Monterey County, where Moss Landing is situated, is the perfect place for a vegetarian business. Home of the Salinas Valley, the so-called “salad bowl of the world,” it’s one of the most productive agricultural areas on the planet, growing more than 150 crops including lettuce — lots of lettuce. It’s been Sweet Earth’s home for years, well before Nestlé acquired the then 350-person company in 2017. But these days, it’s turning into something else — Nestlé’s Plant-Based Protein Center of Excellence, the beating heart of the massive food company’s recent foray into fake meat.
At the Moss Landing facility, where factory workers crank out the wheat-gluten-based Benevolent Bacon responsible for the scent, changes are afoot. Nestlé is spending more than $5 million to renovate the facility, adding new equipment, more freezer capacity, “meat” smokers and more. Construction is underway, and soon employees will start making a slew of new products, including the Awesome Burger, Nestlé’s answer to the Impossible and Beyond Meat burgers.
The product, currently rolling out to retailers including Fred Meyer, Hy-Vee, Ralphs, Safeway, Stop & Shop and others, is hardly a breakthrough. Like Impossible and Beyond’s version, the plant-based burger is designed to cook, look and taste like real meat. And like Impossible and Beyond Meat’s products, a bite of the Awesome Burger patty, when topped with condiments, lettuce, tomato and onions and served in a moist bun, is a satisfying approximation of a real beef burger.
But the Awesome Burger is a big deal because it marks a turning point for fake meat.
Nestlé is a master of supply chains and a profit machine, unlike its younger competitors.
Big Food launching plant-based products is “literally the best thing that could happen for the sector,” said Bruce Friedrich, executive director of the Good Food Institute, a nonprofit that supports plant-based businesses. “When the biggest food and meat companies in the world are launching plant-based meat products, that will do more to mainstream plant-based meats and to make the pie significantly bigger than probably anything else.”
By partnering with fast-food companies and selling in retail, Impossible and Beyond are making plant-based foods available to many consumers. But “there’s a difference between ‘able to get’ and mainstream,” Friedrich added. “It’s about omnipresence.”
Once all the new products hit shelves, consumers will be able to take their pick — they’ll make choices based on ingredients, taste, nutritional profile and packaging. If the trend develops, it’ll give Big Food a chance to compete in a new and lucrative space. But if plant-based meat proves to be a fad and phases out, it could mean the loss of millions of dollars for big companies who made a bad bet.
But Nestlé thinks plant-based protein is here to stay. And it’s banking on Sweet Earth to put it at the front of the pack.
How vegetables became sexy
It may seem like the plant-based trend came out of nowhere, but vegetarian products have been around for decades.
It took about another 15 years for mainstream eaters to start paying attention.
Several factors led to popular interest in plant-based foods, noted Kara Nielsen, vice president of trends and marketing for CCD Innovation, a food and beverage innovation consultancy. “When we look back and look [at] what were the steps that preceded this, there were quite a few. Including vegetables becoming really sexy and interesting,” Nielsen said.
Suddenly, veganism wasn’t a fringe category dominated by lentils and activists. It was a lifestyle embraced by the powerful and famous — and it was drawing interest from influential, wealthy investors.
As plant-based diets were becoming more popular, other changes were hitting the food sector. Big food companies like Nestlé and Kellogg used to be able to set the tone when it came to food trends, launching new products or line extensions without much competition from upstarts. But the food business has become more fragmented.
To compete, big consumer packaged goods firms have launched their own venture arms and accelerators to help them identify new acquisition targets or give them a view into what people want to eat.
Still, large companies have nearly missed the boat on some new trends, said Nielsen. For example, big brands were slow to launch non-GMO or gluten-free products.
Plus, plant-based products appeal to several demographics: Aging consumers who want to reduce their meat intake for health reasons, Millennials who worry about the warming planet and even younger consumers who may be primarily concerned with animal rights.
And, potentially, there’s lots of money to be made. US retail sales of plant-based foods have grown 11% in the past year, according to a July report from trade group Plant Based Foods Association and the Good Food Institute. Barclays predicts the alternative meat sector could reach about $140 billion in sales over the next decade, capturing about 10% of the global meat industry. Jefferies predicts that by 2040, the alternative meat market could make $240 billion in annual revenue globally.
For companies that want to grow while presenting themselves as pro-health, pro-environment and generally with it, the plant-based trend seems like a slam dunk.
For Nestlé, there were a few possible ways into the meat substitute trend. Last year, it started selling vegetarian meals through Lean Cuisine. In Europe, it has a line of plant-based products under its Garden Gourmet brand. The company could have launched the Awesome Burger under those brands, or cooked something up from scratch.
Instead, it bought Sweet Earth.
The Sweet Earth gambit
Sweet Earth may just seem like a mom and pop operation that was in the right place at the right time — a humble maker of frozen veggie burritos and imitation bacon that lucked out when Nestlé decided to hop on a new trend.
Its offices, with open cubicles and windows that frame the pale California sky or let workers peer into the factory on the main floor, lack Nestlé branding. Sweet Earth’s mascot, a farmer seated in a Lotus-like position, can be spotted throughout the office, in a small painting by the elevator and on a wall-mounted gong. Employees have access to fruit and vegetables from a backyard community garden, and can kick their feet up on a tree stump ottoman in a sun-drenched meeting room.
But as non-corporate as it seems, the operation was launched by a business-savvy couple with years of experience selling big brands.
Kelly and Brian Swette, who started the company in 2011, each have a background in marketing. Both spent years at PepsiCo, Brian as chief marketing officer and Kelly as a brand manager and director of marketing for the Pepsi brand. Brian also was the director of Jamba Juice, sat on the Burger King board, and was a brand manager for Procter & Gamble. Kelly was the global vice president of marketing at Calvin Klein.
The Swettes each had their own reasons for wanting to start a vegetarian meal company. In 2004, the couple’s teen daughter Briana started keeping a vegetarian diet because she was concerned about the environment and animal welfare. Kelly, responsible for the household cooking, looked for quick, easy, appetizing plant-based foods and found the options lacking.
Meanwhile Brian, who helped start Arizona State University’s Global Institute of Sustainability in 2002, noticed that food played too small of a role in the sustainability movement.
Both saw an opportunity.
“We thought there was a marketplace,” Brian noted. “It was pretty clear to me as you’d talk to young people, saw their behaviors and you saw the menus change, that there was a desire for delicious and nutritious food that was plant-based.”
Sweet Earth quickly started getting attention from industry experts. Trade publications handed out accolades, highlighting the company’s frozen burritos, fake bacon and veggie burritos in best-of lists. Kelly Swette, who remains Sweet Earth’s CEO (Brian is president) also started receiving attention — in 2015, Goldman Sachs called her one of the 100 most intriguing entrepreneurs of the year.
“More and more consumers [were] interested in eating plant-based, but in a more familiar way,” Kelly recalled. After the acquisition, with access to Nestlé’s huge R&D capabilities, Sweet Earth was able to speed up development of the Awesome Burger.
That was good news for Nestlé. The Sweet Earth acquisition “gives us a lot of speed to market,” said John Carmichael, president of Nestlé USA’s food division. “They’ve been at this for multiple years now,” he said. The deal “gives both of us a jumpstart on a market that’s maturing as we speak.”
Nestlé’s Awesome Burger started shipping out to grocery stores weeks before the Impossible Burger got to retail for the first time. Kroger’s collection is also reaching shelves this fall. A whole world of choice is opening up to consumers who want to test out — or fully buy into — meat substitutes. It’s a new but already crowded market, and each brand will have to set itself apart.
When my colleagues and I tried the Awesome Burger in Sweet Earth’s test kitchen, it tasted good — but it didn’t taste exactly like meat.
The Awesome Burger is made out of pea protein, coconut oil, wheat gluten and canola oil, among other ingredients. Beyond Meat also lists pea protein, canola oil and coconut oil among its main ingredients. Impossible, on the other hand, uses soy protein, coconut oil and sunflower oil, in addition to other things.
Nutritionally, the Awesome Burger looks a little different. An Awesome Burger has 260 calories, 26 grams of protein, six grams of fiber and 15 grams of fat per each four-ounce serving. An Impossible Burger of the same size has 240 calories, 19 grams of protein, three grams of fiber and 14 grams of fat, and a four-ounce Beyond Meat burger has 250 calories, 20 grams of protein, two grams of fiber and 18 grams of fat.
The Awesome Burger’s relatively high protein and fiber count is by design, said Kelly Swette, noting that those factors could help set it apart from the competition.
That aside, the Awesome Burger looks a lot like the Impossible Burger, down to the branded toothpick stuck into the bun when served to customers (or at least, to us). As the market grows and more meat-like products with cheeky names hit shelves, consumers might mistake one product for the other — or they might reach for brands they’ve been hearing about for years, like Beyond Meat and Impossible.
The space is “superlative-laden, I would say, in terms of the naming,” Brian Swette conceded. But “our intent is to leverage” the Sweet Earth brand, he said. “There will be some marketing and distribution wars that will take place.”
Carmichael thinks that Sweet Earth’s credentials as an established vegetarian food company will also help set it apart from competitors.
Some, like Friedrich of the Good Food Institute, think it’s a mistake to look at the plant-based sector as zero-sum. Entrants into the space won’t steal share from each other, Friedrich said, but help expand the sector.
But that doesn’t mean every brand will do well.
And as the plant-based market heats up, a backlash could be brewing.
“Most consumers are not aware of how these products are actually put together,” said Darren Seifer, food and beverage industry analyst for research group NPD. “Right now it’s about the plant-based part of it. They figure, it’s a plant, and it’s a bunch of plants put together. Beyond that I would say that there’s still some confusion.”
Nestlé itself may face its own challenges.
Plus, allegations of animal cruelty at a Nestlé supplier put the company in the spotlight this year (Nestlé has cut ties with the farm in question, and says it has been working with its dairy suppliers to develop a program supporting improvements, including in animal care).
“In our community, Nestlé has had a bit of pushback,” said Anna Starostinetskaya, senior editor at VegNews, a vegan lifestyle brand with a news website and magazine. “But because Sweet Earth has been a pretty beloved company … some vegans might be attracted to it.”
Kelly Swette said she’s not concerned that Sweet Earth’s association with Nestlé could drive away vegan or vegeterian customers. “Our values and mission are supported by Nestlé,” she said. “Together we are stronger.” Paul Mankowski, head of research and development for Nestlé Foods, said that selling affordable vegan food is “an opportunity to get more plant-based products in consumers’ hands.”
Environmentally conscious consumers may warm to Nestlé because of its efforts in the plant-based space — but they may decide to go with a company they see as less controversial.
Some, perhaps most, customers may not even realize that there’s a connection between Sweet Earth and Nestlé. The Awesome Burger package features Sweet Earth’s name and logo prominently, but doesn’t mention its parent company.
Nestlé says it is committed to the plant-based sector. It says plant-based products are an important, growing part of its business, a trend that’s here to stay. But decades of experience means that Nestlé has seen fads come and go, and knows how to exit when it needs to.
For example, the company is distancing itself from candy, which was for years a key part of its business. Last year it sold off US candy, including Butterfinger, Crunch, Raisinets, Nerds, Laffy Taffy and others to Ferrero in a $2.8 billion deal. “This move allows Nestlé to invest and innovate across a range of categories where we see strong future growth,” Nestlé CEO Mark Schneider said in a statement at the time.
“We’ve lived through trends and we understand how to deal with trends,” noted Mankowski. “We are well-positioned to drive into trends and to pivot when new trends come.”
Brian Swette says he’s not worried about the Awesome Burger or other Sweet Earth products being offloaded by Nestlé. “We’re supervising, along with Nestlé, the formulation of the product, and the making of the product and the distribution of it. I’m very confident on all three aspects,” he said.
“That’s not going to happen to us.”