In an email to staff seen by FoodNavigator-USA Thursday evening, CEO Peter McGuinness – who took the helm at the plant-based meat co in April - said the “well-capitalized” firm had “a strong balance sheet” and is “now the fastest growing plant-based company in both sales and share in the US, with 60% retail sales growth year over year.”
However, he added: “We still need to prioritize the projects and initiatives that will best fuel our business and mission as we prepare for our next phase of growth.”
Acknowledging that it had been “an emotional, tough day” for team members impacted by the restructure, McGuinness stressed that the layoffs were not performance-related, but that some roles had become 'redundant' as the company continued to reorganize to break down internal silos and become more responsive to customers and consumers.
Noting that Impossible Foods plans to build out the sales team as it grows distribution and will “hire strategically to build new muscles and capabilities," McGuinness added: “We’ve created clear supply and demand functions and focused our R&D and innovation pipeline, all of which will help us operate better and faster, with more agility.
"And we’ve made the very difficult decision to eliminate certain roles that have become redundant to others in the organization or that are no longer aligned with our core business priorities.
“In total, about 6% of our workforce will be impacted, with employees [which FoodNavigator-USA understands to span multiple departments] being notified by their managers today.”
Shake-out to come: ‘Retailers look at productivity on shelf, and here the math is in our favor’
As a private company, Impossible Foods - which has raised almost $2bn since its founding in 2011 - has not faced the same kind of scrutiny as rival Beyond Meat, which went public in 2019 and has been having a pretty torrid year.
However, with analysts now questioning whether the addressable market for meat alternatives is as large as it appeared a couple of years ago, Impossible is under pressure to deliver.
McGuinness – who says the restructuring reflects the journey from a tech company to a tech-enabled food company – said Impossible Foods plans to double down on innovation and instill a culture of continuous improvement in its core categories of beef, pork, and chicken.
It will also focus on getting its message out to a wider audience through improved and increased marketing and advertising to raise consumer awareness and understanding of the benefits of plant-based meat, something he says that brands in the space, including Impossible Foods, have thus far failed to do very effectively.
Speaking to FoodNavigator-USA last month after announcing moves to slash saturated fat and improve protein quality in its flagship burger, McGuinness claimed that while Impossible Foods' products were consistently rated as the best in the category, awareness remained low.
“We have a repeat rate of around 45%, so every two people I get to try our products, one in two repeat. So that says awareness and trial is a gift that keeps on giving, as we only have 5% household penetration.”
Founded by Dr Pat Brown in 2011, Impossible Foods entered the US foodservice market in 2016 and made an aggressive push into retail in 2020.
Hitting Burger King outlets nationwide in late summer 2019, it has also struck high-profile partnerships in the foodservice arena with brands including Starbucks, White Castle, Red Robin, Qdoba, and Fatburger.
It has also teamed up with Buitoni Food Company, which features Impossible beef in new Buitoni filled pasta products; and Denver-based Custom Made Meals, which manufactures entrees and appetizers for Kroger’s Home Chef brand, to develop plant-based protein products, although it has not provided details about the scope of the collaboration or the timing of the launch.
It does not disclose revenues, but its products are now sold in 30,000+ grocery stores and 45,000+ foodservice locations across the US, the UK, Australia, Canada, Hong Kong, and Singapore.
Image credit: Impossible Foods
'The category has done a lousy job of explaining itself. It's one of the biggest communication failures in food'
In the short term, predicted McGuinness, there’s likely to be a shakeout at retail as buyers take out poor performers and me-too products: “Space isn’t increasing, so to get distribution, something has to come out. So they look at productivity on shelf, and here the math is in our favor. “
But what about the fundamental question preoccupying many stakeholders right now: Were projections about the pace of growth for alt meat – including Impossible Foods’ founder Dr Pat Brown’s prediction that animal agriculture would be “eradicated” by 2035 – just wildly over-ambitious? And is Impossible ever going to be able to deliver on such lofty expectations?
According to McGuinness, who started his career in advertising and marketing, there is no question that plant-based meat is a mass market proposition, the industry collectively just has to do a better job of selling it in the mass market, and the products have to deliver.
“The category has done a lousy job of explaining itself," he told us. "It's one of the biggest communication failures in food. And by the way, we haven't done a great job either, so I don't want to sit here and say that we're perfect because we're not. We've done little to no advertising.
“If you're going to even start to displace animal products, you have to go to the next level in terms of taste, texture, flavor, and nutrition and have frequent and sustained communication.”
No one, he claims, “other than in keynote speeches and lobbying efforts is saying, in a mass, compelling way, that these products are better for you and the planet.”
US retail sales, meat alternatives: August 2022 vs August 2021
US retail sales of meat alternatives (frozen and refrigerated combined) were flat (-0.9%) in August 2022, with unit sales down -7.2% year on year in measured channels (IRI).
To place this in context, total food & beverage sales were up +8.7% with unit sales down -5%, according to IRI data crunched by 210 Analytics.
Within that, frozen meat alternatives, which account for two-thirds of category sales, are faring significantly better (dollars +6.9%, volumes +1.3% in Aug '22 vs Aug '21) than refrigerated meat alternatives (dollars -16.2%, volumes -16.7%).
- JBS pulls plug on Planterra Foods US plant-based meat operation
- Beyond Meat test launches Beyond Steak plant-based seared tips, Beyond popcorn chicken
- NotCo to launch NotChicken at Sprouts nationwide, unveil first fruits of Kraft Heinz JV, by year end
- Beyond Meat chief supply chain officer Bernie Adcock gives notice, days after suspension of COO Doug Ramsey
- Quorn Foods USA president talks meat alternatives: ‘We all need to take a deep breath’
- ‘There’s going to be a lot of burnt capital…’ Navigating the ‘hand-wringing phase’ of alt meat investment
- Conagra Brands (Gardein) talks alt meat: ‘There's no way the space supports 20 manufacturers making plant-based burger patties’
- Where next for meat alternatives? Stakeholders weigh in: ‘Building a food company is not like going live on an app… it takes patient capital
- Brightfield Group: 'Plant-forward consumers are going to be the ones to make or break the category. And right now their loyalty is wavering'
- Impossible Foods tweaks formulation, slashes saturated fat: ‘The category has done a lousy job of explaining itself,' says CEO
- Plant-based meat by numbers in US retail: A tale of two temperature states
- Burger King tests plant-based chicken sandwich from Impossible Foods as frozen patties hit stores nationwide
- Stray Dog Capital: ‘Truly astonishing’ innovations afoot in alternative proteins, after you sort through me too products
- Beyond Meat Q2: CEO under pressure as firm posts $97.1m loss on sales -1.6% to $147m, lowers guidance
Interested in meat alternatives?
- Dr Elliot Swartz, lead scientist, cultivated meat, The Good Food Institute
- Ethan Brown, co-founder and CEO, Beyond Meat
- Dr Lisa Dyson, founder and CEO, Air Protein
- Dr Tyler Huggins, co-founder, Meati Foods
- Abena Foli, head of regulatory affairs, Orbillion Bio