Kraft Heinz and NotCo, its partner in the plant-based space, are not planning to slow the roll out of new products in the category even as some of its competitors scale back their once lofty ambitions.
“We’re not committed to anchoring our efforts in just one unique space,” Lucho Lopez-May, the CEO of The Kraft Heinz Not Company, said in an interview. “We know for a fact that there are spaces where we can continue to deliver on our mission where we’re not playing today.”
Lopez-May said The Kraft Heinz Not Company joint venture possesses two valuable attributes that provide it with multiple growth opportunities and help separate it from its competitors. The first is the valuable brand equity that Kraft Heinz contributes, with several products in its portfolio that have been in home kitchens for decades.
NotCo, which is based in Chile, also contributes a powerful artificial intelligence platform to redesign traditional food products with plant-based ingredients. The technology allows The Kraft Heinz Not Company to replicate dairy, egg and meat offering with a plant-based substitute closer to the real thing, increasing the likelihood that the product will resonate with consumers.
Since establishing their partnership in 2022, Kraft Heinz and NotCo have introduced products that fit into each category: sliced cheese and Mac & Cheese for dairy, mayonnaise for egg and most recently, Oscar Mayer hot dogs and sausages, for meat.
As it looks for new products, Lopez-May said the venture will gauge if there are categories that could benefit from a plant-based product. The Kraft Heinz Not Company then determines whether it has the brands to fill that void; if it can deliver an offering that has the taste consumers demand, especially among those who consume both plant- and animal-based items; and whether it can do it in a cost-effective way to attract a large swath of shoppers.
“We are on a mission to make sure that we replicate that plant-based portfolio and that’s why you see us really penetrating different spaces and making sure that we’re offering to that flexor consumer an alternative across all of their needs,” Lopez-May noted. “That’s why you also see us on a mission to expand our portfolio.”
The push further into plant-based foods by The Kraft Heinz Not Company comes as the sector is mired in a prolonged downturn. Inflation has caused many consumers to leave the pricier space in favor of animal-based items. Questions also have risen over the quality of existing plant-based items and the ingredients used to make them.
Prominent players in the space, including Beyond Meat and Impossible Foods, have cut jobs, discontinued products and scaled back their long-term plans.
In the case of the Oscar Mayer NotHotDogs and NotSausages, the partnership noted that hotdogs and sausages remain “underdeveloped and under-consumed within the broader plant-based meat category, largely due to disappointment in existing offerings’ taste and texture.”
Lopez-May said while consumption of plant-based hotdogs and sausages hovers in the low single digits, the reasons people avoid animal-based items — personal health, environmental impact and animal welfare — are not going away. He noted that the U.S. plant-based market is forecast to more than double to $19 billion by the end of this decade, citing data from Research and Markets.
Consumer demand for the first three products launched by The Kraft Heinz Not Company so far has been “strong,” Lopez-May said. The Oscar Mayer NotHotDogs and NotSausages hit the market in early March.
He would not disclose sales figures but noted that its plant-based cheese slices are gaining distribution and are already the top-selling plant-based cheese where they are sold in the Northeast. Its mayonnaise has the second-highest velocity in the animal substitute category for the condiment where it’s available, and the Mac & Cheese is already the top-selling product in the plant-based category where it’s offered.
“It’s quite an accomplishment to develop product formulations and to scale those up in such a short period of time,” he added.
The Kraft Heinz Not Company is planning additional product launches in 2024, and recently made its first international foray into Canada. Lopez-May declined to provide insight into the next new product to hit the market.
