A vegan burger company has laid off a number of employees, in the latest sign of unrest in the fake meat space.
Vegan burger company Impossible Foods has laid off a number of employees as part of an internal reorganization, in the latest sign of trouble in the fake meat space.
Impossible Foods, whose plant-based meat substitute is made from a mass of soy protein produced by genetically modified yeast, has laid off fewer than 15 of its 800 employees worldwide, a spokesperson said at Bloomberg.
“Earlier this month, we made organizational changes across multiple teams to ensure the functions supporting our business are better aligned with our strategy,” the spokesperson said.
“This included downsizing some teams and as a result a small number of employees were affected. We continue to actively hire, with plans to increase the size of our team throughout the year.
Impossible Foods launched its first burgers in 2016 with a focus on restaurants, before receiving approval from the US Food and Drug Administration in 2019 to sell its products in retail stores.
Burger chains Grill’d and Butter became the first Australian retailers to offer Impossible Burgers late last year.
The California-based company, which has high-profile investors including Bill Gates, recently closed a $500 million (A$700 million) funding round in November at a $7 billion valuation (9, AU$7 billion), according to Bloomberg.
The company has raised nearly US$2 billion (AUD$2.8 billion) since its inception in 2011.
It said in a November press release that its products are now sold in about 22,000 grocery stores, up from just 150 stores in March 2020, as well as nearly 40,000 restaurants worldwide.
The new funding would be used to further its “growth in retail and across its supply chain, product portfolio, technology platforms and international expansion plans – all of which are essential to its mission to address the urgent threat of climate change caused by livestock,” the company said.
At the time, Chief Executive Pat Brown said the IPO was “inevitable”, but would not specify a timeframe.
But news of Impossible Foods’ restructuring comes as Beyond Meat, a NASDAQ-listed rival that debuted to much fanfare in 2019, is being beaten by investors.
Shares of Beyond Meat jumped 163% on its May 2019 debut, but have fallen 60% in the past 12 months to close at US$62.49 (A$87.37) on Monday. That was led by a sell-off in October after the company posted a sharp drop in third-quarter sales to $106m (A$148m), missing its previous guidance by around 30%.
Earlier this month, Bloomberg reported that Beyond Meat was being targeted by short sellers, who are betting the company’s stock price will continue to fall.
According to research firm S3 Partners, Beyond Meat was the most short-sold company on the Russell 1000 Index, with short interest amounting to 37% of the company’s freely traded shares, up from 26% at the start of October.
Some analysts have suggested that the plant-based meat category could face a tough outlook as fewer households than initially expected adopt the products.
Bank of America analyst Peter Galbo warned that plant-based dairy products are proving more popular with consumers than plant-based meat products, which are consumed less frequently.
But James Brumley, analyst at The Motley Fool, says Beyond Meat is ripe for a “short squeeze”.
“Given the impending growth of the plant-based meat industry and Beyond Meat’s place in that industry, the case for buying the stock now that it’s been halved since the middle of last year seem much stronger than the case for continuing short selling here,” he wrote.
Talk to The Wall Street Journal In July last year, Beyond Meat chief executive Ethan Brown said the pandemic had helped the plant-based food movement.
“It was a time of soul-searching for a lot of people, about big social issues like race and equity,” he said. “Awareness of the link between livestock and climate has only accelerated throughout the pandemic. All of these things work in our favor.
Mr Brown said his ‘holy grail’ was to make his imitation beef, pork and poultry ‘indistinguishable from animal protein’.
“How do you make a raw chicken breast with the translucent skin, the color transition that happens? ” he said. “The steak, given its fat and protein distribution, and, of course, the bacon? These three things are the Holy Grail.