At the consumer level, plant-based food (all food primarily derived from plants) can significantly reduce a consumer’s carbon footprint.

The climate crisis is real and is the biggest environmental threat to humankind. Climate change is impacting ecosystems, agriculture, human health, and water supplies.

While consumers are becoming more environment-conscious, regulators are playing their part, compelling companies to emphasize sustainability.

Plant-based food can have a positive impact on the environment

Plant-based food—including dairy alternatives and meat substitutes—typically has a lower carbon footprint than traditional animal-based food. Research from the University of Oxford found that people who have a plant-based diet account for 75% less greenhouse gas emissions than those who eat over 3.5 ounces of meat per day. The research says that a vegan diet can significantly reduce harm to land, water, and biodiversity, thereby positively impacting the environment.

An emphasis on health and wellness will be the key driver for the growth of the plant-based food market. The Covid-19 pandemic also accelerated consumer interest in health and wellness, resulting in a greater demand for plant-based food.

According to GlobalData’s Market Analyzer, both dairy alternatives and meat substitutes increased in value during 2018 and 2022, recording a compound annual growth rate (CAGR) of 5.1% and 11.7%, respectively. This growth can be attributed to the emergence of ‘flexitarian’ consumers (those who eat mostly vegetarian or vegan diets but occasionally eat meat and poultry) along with an increase in the number of vegetarians and vegans. GlobalData expects dairy alternatives and meat substitutes to continue to grow in demand over the next five years.

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Changing dietary preferences will drive demand

Globally, the food industry has a massive impact on the planet. It emits about one-third of all greenhouse gas emissions, heavily contributing to global warming. The current food system also uses 70% of all the planet’s freshwater for agriculture but is responsible for only 17% of humanity’s food supply. Emphasizing sustainable dietary choices will help reduce carbon emissions. However, using the singular approach of plant-based diets will not help in reducing carbon footprints. Factors such as sustainable farming practices, reduced food wastage, and renewable energy sources are also critical.

Over half (58%) of global consumers deem plant-based food as “essential” or “nice to have” when making purchasing decisions, according to a GlobalData survey. The study found that consumers aged 25 to 34 are the most interested in plant-based items when making a purchase, although the proportion of consumers from all age groups is relatively high. This suggests that demand is not dependent on age.

Meanwhile, according to the National Institute of Diabetes and Digestive and Kidney Diseases (NIDDK), an average of 68% of the global population are lactose intolerant. This presents a lucrative opportunity for dairy alternative brands.

Environmental consciousness will boost the market

Increasing consumer interest in sustainable food products will bring food’s environmental impact to the fore. Shifting consumer attitudes towards saving the planet is already fuelling dairy alternative and meat substitute companies to invest in sustainable products and packaging. In particular, Nestlé is investing in sustainable packaging solutions to create plastic-free and recycled alternatives alongside its plant-based products.

Consumer sentiments along with government mandates are forcing companies to shift from a voluntary regime to a mandatory one. For instance, in January 2023, Taiwan passed a climate bill mandating the promotion of low-carbon diets including plant-based food. Likewise, India has mandated traceability within the value chain to help companies producing vegan products gain regulatory approval. More regulations will come into light, as environment-conscious consumers explore sustainable products from brands that combat climate change.