“The industry is growing; this sector is growing. I think it's growing at the right rate. I know that we have some problems with the economy. So, the available dollars aren't really that available to help some of these brands grow, and which would by the way, helps the sector grow,” Bullock said. “It won't sort itself out, but it will get sorted out. This is an issue of time and survival.”
Building a strong relationship with Walmart
Previously only available in natural and specialty grocery stores in the Pacific Northwest, Rocky Mountains, Pacific Southwest, Texas, and Hawaii, Misha’s will now offer four of its spreadable plant-based cheese products, including Smoked Cheddar, Black Truffle, Sari (cilantro, roasted garlic, and sundried tomatoes), and French Connection (black olives, grains de paradise, and herbs de Provence) in California, Utah, Nevada, Washington, and Texas Walmart stores.
“There's a lot of fear in this space about Walmart,” Bullock said. But, he added, "my experience has been that they have been incredibly helpful, incredibly supportive, that they have championed everything that we have done, that they did not try to rake us over the coals over price. They've held our hands and walked us through so many things. The relationship with Walmart has absolutely been stellar.”
Adjusting to the current reality, growing with a lean operation
Before Misha's could exand, it first needed to adjust to the new dynamics in the market around access to capital, Bullock said. Earlier in the year, Misha’s attempted a crowdfunding campaign, but after failing to raise the money needed, the brand had to make a series of changes to survive, he admitted.
“We have made the decision to be lean. We had 30-some-odd employees. Now, there are three, and we'll be profitable this month, whereas we were about to be dead.”
In addition to finding ways to save money on the personnel side, Misha’s decided to close its production facility and admin offices and moved from producing the product themselves to working with a co-manufacturer, which has saved them money, Bullock said. The decision to go with a co-manufacturer has been in the work for years but came in at a crucial moment for the brand, he added.
“We couldn't find anybody who had the capability to make our very special unique product, and at the last moment, we did," Bullock said. "They're really really great, and they're owned by an international company who was a big player in the European dairy space.”
Plant-based market remains resilient, despite the challenges
The brand is also remaining optimistic about the future of the plant-based cheese segment and the overall market, Bullock said, adding that “the market is doing fine.” This is despite recent sale declines in the plant-based cheese segment, which saw cheese sales come in at $230m in 2022, a 1.71% decline since 2021, and household penetration declining .3%, according to Plant Based Foods Association and SPINS data.
“I don't know that there's a problem with our sector. I think that there's a problem with the world right now. And we've got to figure out how to correct that. But I think the sector is doing fine. People are still wanting to eat healthier foods there maybe now even more because they're very concerned.”
While the overall plant-based market will see growth and innovation, many of the dynamics around funding and investing have changed and are creating obstacles for smaller brands, Bullock said. A lot of investment dollars that poured into food startups came from the technology "with the belief that it operated like tech," though the food and beverage industry has more “long and steady" growth, he added.
Not only is the current capital crunch creating an environment where it’s hard to raise money, but it’s also providing fewer opportunities for minority CPG brands to receive the support they need to grow their brands and bring diversity of thought and products to the entire industry, Bullock noted.
“We're in a dangerous place where again small brands, minority-owned brands, [and] women owned-brands don't have access to a lot of the capital that's necessary to stay or to get on those shelves,” Bullock said. “It is that diversity that helps markets grow... But I don't know that I think that there's a big problem like if people are saying, ‘listen we gotta get this huge growth like software.’ Well, it's not software.”