need to take a long hard look at product costs and affordability if these really want to make the desired impacts on food security and sustainability.

“Many major alternative protein discussions highlight climate change, sustainability, and food security as major drivers to change to a diet with less conventional animal protein, so that by 2050 when the world population is expected to hit 10 billion the food system can still sustain everyone,”​ he told us.

“But what the majority of alternative protein companies are doing now is looking at solutions for developed markets such as Singapore or the United States instead of places which really need this nutrition such as Africa or other parts of Asia - premium products are being developed for premium markets at premium prices, but consumers who really need this nutrition are unable to access such expensive items so have no need for it.​

“Right now, this concept is really doing nothing for this demographic who is the most in need, and although many firms are highlighting that they are looking at the developed markets as ‘test markets’, really how long can this testing go on? Beyond Meat for example was one of the industry pioneers and reported a loss of millions earlier this year.​

“So if the alternative protein industry continues down the route it is on, it is not going to be the magical solution that will save the world, but more of a niche sector for consumers with the money to indulge in it.”​

Taking a different route​

Other firms believe that the future for plant-based in Asia is likely to lie in a different direction from being alternatives to dairy or animal protein.

“We do have plant-based meat and seafood alternatives made from coconut such as plant-based calamari and chicken, but what we see as having the greatest potential is the area of plant-based ready meals,”​ Thai Coconut Strategic Marketing Manager Sirikanya Pushpavesa told us.

“Examples of our plant-based ready meals are the use of coconut milk to make yellow, green or red curries to be sold with rice; or prepackaged coconut chicken satay, and this ready meal concept ensures that consumers can get the entire meal experience at a reasonable pricing.​

“This is a market that is still growing for us, and we know it will take time, but we believe it has more significant potential than simply focusing on coconuts as a plant-based dairy or meat alternative.”​

But although no singular solution appears to have arrived yet, there is a lot to be said for plant-based products that are able to get the taste, cost and health factors correct and the immense market potential awaiting these.

“The truth is that Asian consumers have much higher positivity towards the ‘vegan’ concept than even North American consumers, and markets like Indonesia and Vietnam have much higher trust in big multinational brands that are promoting products as ethical or environmentally friendly,”​ Hill added.

“Asian consumers are also very keen to try new flavours as soon as possible and experiment with different cuisines, in addition to having far less aversion to alternative dairy products as soy milk has been around for a long time.​

“So [once the plant-based base is right] and manufacturers can correctly leverage local cuisine and heritage to develop the right foods or beverages that resonate with local consumers, the potential for growth is really immense.”​

Utsahajit added that it is crucial to properly highlight the real advantages of plant-based foods and beverages, so as to eradicate negative consumer perceptions.

“Plant-based ingredients are fundamentally on their own healthier than animal protein when compared head-to-head, but the issue is that most products on the market are processed in conventionally unhealthy ways such as being deep fried, which is not helping the perception,”​ he said.

“We need to improve the product formats to healthier ones such as grilled or steamed products, and this would be a quick way to remove the category’s association with being unhealthy fast foods.”​