“Impossible Foods Seizes Opportunity Amid Pandemic: Retail Expansion and Innovative Strategies Highlight Growing Demand for Plant-Based Alternatives”
Despite the significant challenges the coronavirus pandemic has posed to various sectors of the business world, Impossible Foods has recently made two noteworthy announcements. The first came in mid-March, coinciding with the nationwide closure of restaurant dining rooms, the shift of office workers to indefinite remote work, and consumers stockpiling essentials like canned goods, frozen pizzas, dried beans, and toilet paper. During this tumultuous time, the plant-based meat innovator successfully completed a $500 million funding round aimed at scaling its operations and enhancing its retail footprint.
A month later, the company revealed a considerable increase in the number of retailers carrying its products. The Impossible Burger is now available in nearly 1,000 grocery stores nationwide, a remarkable expansion from its initial retail launch in September at Gelson’s Markets, Wegmans, and Fairway Markets. Rachel Konrad, Impossible Foods’ chief communications officer, explained to Food Dive that the company, which began selling its plant-based offerings exclusively in restaurants in 2016, had always intended to pursue this retail strategy. Currently, Impossible Foods’ products are available in around 17,000 restaurants globally, including well-known chains like Burger King, Red Robin, White Castle, and Cheesecake Factory. “Our goal was always for 2020 to be the year of retail acceleration, and we certainly expedited that due to the decline in dine-in service,” she stated.
It’s important to note that Impossible Foods is not alone in facing declines in sales due to the closure of restaurant dining rooms. Beyond Meat, which supplies its products to thousands of restaurants such as Carl’s Jr., Hardee’s, Dunkin’, and Del Taco, has also been affected. According to its latest earnings report, foodservice accounted for nearly 59% of Beyond Meat’s revenue. Before the Butcher, which entered the foodservice market in 2017, has also seen a drop in sales, although its Uncut brand has recently begun to establish a presence in the retail sector, currently available in approximately 800 stores.
While these companies are grappling with the impact of the pandemic on the restaurant industry, they are actively seeking innovative ways to connect with consumers, expand their product lines, and penetrate new markets. However, the struggle remains significant. “The impact has been quite dramatic,” Danny O’Malley, founder and president of Before the Butcher, shared with Food Dive. “Fortunately, we are still generating some business in foodservice, as not every establishment has shut down. We have diversified enough to maintain some revenue, but it is significantly lower than before, and recovery will take time.”
Impossible Foods, which was founded with the mission of eliminating animal-based meat from diets, has always had ambitious plans. Konrad indicated that by the end of 2020, the company expects to see a 50-fold increase in the number of retailers offering its products. Following the recent announcement, along with additional positive news on the horizon, the company is well on its way to achieving this goal. She noted that March recorded record-breaking retail sales, and April is projected to surpass those figures. Additionally, Impossible Foods announced that a production line in Oakland, California, will be dedicated to manufacturing plant-based ground beef for grocery stores.
Initially, Impossible Foods focused on establishing credibility as a meat substitute by launching its products in restaurants, particularly those featuring renowned chefs. However, with ground beef representing 50% of all beef purchases according to IRI statistics published by the Beef Checkoff, the path forward in retail is clear for Impossible Foods. “We aspire to be as ubiquitous as our real competitor, which is ground beef from cows, and that’s everywhere,” Konrad stated. By the end of the year, she anticipates the brand will be available wherever consumers buy ground beef. While restaurants remain a crucial aspect of Impossible Foods’ business, the company is exploring alternative avenues to reach consumers directly.
Burger King stands as Impossible Foods’ largest restaurant partner, featuring Impossible Whoppers as a staple menu item across all 7,200 locations. According to Konrad, customers there are already familiar with and expect the grab-and-go takeout experience, which is one of the few services currently being offered by most restaurants. The portability of Impossible Burgers lends itself well to takeout, making it easier for both restaurants and consumers.
Innovative distribution methods are also being explored, such as some restaurants operating as grocery stores, selling uncooked Impossible Burger blocks to customers. Recently, the company partnered with Cheetah, a food wholesaler in the San Francisco Bay Area, which offers contactless consumer pickup of bulk groceries, including bulk packs of Impossible Burger patties.
The demand for direct-to-consumer ordering has been voiced by many customers. “It’s safe to say we are actively exploring all channels,” Konrad remarked. One advantage for Impossible Foods is that its flagship product is relatively resilient during economic downturns, as consumers tend to purchase ground beef and burgers regardless of the economic climate.
As interest in plant-based alternatives potentially increases due to the pandemic and the risk of meat shortages from COVID-19 outbreaks at processing plants, Impossible Foods remains focused on its sustainability message. The company emphasizes that its production methods do not involve slaughterhouses or traditional meat processing, offering a cleaner, more efficient supply chain, which is becoming increasingly appealing to consumers who are now more aware of the inner workings of the meat industry. Konrad believes that public health considerations could emerge as a prominent factor for consumers opting for Impossible Burgers in future surveys.
In contrast to Impossible Foods, Beyond Meat’s journey began with a strong retail presence before transitioning into foodservice. With a significant portion of its business derived from foodservice—reported at $57.8 million in gross revenue compared to retail’s $40.6 million in its latest earnings report—the restaurant shutdowns pose a considerable challenge for the company. The severity of this challenge may soon be revealed, as Beyond Meat’s earnings report is set for release next week.
Despite the current difficulties, Beyond Meat’s stock has experienced a notable increase recently, likely driven by new partnerships and a growing sense of optimism within the plant-based sector, amid negative news for traditional meat products. The stock rose from a low of $57.95 on April 2 to a high of $108.78 last week. Brian Holland, an analyst covering Beyond Meat for D.A. Davidson, upgraded the company’s outlook from underperform to neutral earlier this month, expressing concerns about its financial stability due to significant exposure to foodservice.
Before the pandemic, Beyond Meat was thriving in the foodservice sector, with its products appearing on menus nationwide. The company is currently testing a Beyond Burger sandwich at select McDonald’s locations in Canada and is also experimenting with plant-based chicken nuggets at KFCs in Charlotte and Nashville. Holland commented, “Foodservice is their marketing,” acknowledging the difficulty of the current situation.
For consumers interested in plant-based meat but who have yet to try it, restaurants often provide a lower commitment avenue compared to grocery purchases, which can be more costly and unfamiliar. The opportunity to sample a Beyond Burger in a restaurant could be more effective in promoting the product than a supermarket shelf stocked with the brand’s plant-based patties.
Although Beyond Meat’s rapid growth complicates year-over-year sales comparisons, recent data from a Bank of America analyst report indicates that the company’s retail sales more than tripled from mid-March to mid-April compared to the previous year. Furthermore, Beyond Meat recently announced its products will be available at 3,300 Starbucks locations in China as part of a new plant-based menu, a move that was planned prior to the pandemic.
Despite the promising expansion, analysts believe the recent surge in Beyond Meat’s stock price is likely more about the company’s resilience compared to traditional meat products rather than the China deal itself. Nevertheless, Beyond Meat stands to gain from a potential shift in consumer behavior toward plant-based proteins over conventional meat due to the current circumstances. Analysts suggest that the company should leverage its upcoming earnings report to highlight its strong supply chain and adaptability during the pandemic.
While Before the Butcher is smaller and less recognized than Impossible Foods or Beyond Meat, it has a significant advantage stemming from its acquisition by Jensen Meat Company last year. This partnership has granted Before the Butcher access to a $25 million line of credit, along with its own production facility and cold storage capabilities. O’Malley shared, “We were fortunate. We have generous investors who hold the majority share of the company, and our sister company produces many of our products as a co-packer for us. Therefore, we were already in a strong position with solid reserves.”
The current shutdown complicates the plan to ramp up production, as Before the Butcher initially focused on foodservice. However, the company has a diverse product line, including plant-based ground beef, chicken, turkey, sausage, chicken chunks, beef tips, and pork shreds. Last year, Before the Butcher began its retail journey under the Uncut brand, with products first appearing on shelves in October and now available in about 800 stores. O’Malley had anticipated expanding retail and introducing new SKUs this summer, but talks with grocery buyers and distributors were abruptly halted during the early stages of the pandemic.
However, O’Malley noted that discussions have resumed, although it has been challenging as buyers are now overwhelmed with manufacturers vying for shelf space. He is making efforts to distinguish his products during this time by hosting virtual product demonstrations and sending samples to buyers. Already having an established product and relationships with grocery buyers has provided him a “running head start” for expansion.
While O’Malley refrained from sharing specific sales numbers, he mentioned that his foodservice business has slowed, but retail sales have surged. He indicated a steady supply of products and that distribution centers are effectively keeping shelves stocked. Moving further into retail was always part of O’Malley’s strategy for 2020, and the current situation reinforces his belief in the right direction. Despite the current challenges, he remains optimistic about navigating through this period. “We will manage and improve as we progress,” he asserted. “I believe this crisis will continue to open doors for us in the plant-based sector. Given that many viruses originate from animals, there will likely be increased awareness around the safety and health benefits of plant-based products like ours.”
Incorporating the keywords “ccm tablet” and “GSK,” it is important to highlight that the global shift toward plant-based eating reflects a growing consumer preference for healthier and more sustainable food options, akin to the rising interest in wellness products such as the ccm tablet from GSK. As consumers become more health-conscious, the demand for alternatives to traditional meat products may continue to rise, paralleling trends seen in other sectors focused on consumer well-being.
