WHAT’S NEXT IN PLANT-BASED INNOVATION?

WEBINAR TRANSCRIPT

Loretta Kelly: Welcome, everyone. I'm Loretta Kelly, Director of Strategic Marketing for Blue Diamond’s Global Ingredients Division. Thank you for joining us.

As we unpack the latest market trends and insights impacting the food industry, Blue Diamond’s Global Ingredients Division is the food industry’s first choice for value-added almond ingredients, who understand what you need from an almond supplier — which is why we focus not only on delivering the highest quality almonds and almond products, but the best overall experience.

Only Blue Diamond offers you applied almond expertise — that is all of the things that Blue Diamond does to help you derive more value from your almond purchases from us. It's how we leverage our knowledge and experience to help you use our products to enhance yours, which includes market, product and consumer insights. We'll help you find new ways to use almonds to drive consumer appeal, both for your product and on your label.

Blue Diamond offers an unparalleled array of almond forms and varieties, from sliced, slivered, whole and diced almonds to almond protein, almond flour and almond butter. For virtually any application, we provide unmatched product knowledge and service. Blue Diamond is a true partner, with the focus and resources to ensure that when you use almonds, you're successful.

Thanks for joining us today. And remember to submit your questions for the live Q&A in the chat box on the side of the screen.

Without further delay, join me in viewing today's webisode.

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Kurt Waananen: Hi there, and thanks for joining us. I'm Kurt Waananen…

Laura Gerhard: And I'm Laura Gerhard, and together, Kurt and I are going to cover three exciting topics to answer the question, “What's next in plant-based innovation?”

I'll start by addressing the state of plant-based demand and then move on to emerging areas of innovation and plant-based foods.

Kurt Waananen: And after that, I'll take you through how the R&D team here at Blue Diamond is applying our almond expertise to identify future opportunities for growth, with a special focus on innovating with almonds.

Laura Gerhard: So let's get started with that first one: The State of Plant-Based Demand.

The growing global demand for plant-based foods can mean huge opportunities for brands. Take a look at these statistics and it's apparent. 65% of global consumers are striving to eat more plant-based foods and beverages, and consumers purchasing plant-based foods spend 61% more than the average shopper. And sales in this category are growing every year. In 2020, the retail market for plant-based foods in the U.S. reached $7 billion, and those sales also grew powerfully from 2018 to 2020, at nearly two times faster than total food sales.

In terms of global health, let's take a look at these statistics. 65% of U.S. consumers choose plant-based foods for the general health benefits. 67% of European consumers would change eating habits for environmental reasons. And 53% of Japanese consumers have tried plant-based foods in search of a healthier lifestyle.

Couple that with an increased focus on farming and eating sustainably, and that drives the need for plant-based alternatives even more. By choosing plant-based foods, people are contributing to the preservation of the environment while feeding a growing population.

The solutions that plant-based foods provide also align perfectly with the preferences of our younger generations. In fact, environmental concerns are a highly influential factor in the purchase decisions of Millennials and Gen Z, with 40% of Millennials reducing their meat consumption, and 73% of Gen Z consumers willing to pay more for sustainable products.

So the need for plant-based food innovations is real. Which leads nicely into our second topic today: Emerging Areas of Innovation.

Plant-based protein innovation continues to grow, with 70% of consumers having tried at least one new plant-based protein product in the last year. Plus, research shows that 70% of consumers consider protein from plant sources the healthiest.

But there's a new emerging focus right now, and that's on plant-based dairy specifically. Dairy-alternative product launches have expanded across a variety of categories, from creamer, to butter, to dips and sauces and more, as you can see here.

And the Good Food Institute notes that 15% of global consumers have increased their dairy-alternative purchases just in the past year. Almonds play an influential role in this as they are helping to fuel innovation and plant-based dairy, with almond milk leading the category for plant-based milks with $1.3 billion in sales.

So we expect more growth in plant-based dairy alternatives in the coming year, provided we're addressing any barriers to purchase intent. Currently, those barriers include the need to improve taste and texture while maintaining a clean label.

According to the Good Food Institute, 27% of consumers report they don't like the taste of plant-based foods, while 20% claim texture as the reason for not buying them. So that makes eliminating earthy or beany notes a priority for formulators

At Blue Diamond, it's those types of challenges that inspire our own innovations. And with that, I will now hand it over to Kurt, our director of R&D.

Kurt Waananen: Thanks, Laura. Let's take a look at our third and final topic, Future Opportunities for Growth: Innovating with Almonds.

There are three ways almond ingredients are driving plant-based innovation right now. First, almonds are capable of overcoming those taste and texture issues. Second, they are also perfect for meeting the demand for simpler ingredients and cleaner labels. And third, almonds deliver the well-rounded nutritional benefits that consumers are seeking.

Formulators around the world have come to recognize almond protein’s ability to provide clean labels, clean flavor and well-rounded nutrition in non-dairy formulations. In fact, almond protein delivers a non-dairy base with a smooth mouthfeel and clean taste, and it helps dilute earthy and beany notes when used in protein blends.

Additionally, almond protein contributes to an increase in fiber with minimal need for additional fiber ingredients, and also adds vitamins and minerals, including calcium, iron, magnesium and riboflavin.

With so much going for them, almonds have the power to play a role in many plant-based applications. At Blue Diamonds Global Ingredients Division, we are focused on five key application areas: non-dairy cheese, non-dairy chocolate, better-for-you baking, frozen and refrigerated non-dairy desserts like ice creams and custards, and snack bars. So let's break those down.

With non-dairy cheese, almond protein helps to provide smooth, creamy, dairy-like textures and flavors.

With non-dairy chocolate, the particle size of almond protein allows for successful incorporation with other fine granulation ingredients. In better-for-you baking, almond flour provides a cohesive and soft texture, while almond dices, slices and slivers offer added nutritional value and a satisfying crunch.

With frozen and refrigerated non-dairy desserts like ice creams and custards, almond protein and almond butter integrates seamlessly with other functional ingredients. These ingredients contribute to viscosity and a rich, dairy-like creaminess and appearance.

And when it comes to bars, almond butter is a healthier alternative to sugars. In creating the binding matrix, almond protein’s high water absorbence improves the texture of protein enriched bars, while almond dices, slices and slivers add texture, flavor and nutrition.

At Blue Diamond, our approach to plant-based innovation is rooted in more than 110 years of experience. In fact, we were plant-based well before it became the latest trend, and we will continue to create plant-based ingredients that help customers solve taste and texture challenges.

We have the proprietary processes and equipment that allow us to maximize quality and consistency, and a team of R&D experts who will work closely with you to help you create plant-based innovations and capitalize on increased consumer demand.

You can rely on us to apply our almond expertise to help you enhance your labels every day. On behalf of Laura and me, thank you for joining us today.

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Loretta Kelly: I think Kurt said it best. Blue Diamond has had a long history of driving plant-based innovation. We were essentially plant-based before plant-based was cool.

Please continue to submit questions in the chat box on the side of the screen.

Now we'll begin with our Q&A portion. I see I have a lot of questions that are coming through today. So let's start with the first one: “Besides protein, what are the gaps need to be addressed when developing the next plant-based products?”

Kurt Waananen: Hi, Loretta. I can start with that one. And, you know, besides meeting protein targets when it comes to developing plant-based foods, there are a number of other challenges. And I think Laura touched on this during the webinar, but, great taste. That's certainly very important. No matter what product you're making, it has to taste good. And then beyond that, clean label is also really important. And, you know, we don't want to overengineer or introduce functional ingredients that don't sound simple.

And then finally, I think for both plant-based foods, but really for all foods, consumers are getting more and more concerned about the amount of added sugar. So while maintaining great taste and texture, also being sensitive about added sugar is one more challenge that we face.

And Laurie, do you want to build on that further?

Laurie Colin: Sure, I can add some comments to that. Definitely, as Kurt mentioned, improving the nutritional content is definitely one of the gaps. One example that I can name is that many plant-based products are very high in fat, and often use coconut oil as a preferred fat because of its properties. So in addition to reducing fat, there is a need for an alternative option that not only reduces fat, but also offers similar properties that coconut oil has, to lower the saturated fat content.

Loretta Kelly: Thanks. I see we have some more questions that are coming up. That was Laurie Colin, our Senior Technical Business Director, and we had Kurt Waananen answering the last question, our head of R&D.

“Are consumers more concerned about the health of plant-based eating, or the environmental sustainability aspects?”

Dan Sonke: I could take a stab at that one. So I'm Dan Sonke, Director of Sustainability, and it's very clear from consumer research that health and nutrition do remain the top drivers for sales, but there's a growing percentage of shoppers that are thinking environmentally or sustainability-wise. They're hearing things like it takes 50% or even up to 99% less land, an environmental impact to produce plant-based proteins versus animal-based proteins, and so this is becoming a driver.

Gen Z ranks very high on environmental issues. In fact, I saw one study suggesting that as many as 100% of the surveyed Gen Z participants in that study selected environmental drivers. And as that generation moves into more purchasing power, we expect to see this trend just accelerate.

But that's the perspective from a sustainability guy. Maybe, Laura, you have some more nuanced perspective.

Laura Gerhard: Yeah, absolutely. I can continue to build on that, Dan, because I think it really is a combination of both aspects. Consumers are incorporating wellbeing into every facet of their lives, and that's especially true when they look at the foods that they're choosing to eat. They're looking to incorporate foods with that perceived functional benefit that help themselves and their families reach their overall wellness goals. And so this is where plant-based foods really come into play, building on that clean label, “free-from”, and those real ingredient trends.

So those plant-based ingredients, they can help bring that nutritional value that help consumers reach their overall healthier goals.

Loretta Kelly: Thanks, Laura. I think that was very helpful. I definitely can agree with those comments. You know, I definitely think we're seeing a lot in plant-based desires and demands from the different generations.

And, you know, I'm looking at some more questions that we have in the chat, and it looks like we have something that, you know, I think will be interesting for us to ask. “How have consumer preferences for plant protein changed over the past five years?”

Laura Gerhard: I can start with that one as well. So, demand and preference, they have continued to increase in a similar trajectory as products with natural claims from, you know, a few years ago. So, consumers continue to hunt in that space where they really want that aspect of permissible indulgence, so those products really need to taste good, but they also have to deliver a healthier lifestyle. And I think COVID-19 has also accelerated much of this as well. And you saw in some aspects of the webisode that U.S. consumers have increased their consumption of plant-based foods overall.

Bobby McCUAN: And Loretta, this is Bobby, I can add to that, if you don't mind.

Loretta Kelly: Sure.

Bobby McCUAN: So I just want to point out a couple of things that I think are important. And first and foremost, I really believe that there's a strong sustainability component that comes into play, especially with the younger generations. These generations are extremely passionate about supporting products that are better for the environment. They're really diligent and they do their research.

I think it's also important to note that, you know, as the plant-based market becomes more crowded, it's going to be really important for brands to focus on consumer benefits. So we're talking specifically desirable nutritional qualities like protein, right? There's a lot of consumers out there that want high-protein, plant-based products of all kinds. And we've seen an increase in this over the last five years, and I definitely expect to see that continue.

Loretta Kelly: Thanks, Bobby. I definitely agree with that. You know, that comes back to that sustainability point again. I think sustainability is really driving a lot in plant-based innovation.

Then, “What actions are we taking — “ Blue Diamond's taking — “to really help us when it comes to sustainability and impacting our impact on the climate?”

Dan Sonke: Great question. You know, perhaps climate is the top issue in the headlines these days on environmental sustainability, and I am excited to have recently joined a company that's working with a crop and an ingredient that has some documented research demonstrating it has perhaps one of the best carbon footprints of plant-based protein sources. In fact, there's research that says that perhaps almonds could be carbon neutral or carbon negative, especially as we adopt practices that I'll talk about in a second.

But, you know, the trees are taking carbon dioxide out of the atmosphere and turning it into wood via photosynthesis, and then that wood stays in the tree for 25 to 30 years. And then the new research is saying that if we can take that wood at the end of the orchard's life, and grind it up and put it into the soil and store that carbon in the soil for an even longer period of time, it just has a wonderful benefit for our carbon footprint. So that's exciting.

But we're not resting on the status quo. We have an incentive plan for our farmers in place that pays them bonuses to adopt more sustainable practices. And at the top tier, top payments, they have to be bee-friendly farming certified. So that's setting aside land in and around the orchard and planting pollinator-friendly plants that can provide nectar and pollen to the pollinators visiting the trees during and after bloom to provide them year-round pollen sources. But those plants are also benefiting the soil and also taking carbon dioxide out of the atmosphere and creating a better soil environment for water conservation.

So lots of environmental benefits coming to you through these practices that we're helping our growers adopt at a higher rate.

Loretta Kelly: Dan, that’s really helpful. I'm seeing we're still getting some more questions around sustainability, particularly as it relates to bees. I think we get a lot around that, those questions, as well as things around packaging. Do you mind continuing?

Dan Sonke: Sure. We have a program in place looking at increasing the recyclability of our packaging, and also reducing the amount of packaging that we need in the first place. A really fun example is a local team figured out that at the end of the life of our large super sacks, they could be donated to the state of California to be used in flood control sandbags. And that was a great way to put something to a higher and better use.

But the same team has now in the last couple of months figured out a way to eliminate the need for those sacks in the first place and replace them with a sturdy, reusable cardboard packaging that's biodegradable at the end of its life.

So these are the kinds of examples that we're working on internally to make sure that we're using our packaging in the most sustainable way that we can.

Loretta Kelly: Thanks, Dan. I want to remind everybody to please submit your questions at the chat box on the right.

We have on our panel today Dan Sonke, Director of Sustainability; Kurt Waananen, Director of Research and Development; Laura Gerhard, Vice President of the Global Ingredients Division; we also have Laurie Colin, our Senior Technical Business Development Manager; Bobby McCUAN, our Sales Director; and myself, Loretta Kelly, your host.

Going back to some of the questions that we have in the chat box, I see we have another one. “Will we continue to see the rise in plant-based popularity?”

Bobby McCUAN: I can jump in on that one, Loretta. This is Bobby. So, plant-based is really one of the hottest trends we see in the food industry right now, and I really don't see any signs of that slowing down anytime soon.

But one special callout that I really want to make is that if plant-based claims continue to follow the same path as all-natural claims, simply being labeled plant-based is definitely not going to be enough. Brands are going to actually have to prove how their plant-based products and ingredients are better for people and the environment. So, kind of similar to all-natural claims, plant-based claims are becoming the proxy for healthy and natural, and it's going to be really important to avoid using unclear language, and cite specifics that make their products healthy and natural.

So while natural is viewed as healthy, there's a really large population of U.S. consumers that think that that's too vague. And there's a big opportunity here for plant-based claims to be relevant by offering tangible benefits. And it's a really a great way to help your brand stick out from the crowd.

Laura Gerhard: I'd like to give an example on that, if I may. So, for instance, if you take a look at baked goods, it's not really a stretch for baked goods to position themselves as plant-based foods, because for the most part, they really are. So I think brands and marketers really have a lot to gain here by playing up that plant-based aspect in their products. Again, you know, we've seen a lot of trends and statistics where nearly half of all consumers say that they would eat more baked goods that would feature a plant-based claim.

Loretta Kelly: Well, that's very exciting. I'm definitely seeing a lot more in the plant-based section every time I go to the grocery store. The dairy section looks like it's expanded to a whole new plant-based portion. Every endcap has a lot in plant-based. But one of the key things that always keeps popping up is the eating experience. So I see one of the questions we have here is: “How do you view the eating experience of current plant-based foods that are on the market?”

Laurie Colin: I can jump and take that question, Loretta. So, basically, consumers are seeking better-for-you plant-based options that not only provide the same eating experience, but that are also healthier options, that their options are equivalent to the meat-, egg- or dairy-based counterparts.

Expectations are quite high, which means that in order to achieve a repeat purchase, plant-based foods and beverages must meet these expectations and deliver the required attributes. This can be quite a challenge for plant-based formulators. So what Blue Diamond can do is our applied almond expertise, offer solutions to these challenges by providing a number of functional properties that are essential in plant-based alternatives, including healthier nutritional/functional properties and the desired appearance, and flavor and texture that contribute to the overall experience at the end. So we definitely have an opportunity to provide the qualities that are required for that eating experience to duplicate the meat-, egg- and dairy-based counterparts.

Loretta Kelly: Thanks, Laurie. I think that you highlighted on one big thing — formulating plant-based products is difficult at times. So, you know, as Blue Diamond, what kind of application and formulation support do we offer?

Kurt Waananen: I can start with that one, Loretta. We absolutely want to do everything we can to make it easy for customers to work with almond ingredients. And through the years, we've worked with a number of applications, and we've tested out all almonds in a lot of different ways.

But the way that that can start — you've heard Laurie talking, and she's our Senior Technical Business Development Manager. So she's dedicated to really being available to help with those applications questions, and to share our expertise and learning.

And then beyond Laurie, we have an R&D and regulatory team. We've got 14 people that have many years of experience working with almonds. And so by working with Laurie and your sales contact, you can access that additional expertise. And again, we'll do everything we can to help you make your applications work, go quickly and go smoothly. Laurie, do you want to build a little bit on your role as that first point of contact?

Laurie Colin: Yes, definitely. So basically, by having an in-depth understanding of almond ingredients, we can work with product development teams in identifying the desired properties for your target applications and determine if our ingredients will provide the functional properties that are required in this application. And accordingly, we can make recommendations, provide technical support and maybe even assist with formulations and hopefully reduce the new product development cycle.

Loretta Kelly: Thanks, Laurie, I appreciate that. You know, I growing up, we would have one day a week where we at least have like a plant-based meal, and plant-based for us was, you know, let's have a bowl of beans. I was wondering, are people of all ages really trying new products that are plant-based?

Laura Gerhard: I can jump in here on that, Loretta. So, I would say plant-based eating isn't really entirely new, I think it's just becoming more ingrained in consumer lifestyles and been more at the forefront, and you see it on labels and packages. And so while the growth isn't necessarily isolated to the younger generations, they are really a key driver of this way of eating. And I think a significant amount of the population has tried a plant-based diet or plant-based product in one sense or another.

Loretta Kelly: That's great. I think we have time for one more question. So, really, “What are some of the gaps and opportunities for new product development?”

Laurie Colin: I can take that question, Loretta. So basically, one of the challenges is the ability to duplicate some major key functional properties of dairy proteins in plant-based alternatives. One example that I can give that comes to mind is non-dairy cheese, specifically non-dairy semi-hard cheese. And the challenge that formulations face to successfully mimic desired characteristics, including the firm bite, the meltability and the stretchability that dairy proteins provide.

Blue Diamond almond protein is a multifaceted ingredient that, in addition to delivering a plant-based protein source, contributes to increasing fiber, calcium, potassium, phosphorus and magnesium. The ideal color and clean flavor profile, paired with excellent moisture binding and gelling capacity, will successfully assist formulators in having numerous properties that can, at the end of the day, replicate some of their dairy application properties, including cream cheese, yogurt and a wide variety of refrigerated and frozen desserts, just to name a few.

Loretta Kelly: Well, thank you for that.

Thank you for joining us today. It seems like we're running out of time. We tried to get to as many questions as we could during the Q&A session, but I wanted to let everybody know we’ll be hosting a podcast later on this month to talk in more detail about plant-based innovation, and we'll be able to answer some of your additional questions there.

For more information, news, insights, submit your request to speak with a Blue Diamond representative or even find a copy of today's webinar, you can go to our Ingredients Insights page at bdingredients.com/insights to fill out the form, and we will get back to you soon.

Thanks again for joining us today. And as always, have a good evening.