Pandemic sows seeds of direct-to-consumer models for plant-based food

After years of cultivating a restaurant-first strategy, Impossible Foods has leapt from its first national retail launch in Kroger into a direct-to-consumer channel in the course of just a few weeks. Impossible announced last week that consumers can buy its plant-based ground protein directly from the company website.

"It was one of the things on the list," said Jessica Appelgren, vice president of communications at Impossible Foods. "But COVID made it go to the top of the list."

Impossible joins a handful of other plant-based food companies that drastically have shifted their business strategies due to the pandemic. Exponential Foods, a plant-based meat company focusing on Mexican-style meats, was set to launch in US grocery stores when the pandemic hit. Suddenly its retail partners were more focused on staying afloat and adjusting to new social distancing regulations than launching a new product. 

"We had direct-to-consumer in mind," Exponential Foods CEO Iván Jiménez said. "But our idea was to wait a little bit because of the complexity in taxes, and we wanted to avoid that for a while."

Selling products online to an individual is much more complicated than selling wholesale to a grocery store. Each city, state and country has its own sales tax to consider, and then Exponential Foods also had to quickly develop a specific pricing strategy that still allows for a strong retail price later. 

The pandemic changed that timeline. The company's intended product for U.S. grocery stores already was produced and waiting for consumers to buy it. Jiménez decided that tackling the tax and pricing issues of selling direct to consumers was worth it, and Exponential quickly launched a direct-to-consumer channel on Amazon and the company website.

Another company, Fable Food Co in Australia, hadn't planned on a direct-to-consumer launch for a few years. Its focus had been retail and food service for its mushroom-based brisket and pulled pork products. Its inventory of 1 kilogram frozen packages was designed for restaurant use but once restaurants shut down, the founders had to develop new ways of getting the product into the hands of consumers.

Instead of a traditional "always on" e-commerce model, the company decided to create pop-up date night deliveries, servicing only one city at a time. For $69.99, couples got a premade entree from a local restaurant using a Fable ingredient, a four-pack of craft beer, vegan cupcakes, 1 kilogram of Fable to use later and a date night activity such as a pottery kit and Zoom class. 

"It turned out to work really well because it was special and limited time," said Fable Food CEO Michael Fox. "But actually it really stemmed from the logistics of shipping a frozen product. In Australia, to do frozen direct-to-consumer you need a scale that we didn't have."  

By keeping the delivery focused on a single location and limiting the number of deliveries, Fable was able to get its frozen product into home kitchens without huge logistical costs. Fable has a refrigerated product it can ship more easily direct-to-consumer, but the company still plans to continue the successful pop-up model. 

Plant-based meat companies know not to let a crisis go to waste 

The quick shift to direct-to-consumer and a focus on retail comes as plant-based protein companies see a huge opportunity created by the pandemic. Early reports pointed to Wuhan's wet markets as the origins of the novel coronavirus. And while new studies are starting to doubt this narrative, there is still growing awareness that the next viral infection could come from Western industrial meat farms, pushing consumers away from traditional meat products.

"We now have the technology to vastly reduce the risks of modernized meat production with plant-based meat," said Caroline Bushnell, associate director of corporate engagement at The Good Food Institute. "[Plant-based meats] remove food insecurity and zoonotic disease concerns that are just going to be inherent in a supply chain that is dependent on animals."

Supply chains were upended as the pandemic caused meat factories across the country to shut down, creating the great meat shortage of March. The world's largest meat producer, JBS USA, had to close its Pennsylvania plant for two weeks, and after an outbreak at its Iowa factory, Tyson followed suit. Empty shelves forced consumers to buy alternative products. By Memorial Day, retail grocery stores saw a 30 per cent decrease in meat supplies.

"Conventional meat production is environmentally unsustainable but what has been less acknowledged is that it's also going to become increasingly economically unsustainable," Bushnell said. 

The supply chain for plant-based meat is much easier to turn off and on. Instead of a system that requires precise planning, year-long lead times and many links to raise, feed and slaughter an animal, plant-based meat companies can store the dry ingredients easily and respond quickly to turbulent markets, she said.  

"Market efficiency is one often overlooked area," Bushnell said. "It allows a responsiveness to market conditions that animal agriculture just can't provide."

The meat shortage triggered a 20 per cent price increase, creating another long-awaited opportunity for plant-based meats. Reaching price parity always has been a goal of plant-based meat companies as the higher prices many traditionally charge are a considerable barrier to entry for many shoppers. Beyond Meat hopes that the increases in beef costs will push its products to within 20 percent of traditional animal-product prices. And by 2024, it's committed to release at least one product priced under animal protein. 

After these compounding events, the data indicates rising consumer success for plant-based meat. Nielsen reported that alternative meat sales increased 264 per cent in March and April. According to Beyond Meat, it saw a 12 per cent increase in retail sales in March, with some grocery stores doubling their typical volumes. Impossible Foods reported an 18-fold increase in retail coverage compared to the beginning of the year. 

These companies have turned their focus to recipes to keep shoppers from reverting to their old standbys. Fable has an entire section of its website devoted to recipes.

Impossible went even farther. "We decided we needed a cookbook because the home chef was so important to our success," Appelgren said. 

In the beginning, plant-based meats looked to trained chefs and restaurants to launch them onto the scene, and give influence and legitimacy to the products. The pandemic has proven that the home cook is the next great frontier. 

This article first appeared at GreenBiz.com

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• Topics
• Management
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• Impossible Foods
• plant-based
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