BLIVE: Bloomberg Sustainable Business Summit, Impossible Foods CEO on Food, Tech & Sustainability

BLIVE: Bloomberg Sustainable Business Summit, Impossible Foods CEO on Food, Tech & Sustainability

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I'm doing great. Took over in April. We do a little business talk. Before we get into debt. Took over in April. How's it going? It's going great so far. Yeah, it's been a wild six and a half, seven months. Counting. Why wild? It's a very dynamic category industry with huge potential. And it's in its infancy.

And I think hopefully we'll talk about that today. A lot of people say, oh, the plant, these categories, it declining is the demise of it. It makes a great headline. It's a sensational story. And I would just say that it hasn't been established and created yet. So a big part of what I want to do it I'm putting. You mean this is what should have been established? No, it's been around in earnest for, you know, probably less than five years. OK.

There's been vegan burgers and things out for 10 or 12 years. But in terms of all protein that's going, you know, trying to displace the animal product. That's a three to five year phenomenon, and we just launched a retail three years ago in the middle of Covid.

So if you discount, we've probably been available at retail for a year. Yeah. And so I think it's in its infancy and I think it's yet to be created, yet to be established. And I think it's our job to really create this category. It's 3 billion dollar category and a one point four trillion dollar addressable market. So it is very, very small. Right. And it's our job to mold it and shape it

and grow it. And that work hasn't been done yet. Piers, someone who knows the food industry really well, you know, we just remind you, reminding me your 10 years at Chobani and you're doing this, you understand, kind of reaching consumers in what they want. I want to go to a recent Bloomberg opinion piece that talked about plant based product sales in the U.S. and they said they've been flagging. Sure. The categories, meteoric growth in 2020, flattening in 2021. And since last September, a key portion

of its retail sales has dropped more than 10 percent. Its reputation has also been badly bruised by the stock performance of Beyond Meat, which is down more than 90 percent from a peak back in 2019. The column does go on to say, still, it's a mistake for investors to write off the value and potential of the sector as a whole, which will be a keystone among climate solutions going forward.

So first up, I'm going to get to the climate solutions in a moment. The first part, though, I'd packet for me. What is, though, wrong with plant based? Industry today and the sales.

And then we get into kind of so the category is down and that is a fact. Right. You can read ISE data, Nielsen data. It was plus 40, 50, 60 percent. Now it's hovering at minus five to minus seven depending on the week. And there's a lot of reasons for that.

There was a Covid bump probably in there somewhere along the lines. There was a novelty bump when it really first became available. So some of it's a correction, some of it's some noise in the data and then some of it. Are there are players in the category

who will remain nameless because I'm a proponent of the category strategies that are not doing well. And so, you know, the categories, the composition of companies. Right. And so if there's some companies in a category that don't do well, they can bring the whole category down. And so we're doing well. I mean, we're growing 60 percent at retail.

We're in 40 applying top line sales. And so we have our own playbook and we have our own, you know, approach here. But I don't think I think it's lazy to look at comparables and try to project that on a category. Right. Each company has their own issues and challenges and playbook and some work, some don't work. But that doesn't mean that you should cloud the whole category.

Right. And I think the category also is confusing because some of the players in the category are all vague and burgers that are veggie burgers and some of them are all meat, which I don't like the name of that. But those are those products that are displacing foam. Never good. Never good for me. Never good. And then, look, I think the animal industry has done a quite a good job.

They're highly coordinated and pretty loud in trying to confuse this plant based meat category. Right. With calling it processed or faux were too many ingredients. And they have a lot of money and they're highly coordinated, like I said. And I think where the mistake of the plant based meat is, it's young, it's restless, it's very fragmented with a lot of different players. And we have not been coordinated in our messaging and we have not been loud in support of our products. And so combination of big meat kind of

being loud and coordinated and plant based meat being shy and uncoordinated has not helped the situation. So let's talk messaging and let's get to the second part of that Bloomberg opinion column, which said it's a mistake for investors to write off the value potential of the sector as a whole, which will be a keystone among climate solutions going forward. Climate solutions, culture forward. So why is plant based food a keystone among future climate solutions? Yeah, it is the scale of food because this would be great for the narrative. Yes, it would be great for the naira. And it's it's it's a it's a complicated message to get out there from a consumer perspective. And I think a lot of the issue around, look, the food is now come a long way. So the food now stands up against the

animal products. And most people that try it say it's much more than I thought and taste, texture, flavor. And especially when you build a burger and you have cheese and lettuce and tomato on it, it's very difficult. Right.

And we hear that with whoppers and we hear that with our impossible sausage sandwich at Starbucks. So the food isn't a really good place. We have not got the health credentials across. Right. It's zero cholesterol meat. Right. That is 30 percent less saturated fat

and less calories. That has not been communicated. And then the climate piece of it, there is no. Other alternative to reverse climate change other than food.

So most people equate climate change with electric cars, recycling, less electricity, less water use, those are all good things. They will not reverse climate food sources, all of them food systems account for a third of emissions. Third of emissions also, if you think about 50 percent of the usable earth's landmass is animal agriculture related and all of that land has been cleared 50 percent, 3 percent.

Our towns and cities, 50 percent of the entire earth were so that. So the scale is huge. And as a result, 60 percent of our wild animals have been killed in animal products. And I want to sit here and go on and on about how bad the animal industry is.

Let's talk about your climate imprint when you got it. So our plant based meat, if you look at 50 million pounds of our plant based meat versus 50 million pounds of animal meat. Right. Direct comparison, we really will use 4.5 billion less gallons of water. We would save thirty seven million trees and we would avoid one point five billion pounds of CO2. This is. That's 50 million pounds.

That's a small amount, right? That's a fraction of what we will make this year. So. The scale is massive, right, when it comes to food. So food choice and climate change is a very, very powerful thing. It's misunderstood. It's many people are not aware of it. Right. They just don't equate food choice with

climate change. So the more we can educate people. I think it can be quite powerful. And there is no other tool out there that has the power to reverse climate change like food choice.

Right. But it is interesting because we focused so much on Ivins and I guess a little more insight, which is, by the way, a good thing, right? Right. But if all cars went to electric, it would not have the impact of choice. So good business. And you and I talked about on the phone.

I care. I turn over. I look at my food. I want know what it is. My 19 year old daughter does the same thing. Sure. Help me out. Because part of the reason I'm not your customer and I probably should be because I care about my health and what goes in my mouth is that I still am concerned. And I even brought it up in the newsroom today and in our makeup room. I'm like, who's eating this stuff like

sodium, sodium, like you talk about the healthy part of it. Mm hmm. I mean, have we can it be better, it can be better, so one of the big things I want to do an impossible I think we have a really good product and I need to reformulate. Sure know we're on beef 2.5. OK, we're not gonna go ISE pardon me, go

on an iPhone 14, but we're going to go probably beef 4.0. OK, I can see probably a three point only three point five and a 4.0 to perfected taste, texture, flavor, nutrition. And every time we reformulate that food. And I think this is a big part of it. Right. I have to continuously improve those

products. And these products have only been around three or four years. So it's not unusual to continue through technology and new ingredients to try to protect the product. And in doing that, I think will chip away more at saturated fat. Sodium will simplify the ingredient list.

The ingredient list is long. It's all plant based, but it's long because you're trying to mimic the texture of animal meat. It's very hard to do. Complicated, very complicated.

So people say it's processed. I think Twinkies are processed. Right. It's artificial. It's not processed because the ingredient is our process, but our food is not processed because the ingredient list is long.

We're using a lot of different things to mimic the texture, to get people to have it instead of the animal product. But it's all plant based. Right. So I'd much rather ingest that than something highly artificial. And then, look, processed is food that doesn't contain a lot of minerals and vitamins and protein. Right. Our food contains vitamins, minerals and

has more protein than the animal product. So it's nutrient dense. It's nutrient rich. And yes, the ingredient list is long and we'll work on simplifying that. But these are all the misconceptions and myths out there that have been affected. People like you. Well, you and I kidded, you know, you

said maybe we need a got milk campaign. And folks remember it. It was a really productive campaign. Well, I'm still a milk drinker. Yes. Although you like.

Oh. I do like milk. But with Oreos, you got to have the real thing. But what's interesting is that I do wonder, do you guys like what's the thinking? You mentioned all the players and some of them are start. Some of them are Maple Leaf.

Well, let's see, Kraft Hines investing in plant based technology or ConAgra. You've got Kellogg's, Morningstar Farms. You talk about them. I mean, so these are some really established players. What do you as an industry, you're trying to create a sustainable business that is good also for the climate. How do you guys.

What are the conversations you're having? Are you not having them? And that's part of the problem. You know, I think in the spirit of total candor and honesty, we haven't had enough conversations. I think there are a lot of players in the space. I think some are small startups and

they're trying to get investing and funding. Yeah, some are more established and it might be a side business. You know, Morningstar with Kellogg's, right. Some having their own issues and challenges right now. So some are distracted. So as a category, we don't have a coherent message. And by the way, as a category, we should

be we're kindred spirits, right. We should really kind of coalesce around some messaging and really combine resources as you go get a food infrastructure, just like fossil fuels and the integrated oil companies going up against these. It's tricky. In the end of the day, you know, as CEO of Impossible Foods. I'm not happy if I'm taking share from other plant based products.

Right. That's not going to move climate change. We have to displace the animal analog in order to do this. So we should do a lot more messaging and we should do a lot more together to aid and abet this climate crusade that we're on because we're running out of time. And I think so now, I think it used to be people there were so many people that didn't believe climate change was real. So now I think that's less of the issue. The issue now or the challenge now is what do we do about it and how do we fix it? Right. And food choices kind of at the bottom.

Of people's understanding. So this is a massive communication opportunity challenge, probably the biggest out of any industry I've ever seen. And so messaging is extremely important. I want to ask. Who believes in climate change?

Who doesn't believe in climate change? Yes. So that's really not the issue. Right. Who eats plant based food regularly? Who doesn't? OK, interesting. Yeah.

So there there is that there's the opportunity and the challenge right there. All right. So if you believe in climate change, don't eat plant based meat. That's because either messaging, you don't understand it.

You heard bad things about it. You don't equate it to you don't equate your eating habits to helping solve the climate challenge. OK. You talked about distractions and maybe

there needs to be more cohesion among the industry. And I'm gonna just if you indulge me for a second, cause there there's a headline today and I think about some of the infighting that's going on. This had to do with the revoking of a key impossible foods European Union patent. Sorry, I should have warned you, but it

just broke this morning. Like, how does this kind of stuff distract you or is this a problem or is it just like. I didn't read about it? Listen, I think look, we put these how we make food is important to us. We have a lot of hype here. Cars are important. Yeah, no question. Right. And making plant based food tastes as

good as an animal products is not easy work. Right. And we've spent a decade doing it. You have a lot of IP around our food and, you know, principally speaking will defend our IP. But I think it's a distraction. It's a distraction, to be honest with you. I think we have bigger fish to fry. And I think, you know, we have a bigger

opportunity to go after. And I don't really like all this back and forth. Like I said, in the end of the day, I think we should be a coalition of the willing.

Yeah. Right. In this plant based sector to try to take on the real competitor, which is the animal analog. Right. And we were better together than in, you know, individually. ISE. We don't have the might. By the way, just real quick. Yeah.

When these companies are not large. I know, right. We're not. Tyson been in business for 80 years. That's a Fortune 50 company. These even big plant based companies

are, you know, half a billion dollars in revenue. And so we don't have the muscle, the might and the money. Right. To go up to again to go against the establishment. Now, we could better do it, I think, together. Well, you know, it's interesting.

I used to do a lot of stuff which Paul Allen. Sure. And Steve, ours and his team. And I know it's a different team now. And talk with Brian Nichols over there.

Yeah. Like when they started that company, they really were trying to do food in a different way and producer and did talk about the establishment. And it's tough, but this whole idea of regenerative farming. Yes.

So how do we if we're creating sustainable businesses, you guys are creating a sustainable business. How do you do it? I mean, is it you need. We talked a lot about messaging. But I mean, so what are the steps ultimately? Is it just messaging that ultimately will grow your business? I think we have to longer term for the products. So if I look at our business, I think we're gonna invest a lot of money on continuously improving. So like, you know, so taste raven, you

know, taste, texture, flavor and nutrition. Right. The nutrition is good, right? Could be better. OK. Right. And then I think to tell the world about how good our food is and how and look, it's a complicated value proposition. OK. It taste as good as the burger that you

grew up with. It's better for you and it's better for the planet. It's clunky. I don't have the value propositions to sink in my head, but whoever cracks that code is going to, you know, blow this market wide open. So the value proposition to the consumer and a lot of this, by the way, is trial. So if you look at impossible, you know, we're growing at 60 percent. We have 5 percent household penetration now.

Ninety five percent of the country or even try to shift. We have 400 TDM, PS PS total distribution points. You know, when I was at a Trapani, we had 6000. So we're we're, you know, increasing availability and approachability and accessibility is extremely important. We have 70 percent awareness. Eighty three percent of the country hasn't even heard us. So a lot of this is fundamental food marketing, right? Yeah. Making your product more.

We're in 40 thousand outlets in food service. There's one point five million outlets in food service. So that's why I say this is just getting started. Right. And so availability, approachability, awareness, all important. The other thing I would just say is I

think that this plant based community got the messaging rolling the beginning. Right. I think we want to vilify meat eaters. I don't think we want to judge meat eaters. We want to invite them to try our products and incorporate them into their lives. And if you if you have one or two burgers out of your 7 a month that are plant based, that's a win.

Right. Right. And it's not a binary thing. Right. People are flex Italians people. It's not whether you're a meat eater,

non meat eater. There's a lot of people in that. There's a movable middle. Right. That has not been marketed to and spoken to in an inviting way. So when you either are doing stuff with Wal-Mart or fast food companies or airlines or, you know, you've got client pledge, elite arena. Right. Talk to us a little bit about that

thinking and how that's helping in terms of messaging. Narrative and just really your mission as a company that's not just creating products for consumers. That are better and better for the planet, but also you think about your company culture and the buy in there. Yeah. I mean, Impossible is a very mission

oriented company, right? And a lot of people do an impossible for the climate mission and to be truly, truly, truly. Yeah. Now, we can't achieve that unless we have a sustainable business. So I think the other thing we have to clear up here is that we're not we're a for profit company. And the better we do as a company and the more plant based meat we make ship and sell, the better we do as a company, the more we achieve the mission. And I think, you know, ESG is a term thrown out.

We're all trying to figure out exactly what it is and what the value of it is and all that. We have a big giant 8 right gap. And and we're probably one of the only companies or one of the few companies that the product we make is the E, right. We're not buying carbon credits and we don't have a sustainability department. We have a company that's sustainable. Yeah, yeah. But none of us will achieve this unless we can figure out the economics. Right. So we have to have a vote.

Impossible to be a viable, thriving business. We need we need it today. We need gross margins. I know it's terribly boring stuff. And and and we were right.

I think it's kind of why I need growth. Yeah. That will help us achieve the mission. It's interesting. A lot of people can't wrap their mind way, way. So you want to be this business that makes money and profit in order to achieve the mission? Yes, we have to. And I think that's the other thing that's happened. You've seen a lot of these companies come and go in the plant space.

Well, do you think in the timeline for the plant based industry, we need to maybe rethink it a little bit? My guess is that eight or do you think the next year or is it two years that the growth just incredibly. No. I think it's a marathon, not a sprint. I do. I think it's not that we're ISE here being in a play. I think it's five to 10 years out. I think the world is moving in a in a plant based direction that's undefeatable. There's not enough animal meat to feed

the population. Right. Right. And yet you saw the droughts over the summer and input costs are up. And, you know, they're culling herds. And, you know, animal products are up twenty three percent in the last 16 months because water usage and drought and raw rain and war. And so this is inevitable and it's essential to happen where people are going to need to eat more plant based. In terms of pricing, where do you feel

like plant based or ultimately settle in and kind of a pricing spectrum of food and protein? Yeah, I think that's another thing where it's been thrown out like, oh, the plant based industry doesn't work because the pricing. Right. So if you if I just look at impossible, if you look at our data in two years, we've gone down twenty three percent in price and the animals gone up 23 percent. So we're less expensive than grass fed and organic because you could go lower because you purpose. I think we I think we will continue to go lower over time because I think the animal analog will continue to go up. It's just more efficient. Growing soybeans and pea protein requires a lot less water. It's a lot more efficient. Right.

It's easier to ship. Your freight is less the factories require less employees. It's a more efficient supply chain, much more efficient supply chain. So I think with scale plant based

continues to come down and I think I see no path but the animal and I continue to go up because of input costs driven. I think we have any questions. Any questions. Hi. Hi. How do you see entrance like like not playing in the same space? I applaud it. I think not because a good company. I think it was smart to do the deal with Kraft. If you think about it, they're making plant based alternatives and then you have a Kraft Hinds that has might muscle distribution.

And so, you know, not so has the food. Yeah. And they kind of hitched onto the wagon of distribution. Right. I think it's a smart joint venture,

whatever they're calling it. I applaud it. Would you can you continue to go alone? I can go on to and but I'm open to partnerships. I think whatever it takes to scale up, we should be open to. Right, because there's a larger thing at work here. Yeah. So I'm very, very open to partnerships.

You know, about medical and scientific studies. And that plays into the marketing piece of your food and, you know, kind of convincing those consumers that you all were talking about earlier. You know, the branding piece of this, trying to convince them to try your product. So curious about any sort of testing or, you know, data that you're putting out around that. Yeah, well, I think the first thing we have to do is just get the description better. Right. I mean, I don't like plant based meat. It's confusing.

How would you define what you want to call it? I know. Call it meat from plants, animal free meat. I don't have to in seven months. I have not cracked the code, by the way, but I don't think that's helpful.

And how we're describing. Plant based meats like. Is that a riddle? I don't even understand it. I don't think we've gotten the claims. Right. Right. So we're 33 percent less saturated fat.

Yet I hear people say our stuff is high in saturated fats, 33 percent less than the animal half period. Tom Keene, zero cholesterol. I hear Tom Brady is available for some advertising. He sat down with the crypt, I think. Yeah, he's got to focus on. He barely won that game and let fly the.

But we are zero cholesterol. Carol Massar kidding. Yesterday on the phone when we launched oat milk, I remember we called it lactose free milk. Right. So you took the negative of milk. Like no one loves lactose. Right. And lactose intolerance is a thing. So I don't know. Maybe it's cholesterol free meat.

I don't know. Like cholesterol? Not a good thing, right. With I don't care who you are. No one embraces cholesterol. Right. Right. So this is zero trans fat, zero

cholesterol. When you get a doctor saying this is what you should be eating, like there's a B. And even without doctors, I don't think people are dying to have high cholesterol. So. And, you know. Yeah. So we have to figure out a shorthand. Well, if it's a scientific study where

it's a commonsense way of saying what this proposition is, and I don't think we've had academic ways of saying it, we'd have scientific need to speak to consumers in. Regular language and focus groups. Yeah. One last question. One last question, focus group right here. What can other CEOs take back to their office to help get their company and maybe buy in on climate sustainability pledges that can be acted on? I know in our call we talked about people say a lot of things and then they don't show it. Pledges are great, but actions you get

are just final thought. Yeah, I think it's not a department. Right. And I don't think it's a pledge. I think it's a way of working in a way of life. I mean, we join the Amazon climate pledge even though our food is inherently evil. That's because we can improve upon other aspects of our business. Right.

When I look at our factories, they could be more efficient. When I look at our freight and how we ship things, we could be doing full trucks and we could be buying electric. There's things we can do when I look at our packaging. We're not perfect. We could do better on our packaging.

So I think if everyone just I think it's a consciousness and it's a mindset. I think if everyone just looked at their business and all these little things go a long way to core. And it's to me, it's a mentality and it's a way of working versus a pledge and versus a department.

And and then that's the first thing. The second thing is you'd be surprised how your employees will just galvanize around this. It's quite it's a prideful thing. It's a it's an emotional thing. And it's a very high energy topic for your employees. So they would love it as well. So I think it's a good morale boosting thing as well. Well, look forward to seeing what's next

from you guys. Thank you. Peter McGinnis, thank you so much. Thanks, everybody.

2022-12-11 00:07

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