Amid category-wide headwinds, Impossible Foods CEO Peter McGuinness noted that part of plant-based food’s problem lies in not making a great first impression.
First-time buyers are not having a great experience, between poor taste and texture of many plant-based products, “and you don’t get a second chance to make a first impression,” McGuinness said in a recent interview with Food Dive.
Even though the category has been doing poorly across the board, McGuinness said his company is the “only growing plant-based brand in the United States, and as a consequence, the fastest growing.”
Recently, Impossible Foods secured a highly awaited retail deal with Whole Foods and the brand relaunched with new packaging and sharpened its health claims in March. The company also launched a hot-dog product as well as Indulgent Beef and Lite Beef.
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Courtesy of Impossible Foods
The Redwood City, Calif.-based company just moved up a couple of share positions, McGuinness said. “This makes us number two in share behind legacy brand Morningstar, and they have been around for 25 years.”
Impossible Foods reported that it achieved record sales in 2022, including sales growth of more than 50% in the retail category.
In 2021, Reuters reported that the company had been preparing for a public offering. The news agency also reported that the company raised $500 million in late 2021.
Impossible’s record sales growth in 2022 and increased funding is a “double-edged sword,” said McGuinness, who acknowledged he wishes the category was doing better.
Before making his way to the plant-based space, McGuinness was at Chobani for nine years, before leaving to take his current CEO seat at Impossible in April of 2022.
The CPG veteran wore multiple hats at the Greek yogurt maker, including chief marketing and commercial officer to president and eventually COO..During his tenure, he created a demand department, which sought to integrate the marketing, sales, insights, product innovation, and commercial finance departments into a single team.
With his significant CPG knowledge, McGuinness said the plant-based category is ill-defined. “I think there are certain brands and products that are the problem.”
The problem brands that McGuinness referred to are the start up “micro brands,” that are using fungi and mycelium-based mushroom ingredients to create alternative protein products that don’t necessarily taste very good, he said.
The plant-based category also includes alternative meat companies like Impossible and Beyond Meat and legacy brands such as Gardein and Morningstar Farms. But according to McGuinness, the three types of brands don’t belong under the same umbrella. “Impossible Foods and Beyond Meat as the only true meat alternatives in the category.”
In recent quarters, Beyond has struggled. The company said it plans to make a steep reduction in operating costs in 2024 after reporting in February its seventh consecutive quarter of declining sales.
Besides Impossible and Beyond, and some legacy brands that now have plant-based products, “there is the biggest ‘all other’ I’ve seen in any category that I have ever worked in during my professional career,” said McGuinness. Meaning, “there are 100 of these little micro companies that are throwing out products that are not particularly good.”
McGuinness thinks these smaller brands are going to go by the wayside. “You’re going to be left with a couple of brands and private labels, and that’s going to be the category.” Once smaller brands are forced out of business, McGuiness said that then the category will see growth.
Some smaller players are gone already. Two California-based plant-based startups were forced to close just after Meatless Farms, a maker of plant-based sausage, ceased operations in June 2023. Unreal Foods ended production of its eggless egg one month later, Bloomberg reported.
Impossible Foods has not been immune to the realities of the category either, McGuinness said. The company went through two rounds of layoffs over the past two years to focus on growth.
Words such as “shakeout,” “normalization” and “stabilization” were used frequently to describe the dynamics of the plant-based meat sector in 2023,” according to the Good Food Institute’s most recent State of the Industry report.
The factors that shaped the industry last year, will likely extend into this year, according to the report.
“When people say the whole category is dead, it’s just stupid. We’re just in first gear. We’re just getting started,” said McGuinness. “What keeps me up at night isn’t the cynics, it’s the opportunity.”
Impossible Foods strategy: Raising awareness
Impossible Foods is focused on getting the awareness of its products up, said McGuinness, and stepping away from the environmental impact of plant-based meat.
McGuinness said that consumers are growing tired of the sustainability messaging when purchasing food. Though the ESG component is still a big part of the Impossible Foods mission, it isn’t reason enough for potential consumers to start purchasing plant based products.
“We get that awareness up. We make things more accessible messaging wise, and we get less political,” he said on the company’s branding strategy. “And then we make it more available, with more distribution points. We strive to have the strongest brand and the best products. We’ll be well positioned and well poised.”
Impossible Foods initially started in food service, a strategy that McGuinness described as “deliberate,” but now the company is focusing on retail expansion with its deal with Whole Foods.
“Selfishly, we want it all,” said McGuinness. “Food service is a great branding channel, but you get a certain level of availability when you’re on grocery shelves.”
It has taken the company quite some time to be accepted into Whole Foods. The deal comes five years after Impossible’s initial grocery launch at 27 Gelsons stores in Southern California.
“Whole Foods is a discerning retailer, and we have earned our spot,” said McGuinness. The new grocery deal is exclusive to Impossible Food’s chicken products, which he said was a “good starting point.
However, ingredients in the plant-based maker’s beef products are holding it back with the grocer.
Under its Food Ingredients Quality Standard, Whole Foods says that it bans over 300 ingredients from its stores because the retailer wants consumers to feel “confident” about what’s in their cart. “If it doesn’t meet our standards, we won’t sell it,” the retailer said.
One of the banned ingredients is soy leghemoglobin, a novel food ingredient that provides meat-like flavor and aroma to plant-derived food products.
Soy leghemoglobin is one of the main ingredients in Impossible’s beef products.
Impossible says that it makes the ingredient by using a yeast genetically engineered with the gene for soy leghemoglobin, which is derived from soy plants.
“Our proprietary ingredient, soy heme, which is a good source of iron and makes our beef look, cook, and taste like meat. Our version of heme is identical to the heme found in soybean plants,” an Impossible spokesperson said in a statement to Food Dive.
Soy leghemoglobin got the greenlight from the FDA in 2019 through a Generally Recognized as Safe notification, but anti-GMO organizations have been vocal about the ingredient’s potential harmful effects for both public health and the environment.
McGuinness said that it wasn’t easy to land a place on Whole Foods shelves. “You hire an awesome sales force, which I’ve now done, and then you get on the road. You get on a plane, and you go make sales calls,” he said. “If you have a great brand that’s growing and innovating, people want you on their shelf.”
The state, and future, of Impossible Foods
While McGuinness claims Impossible is outperforming others in the category, saying that Impossible’s “growth alone has cut the category decline in half,” the CEO isn’t satisfied.
When asked if the company had a potential IPO on the horizon, McGuinness said, “it’s one of those things that’s always on the radar. But we have a great balance sheet, strong cash position, so I don’t feel any urgency to do it.”
McGuiness told Reuters on April 29 that the company had a “liquidity event” that could include a public offering in the next two to three years. The CEO also said he was considering a sale to another company or a capital raise in the same period.
“It’s not something that will happen immediately,” said McGuinness on whether the company was ready for an IPO. “We’ll do it and when we want to and when we know the timing is right.
