The Meal Replacement Market

Part
01
of four
Part
01

Impact of Economic Factors on the Meal Replacement Market

While it is still too early for precise statistics concerning consumer purchase behavior for meal replacement products, the information that is available points to an increased demand for meal replacement products as a result of the COVID-19 pandemic. This is demonstrated by news and press reports of increased sales of meal replacement products, the inclusion of these products on COVID-19 shopping list suggestions, and increased demand in related industries.

Signs of Increased Demand

  • In the wake of the COVID-19 outbreak, there has been a significant increase in demand for shelf-stable products, which includes meal replacement products. According to research completed by Nielsen, as reported by Time, Americans have increasingly purchased non-perishable food items, particularly in "health food" categories related to meal replacement products such as alternative milks, powdered milk, and meat alternatives which are up 477%, 245%, and 280% respectively.
  • Additionally, Nielsen reports that sales for dietary supplements have increased 9.7%. Extensive crossover between dietary supplements and meal replacement products may point to an increase in sales for meal replacement products as well.
  • Various news sources such as Food Navigator and Erie County News report that stores have had to limit quantities of meal replacement products allowed to be purchased as a result of the products selling out quickly.
  • According to Food Navigator, industry experts predict that products in the plant-based and healthy food market are likely to remain important shopping staples.
  • Soylent, a key player in the meal replacement industry, reports increased sales and higher demand as a result of COVID-19.
  • In the event of a recession, meal replacement products may still increase in demand, as demonstrated by the growth of the industry since the 2008 recession.

Expert Recommendations

  • Meal replacement mixes and powders are being touted by experts as an easy way to get a complete meal in these uncertain times. The Prepared, a publication that helps others prepare for emergency situations, suggests in their coronavirus guide that meal replacement products are essential.
  • Good Housekeeping has also created a list of what to buy according to experts. Included on this list are protein shakes and meal replacement shakes.
  • News publication The Daily Caller remarks that during the COVID-19 outbreak, consumers are purchasing products as a result of what they learn from social media. Compiling its own list of suggestions, The Daily Caller includes meal-replacement protein products at the top of the list.

Potential Industry Threats

  • Amazon's recent decision to ban shipping of non-essential goods will impact smaller meal replacement brands who rely on Amazon for a large portion of their sales.
  • McKinsey warns of the potential implications and economic impact for companies that produce goods, particularly those whose supply chain includes China. Factory shutdowns have impacted the ability to match the demand with ample supply.
  • Online shopping has increased, and may potentially increase permanently, even after the COVID-19 crisis has passed. Companies who struggle with the supply chain, leading to 'sold-out' products on Amazon, risk negative impacts to the Amazon algorithm.

Research Strategy

A multi-hour search was conducted in order to assess the effects of COVID-19 on the meal replacement product industry. As yet, no quantitative data is publicly available regarding the sales of meal replacement products. In order to determine the current consumer behavior regarding meal replacement products, we have carried out several research strategies. The first strategy was to search consumer research reports and databases for the information regarding the meal replacement industry. We found that a report will eventually be released concerning the impact of COVID-19 on the meal replacement powder market. Following this search, we sifted through the websites and press releases of companies considered to be major players in the meal replacement market to attempt to find data released by companies themselves. Finally, we sought information and news articles which suggested information about the demand for meal replacement products or tangential industries such as dietary supplements and alternative healthy foods. This information has been included in the key findings above.
Part
02
of four
Part
02

Meal Replacement Brands and COVID-19

Two case studies of how meal replacement brands are reacting to the COVID-19 crisis in the US are Garden of Life and Soylent. Although the latter appeared more prepared for the crisis, both brands are providing insights on how to keep safe and stay healthy during this period.

Garden Of Life

  • Garden of Life (GOL) is an American brand selling meal replacements. One way the company is reacting to the COVID-19 in the US is through its DIY campaign. GOL is educating people on how to make sanitizer gel at home and observe high hygiene by washing their hands regularly with soaps too.
  • Reacting to the pandemic, GOL started a program — 'Our Health Talks' in March 2020. The program features David Perlmutter, M.D. and other healthcare experts to lend their voices to the COVID-19 crises. These discussions give rise to a series of conversations, and people get to ask salient questions about the pandemic.
  • The company is also reacting to the pandemic by giving immune-boosting tips to the public. Some tips include ingesting more Vitamin C, reducing stress, ingesting quality probiotic, and getting natural Vitamin D.
  • On March 16, 2020, GOL published a letter to 'friends' via its social media platforms encouraging them to abide by the CDC guidelines to stay safe during this pandemic period.
  • The company is constantly posting live videos and webinars on health talks as a reaction to the pandemic. These videos featured on March 16, 20, 26, 27-28, and another one will feature on March 30. Besides the posting of this visual content, GOL is encouraging people to watch these videos together with friends or groups.
  • The company is using the messaging — 'breakfast of champions' around the COVID-19 crisis. It is also emphasizing certain hashtags (#golambassador, #golsport, #organic, #health, #VitaminC, #hand sanitizers, #germs, and #sanitizer) to spread the awareness of safety, the need for volunteering, fitness, and health.
  • Before the heat of the pandemic, the Facebook page of GOL was relatively quiet with posts, while its Twitter page was engaging. The last two posts of the company before occurred on February 6, 2020, and December 3, 2019.
  • Following the heat of the pandemic, the Facebook page of the company has become active almost every day with posts from March 16. The new frequent posts include the health talks on COVID-19, video ads of its meal replacement, sponsored walkouts, and webinar links.
  • With insights into the flurry of activities on the company's Facebook pages in March, one could safely assume GOL advertised more during the crisis. This is even more so with the free webinar program — "COVID-19 Ask The Experts Summit, where there would be six of the country's top medical experts."

Soylent

  • Soylent reacted to the COVID-19 crisis in the US by appreciating all the healthcare experts and offering them a 25% discount on all purchases from the company between March 18 through April 1, 2020.
  • The CEO of the company also released a statement online to show the efforts and measures they are putting in place to ensure the safety and well-being of everyone during the crisis. Reacting to the COVID-19 crisis in the US, Soylent canceled "all non-essential in-person meetings and travels, and allowed its staff to work from home." It is also providing tips on how to stay healthy during the isolation period.
  • Through its #SoylentForGood program, the company has donated 150,000 bottles of products, during the COVID-19 crisis, directly to food banks in the US. Within this period, it also became "an official partner to Feeding America, the nation's most extensive response to hunger."
  • Outside of donating its products, Soylent has provided 257,297 complete meals in charity within the last few weeks, as it continues to support the works of food emergency responders across the US.
  • The company also creates more awareness of the crisis by providing links to "COVID-19 updates from the CDC, help with planning for emergencies, State of California COVID-19 response, and steps to prevent illness."
  • Since the crisis started, Soylent has also been embarking on an education spree of how its products can become nutritional options for people. On February 26, 2020, the company reduced its price and encourages customers to subscribe for "a meal at $1.50, totaling $52.50 for a full week of nutrition."
  • Messaging of the brand, related to COVID-19, includes "working from home and fueling on Soylent, reliable supply of calories and nutrition, stock up on complete nutrition, and Soylent can help." The company's hashtags during this crisis include #SoylentForGood, #Multitasking, and #WorkFromHome.
  • Soylent is now using a dedicated healthcare email to target medical staff in the US by offering them a 25% discount on products purchased. This is a unique advertising channel to supply healthcare responders during this crisis.
  • Based on the acknowledgment by the company that it is facing higher demands since the start of 2020 and its admission of running out of stocks, it is safe to assume that the marketing budget of the brand has not changed because of the crisis. Besides, there are no significant changes (asides from content) in its marketing campaign across social media platforms and blog posts, before and during the COVID-19 crisis.

Research Strategy

We explored two case studies (Garden Of Life and Soylent) of how meal replacement brands are reacting to the COVID-19 crisis in the US by examining their activities in March (the peak period) and before then. From our findings, we realized that even though Soylent was more prepared for the COVID-19 crisis, it still ran out of stock, eventually. Their social media and blog posts during the crisis show how these brands are reacting within this period. By implication (social distancing), it is through these platforms and other digital communications that they can engage with their customers and the public.
Part
03
of four
Part
03

Meal Replacement Products - Trends

Recent trends that are related to the popularity of meal replacement products in the United States include the steady increase in meal replacement product sales over the last few years and the increasing popularity of meal replacement products among health and fitness enthusiasts. A detailed overview of the research findings and research strategy follows below.

Steady Increase in Meal Replacement Product Sales

  • In the United States, the popularity of meal replacement products has been increasing over the years. This is evident in the sales revenue that companies in the protein and meal replacement supplements market have been registering in the American market.
  • In 2015, the sales value of protein and meal replacement supplements was $2.86 billion. This value increased to $3.05 billion in 2016, $3.37 billion in 2017, and it is expected to increase to $4 billion by the end of 2020.
  • Additionally, the meal replacement product industry has also been experiencing a steady growth over the last 5 years. This growth was estimated to be an average of 2.6% per year between 2015 and 2020.
  • This steady increase in meal replacement product sales and the sustained industry growth points to a steady increase in the popularity of these products within the United States.
  • Examples of companies that are impacted by this trend in the United States includes two of the biggest companies in the meal replacement product manufacturing industry i.e. Abbott Laboratories and Herbalife Nutrition Ltd.

Increased Popularity with Health and Fitness Enthusiast

  • According to Lauren Blake, a Registered Dietitian Nutritionist (RDN) at Ohio State University Wexner Medical Center, the popularity of meal replacement products in the United States is driven by the people "who prioritize healthy eating but don't have the time to prepare ideal meals." Blake notes that this is the reason why these products are becoming a huge trend.
  • From this, it can be concluded that currently, there is an increased popularity of meal replacement products in the United States because consumers are pursuing health and fitness goals and these products are ideal for them because they are nutritionally balanced and require no effort.
  • This is a trend that is related to the popularity of meal replacement products in the United States because the increasing revenue within the industry points to the growing popularity of these products with the core consumer base that is composed of health and fitness enthusiasts.
  • An example of a company in the United States that markets its meal replacement products with messaging that is inclined towards health is Garden of Life while an example of a company that markets its products with fitness messaging is RSP Nutrition.

Research Strategy:

We were able to identify two trends on the popularity of meal replacement products in the United States. These trends were identified by doing an exhaustive search for information in news, health and fitness, statistical, and business news resources that included Reuters, CNN, Mayo Clinic, Shape, IBIS World, and Statista. For the first trend, we had to add the IBIS World sources into a Google Doc because adding them directly to the editor resulted in the website redirecting to its home page instead of to the actual resources that contain the targeted information.
Part
04
of four
Part
04

Growth of the Meal Replacement Market

The meal replacement market in the US grew by 2.6% per year between 2015 and 2020. It is expected to increase by 4.9% in 2020 and continue to grow steadily between 2020-2025.

Growth Insights

  • According to a report published by IBISWorld, the US meal replacement market size grew by 2.6% between 2015 and 2020. It will reach $4 billion in 2020.
  • During this period, the market size of the US meal replacement industry grew faster than both the consumer goods and services sector and the US economy overall.
  • The report, which projected the US meal replacement market from 2005-2025, states that the market size is expected to increase by 4.9% in 2020.
  • According to a report by KBVR research, the global meal replacement market is expected to reach $24.8 billion by 2025, rising at a compound annual growth rate (CAGR) of 6.9% from 2018 to 2025. The North America meal replacement market dominates the global market size and is expected to grow at a CAGR of 6.2 % during the forecast period (2019-2025).
  • According to a report published by Grand View Research, in 2018 the North America meal replacement market occupied the largest market share, at over 45%. The report indicates that the US helps drive demand because of its health-conscious population and increasing rates of obesity, diabetes, cardiovascular diseases, high blood pressure, high cholesterol levels, and other maladies.
  • Key factors that affect the growing meal replacement market in the US are (1) the growing life cycle stage and (2) low revenue volatility. Other factors driving the market include busy lifestyles, rising health consciousness, rapid urbanization, and increasing demand for food convenience. Consumers increasingly seek food products with high nutritional content.

Research Strategy:

In an attempt to find the growth of the US meal replacement market, your research team collected precompiled information. We came across an IBISWorld report that projected the market growth between 2005 to 2025. Although the report had the US meal replacement market size in 2020, the remaining part of the forecast period was under a paywall.
So we decided to triangulate an answer by expanding our scope to North America. We found the market share that the US would have during the 2018 to 2025 period. The reports projected an increase in the growth rate of the market in North America during the forecast period. They showed that the US dominated the market in North America in 2018. Given these insights, we assume that the market will continue to grow during the forecast period. The reports we used came from Grand View Research, Mordor Intelligence, and Mynewsdesk. Although they were also under a paywall, they provided essential insights and could provide more if unlocked.
Sources
Sources

From Part 01
Quotes
  • "Nutrition startups have voiced fears for their businesses after Amazon announced it is prohibiting shipments of any non-essential goods from its warehouses until at least April 5th in an aim to meet spiralling demand caused by COVID-19."
Quotes
  • "Should prolonged social distancing measures generate mass unemployment, premium priced natural and organic products will likely not be top of most people’s shopping lists, while private label sales will likely rise, although packaged foods will continue to benefit overall as consumers stop eating out, predicted firms FoodNavigator-USA spoke to this week."
  • "Interest in healthier products and plant-based trends is likely here to stay, predicted industry sources."
Quotes
  • "In consumer goods, the steep drop in consumer demand will likely mean delayed demand. This has implications for the many consumer companies (and their suppliers) that operate on thin working-capital margins. But demand returns in May–June as concern about the virus diminishes. For most other sectors, the impact is a function primarily of the drop in national and global GDP, rather than a direct impact of changed behaviors. "
  • "For many companies around the world, the most important consideration from the first ten weeks of the COVID-19 outbreak has been the effect on supply chains that begin in or go through China. As a result of the factory shutdowns in China during Q1, many disruptions have been felt across the supply chain, though the full effects are of course still unclear."
Quotes
  • "But during a pandemic, consumers might have had more practical concerns. Oat milk is shelf-stable—which means that consumers can keep it in their homes longer."
  • "Nielsen’s data shows that last week, Americans bought an unusually large amount of non-perishable food, as well as cleaning products, health goods, and lots and lots of toilet paper as they got ready to keep themselves and their homes clean and stocked with food."
Quotes
  • "Pre-made protein-shakes or meal-replacement shakes (in case you get sick and lose your appetite)"
Quotes
  • "This year, due to the outbreak of Covid-19, the needs for hygiene, nutrition and meal replacement grew significantly."
Quotes
  • "If you’d like to mix it up and possibly bulk up during the apocalypse, consider some meal-replacement protein."
Quotes
  • "As you may imagine, our sales have increased since the beginning of the year due to higher demand."
Quotes
  • "You should also consider adding meal replacement mixes and protein powders, because these products last for months in a pantry and can add enough protein, vitamins, and minerals to turn a simple bowl of cereal or oatmeal into a complete meal with most of the essential micro macro- and micro-nutrients. (And if you add oil to the cereal, then you’ve got fat covered, too.)"
Quotes
  • "The Major players profiled in this report include Soylent; Abbott; Nestl? Health Science; Herbalife International of America, Inc.; SlimFast; Blue Diamond Growers; Glanbia plc; General Mills Inc.; Bob's Red Mill Natural Foods; Healthy 'N Fit International Inc..; Kellogg NA Co.; Encore; PepsiCo; PREMIER NUTRITION CORPORATION; Labrada.com; Vega (US); ICONIC Protein; others"
Quotes
  • "Nutritional Meal Replacements (bars, shakes, powders) – limit 2"
  • "Food, cleaning supplies, toilet paper and other staples are sold out or available in limited quantities in many places around Erie County."
From Part 02
Quotes
  • "COVID-19 Ask The Experts Summit, where there woulb be six of the country's top medical experts."
Quotes
  • "all non-essential in-persons meeting and travels, and allowed its staff to work from home."
  • "an official partner to Feeding America, the nation's most extensive response to hunger."
  • "The company also creates more awareness of the crisis by providing links to "COVID-19 updates from the CDC, help with planning for emergencies
, State of California COVID-19 response
, and steps to prevent illness."
  • "a meal at $1.50, totaling $52.50 for a full week of nutrition."
Quotes
  • "working from home and fueling on soylent, reliable supply of calories and nutrition, stock up on complete nutrition, and Soylent can help."