'An emotional, tough day...' Impossible Foods eliminates 6% of roles as new CEO restructures to ‘grow and evolve’

07-Oct-2022 - Last updated on 07-Oct-2022 at 18:49 GMT

CEO Peter McGuinness: 'In total, about 6% of our workforce will be impacted...' Image credit: Impossible Foods

In a restructuring announced days after meat giant JBS revealed plans to close its Planterra Foods plant-based meat division, impacting 121 jobs, Impossible Foods is eliminating approximately 6% of roles at the company (under 50 staff) in a move it claims will better align its org chart with its goals.

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.

Strategic hires

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.”

Beyond-and-Impossible-US-retail-Piper-Sandler — “While there is pressure on Beyond and the category broadly, sales performance does vary,” said analysts at Piper Sandler in an August 23 note to investors. “Retail sales gains for Impossible have been averaging ~60% for the past year, even as Beyond has been flat or down, suggesting that consumers are differentiating between the brands.”

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

plant-based-meat-GettyImages-Aamulya — GettyImages-Aamulya

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%).

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