Unilever is expecting to take a €1 billion bite out of the alternative meat and dairy market

Unilever expects sales of its plant-based meat and dairy products to reach 1 billion euros over the next five to seven years, it said on Wednesday, helped by growth of its Vegetarian Butcher brand and vegan varieties of Hellmann's mayonnaise and Magnum and Wall's ice cream.

The target supposes a quintupling of the business, said Hanneke Faber, president of Unilever’s foods and refreshment business.

“It will require really, really high growth rates,” Faber told Reuters. “It’s a scary target honestly, but I think it’s important that we set it.”

Plant-based meat and dairy products have been one of the fastest-growing packaged food areas. But U.S. player Beyond Meat surprised investors earlier this month with lower-than-expected sales and a quarterly loss.

Some of Unilever’s vegan products - like its competitors’ - are pricier than the real thing, which could turn off some cash-strapped shoppers in a recession.

At Tesco, Britain's largest supermarket chain, a 200 gram pack of Vegetarian Butcher mince costs £2.75 online, equal to £13.75 per kilogram. Tesco's organic beef steak mince is £4.65 for 500 grams, or £9.30/kg.

“Scale is going to make a difference over time,” Faber said, adding that it will be a few years before prices come down enough to be comparable, though its vegan mayonnaise could be comparable sooner.

Unilever bought Vegetarian Butcher in 2019 and has expanded it to more than 30 countries. It is the regional supplier for Burger King’s plant-based Whopper and nuggets.

Polaris Market Research in July forecast the global plant-based meat market to grow 15.8 percent a year over the next seven years, from $11 billion in 2019, helped by the growing popularity of veganism, increased nutritional awareness and pandemic-fueled health concerns.

When asked about acquisitions in plant-based food, Faber said: “Organic growth will be our priority, but never say never”.