Elysabeth Alfano Q&A: Mindset Shift Needed

Elysabeth Alfano is CEO of VegTech Invest, advising the Plant-based Innovation ETF (EATV), Founder of Plant Powered Consulting and Host of Plantbased Business Hour. NCFIL spoke with her about her perspective on the plant-based food industry. 

NCFIL: What’s your perspective on the national state of the plant-based food manufacturing sector over the past five years? 

Elysabeth Alfano (EA): From a national production standpoint, infrastructure is the elephant in the room. It’s not sexy for venture capitalists to invest in infrastructure, but that mindset needs to change. Entrepreneurs cannot scale if they don’t have infrastructure. What’s problematic is investors do not see immediate returns investing in infrastructure, and they may not get that unicorn payback. However, if they don’t invest in the nonsexy, they are not going to have an industry.

We need an investor mindset shift: they must accept that part of the investment model in an emerging sector is building out infrastructure. Even with record production, an enormous gap in what is available to producers still exists. This does require specific knowledge (in short supply) and requires specific machinery. If we had been more judicious about infrastructure, we could have handled COVID better, resulting in having more people trying plant-based foods and more converters as we moved into 2021, 2022 and 2023. 

Co-manufacturing remains a big concern. Producers frequently tell me they will go under if they cannot secure co-manufacturing. 2022 saw many co-manufacturers with continuing labor issues, so they cut smaller clients, often plant-based food clients. Therefore, many brands lost their co-man and could not make their product. Although in high demand, lofty capital costs make it difficult to build a plant-based co-manufacturing plant. 

NCFIL: What positive things do you see happening in the plant-based food space now? 

EA: There are lots of positives. I’m excited about the work CEO and Co-Founder Mark Warner is doing with Liberation Labs. The company’s mission is “to commercialize precision fermentation manufacturing with scalable, cost-effective, and purpose-built facilities for industrial biotech.”

Globally, I see some willingness in the Middle East to spend on plant-based foods since food security is more pressing. I also see a worldwide rise in plant-based consumption and demand, which is why we need more willingness to build out infrastructure as I previously emphasized. When you look at government spending, the U.S. is behind, and we cannot be behind in food innovation. But we are coming around. 

I also had a great conversation with Dot Foods: they said plant-based food service sales in 2022 were 40 percent above 2021. Why? After COVID, restaurant owners realized they must have at least one vegan option on menus. Not only are restaurants pushing plant-based foods, corporate and university cafeterias are following suit as well. Aramark and Sodexo both are touting a significant increase in plant-based offerings by 2025. 

NCFIL: What are your 2023 predictions for plant-based foods? 

EA: Let’s be honest. 2022 was a big punch in the face. Although 2023 won’t be easy, I do have some positive predictions.

• More plant-based frozen meals will appear in the grocery store. 
• A surge in plant-based deli meat, from white label to branded, is expected. 
• Blended products (hybrid meats) will continue to grow, with companies like Mission Barns. 
• Plant-based steak options are on the tip of everyone’s tongue, like Juicy Marbles and Beyond Meat’s new product.
• VegTech(™) investing will become a big theme on Wall Street. Investing in the tech before the S-curve adoption of plant-based innovation is beginning to resonate in public markets. 
• Healthier labels with fungi, mycoprotein, and fermented proteins come into focus. 
• Continued growth of plant-based fast foods is imminent. 

NCFIL: Do you see specific areas of opportunity or roadblocks to overcome for plant-based food entrepreneurs or manufacturers as we enter the next five years?

EA: It’s hard to say anything negative because everyone in the industry is trying so hard. Right now everyone is in survival mode. One opportunity as we move into better economic times is product branding. Plant-based food producers need to brand products to target specific consumers, like moms who want better food for their kids or college students focused on the planet. Oatly has done a great job with this; we could see more specific targeting as we enter 2024.

Right now the sector is holding on because food service and international sales are up, but the U.S. still treads water after high growth in 2019-2021.

These high growth years made the meat industry take notice. This is an opportunity and a hurdle. It is an opportunity for B2B suppliers to work with larger industry players, which can lead to high growth in the supply chain. It’s a potential curse because Big Meat would like to own the sector.  

To remain independent and strong, the plant-based sector would benefit from focusing more resources on unified, sector-wide messaging to protect the category. 

Learn More

To follow Elysabeth Alfano’s insight throughout 2023, subscribe to her LinkedIn newsletter, Elysabeth Alfano: This Just In. You can also learn about the plant-based food industry via NCFIL News.