If you turn off Highway 1 at just the right spot in Moss Landing, California, past fruit stands, roadside cafes and artichoke farms, you may catch a sudden whiff of bacon. It's surprising, because this exit leads to the headquarters of the vegetarian meal company Sweet Earth, where bacon — at least the kind made from pigs — is absolutely not on the menu.
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.
Impossible Foods has been around since 2011, Beyond Meat since 2009. The buzzy startups have been growing rapidly, with orders pouring in from Burger King, Dunkin', Subway and Sodexo, which counts university and corporate cafeterias among its customers.
Like many young companies, Beyond and Impossible have struggled, as well. Impossible faced shortages, reassigning employees from its corporate office to its refrigerated warehouse to help meet demand (the shortages, it says, are over). Beyond had a wildly successful IPO and has since held a secondary offering, but its losses remain steep, and experts fear the inflated stock price may be a sign of a bubble. Impossible is private and doesn't disclose financial information.
Nestlé, on the other hand, is the largest food company in the world, according to Forbes. It has about 140 years on Beyond and Impossible. Its breathtaking scale dwarfs Impossible and Beyond: The Swiss company employs 308,000 people, rakes in tens of billions of dollars in annual sales, has offices in countries around the world and owns a wide variety of well-established brands, including Dreyer's and Häagen-Dazs ice cream, Toll House chocolate chips and cookie dough, Gerber baby food, DiGiorno frozen pizza, Lean Cuisine, Stouffer's and more. Sweet Earth has already benefited from that scale: While under Nestlé's umbrella, it has rolled out frozen pizzas, empanadas and new entrees.
Nestlé is a master of supply chains and a profit machine, unlike its younger competitors.
Its relationships and its broad product platform mean that Nestlé can ensure the Awesome Burger will, in some form or another, be everywhere — in restaurants, on grocery shelves and incorporated into frozen meals. Nestlé is already partnering with McDonald's on vegan patties in Europe — if that relationship extends to the United States, the Awesome Burger could be in the biggest burger chain in America. McDonald's, for its part, has said that it is still deciding whether to serve a meatless (but meatlike) burger in the United States. And through Sweet Earth, Nestlé is also launching a line of plant-based deli meats, including turkey, ham, salami and sausage, this spring. The products will be sold in a dedicated, branded deli counter as well as on shelves.
Nestlé is not the only major food company angling for a piece of the plant-based pie. Kellogg plans to launch a line of meat substitutes called Incogmeato under its Morningstar Farms brand next year. Kroger is introducing its own plant-based products, from burger patties to Bolognese sauce to sour cream, this fall. Hormel Foods, maker of Skippy, Spam and AppleGate, has also introduced a line of plant-based and blended products, as has Tyson, one of the world's biggest meat, pork and poultry processors.
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.
Veggie burgers started hitting grocery shelves about 30 years ago. Gardenburger, which makes burgers primarily out of vegetables and grains, was founded in 1985. Slowly, the market expanded. Dr. Praeger's, which also makes veggie burgers, launched in 1992. Tofurky debuted its holiday roast in 1995.
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.
Things started turning around for vegetables around 2010, according to Nielsen. That year, President Bill Clinton started talking openly about his decision to go (mostly) vegan as a way to manage his health. Plenty, a best-selling vegetarian cookbook that New York Times food writer Mark Bittman called "among the most generous and luxurious nonmeat cookbooks ever produced," hit shelves. Soon, the plant-based diet was luring celebrities like Jay-Z and Beyoncé, who pledged in 2013 to give being vegan a try. Bill Gates, who invested in Beyond Meat, raved about the company in a 2013 blog post.
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.
Young companies can crowdfund to launch products and use online retailers to sell them, reaching an audience quickly and without the use of traditional channels like established grocery stores. The bustling space has also started to attract more funding: Research firm CB Insights found that between 2013 and 2017, the number of investors — including venture capitalists, private equity firms and others — pouring funds into food and beverage startups has more than tripled.
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.
Nestlé, Kellogg, Kroger and the other big companies chasing Impossible and Beyond don't want to be left out of the plant-based trend, which is particularly attractive. As increasingly health-conscious consumers turn away from processed, sugary foods, it fits neatly into the health and wellness space big companies are trying to build out. And it has the added bonus of signaling and supporting sustainability efforts. When Nestlé announced plans to reach net-zero greenhouse gas emissions by 2050, it said it would bring plant-based products to market as part of the effort. Plant-based alternatives to meat use significantly less water and release far fewer emissions than animal 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.
Two years later — right around the time Sweet Earth started thinking about launching a meatless burger that looks and tastes like meat — Nestlé acquired the business. It didn't disclose the financial terms of the deal.
"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.
A four-ounce serving of real ground beef, made of 80% lean meat and 20% fat, has about 290 calories, 19 grams of protein, zero fiber and 23 grams of fat, according to the USDA.
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.
Kara Nielsen pointed to the low-calorie ice cream trend fueled by Halo Top as an example of how the plant-based trend could play out. "Everybody wants to have one, and there's not going to be enough room," she said. "One will be the victor."
And as the plant-based market heats up, a backlash could be brewing.
Customers interested in unprocessed foods, like whole grains, beans and vegetables, may turn away from the product when they realize that, like any other burger, it's prepared in a factory.
"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.
Because it sells bottled water, it's been accused of making money off of precious public resources. Nestlé says it is "committed to continuing to conserve and protect water resources in the areas where we operate" and set up a web page responding to concerns about its water usage in California after activists tried to prevent Nestlé from withdrawing water in the state. The company has also been criticized as a contributor to plastic pollution. In response, it's committed to make all of its packaging recycling or reusable by 2025 and to reduce single-use plastics by testing out reusable packaging and other innovations.
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."
There are some signs that not every market has a voracious appetite for plant-based products. Tim Hortons launched Beyond Meat as a limited menu item across Canada in June, and has since said that it will continue the test just in British Columbia and Ontario because of the "positive guest response." After a limited retail test in the United Kingdom, Nestlé pulled its Garden Gourmet line from shelves in that market, saying that it "was received very positively," and that it's planning to return to the region.
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.