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Impossible Foods wins Starbucks' US love as it chases mainstream goals

Thursday, June 25, 2020 by Snacks
_"I thought we had something special" - Beyond Meat to Starbucks Canada_

"I thought we had something special" - Beyond Meat to Starbucks Canada

What a plant-based player... When it comes to alt-meat, Starbucks is not monogamous. After linking up with Beyond Meat in Canada and China, Starbucks has moved on to Impossible Foods sausage in the US. The Impossible Breakfast Sandwich will be available at 15K Starbucks stores - and it's all about the mass exposure:

  • Impossible's biggest partnership: By hooking up with Starbs, Impossible just 3X'd the number of eateries that carry its new breakfast sausage.
  • Bigger than BK: Last week, Burger King rolled out the Impossible Croissan'wich at 7.5K US stores (BK also carries Impossible Whopper). This Starbucks partnership is 2X bigger.
  • But it's not exclusive: Starbucks sells rival Beyond's products in Canada and China. Beyond stock dipped on the Impossible two-timing yesterday.

Impossible wants to be "basic"... It doesn't want to be viewed as a niche alternative. But it's running into the (vegan) chicken and egg problem: to get more meat eaters, Impossible has to lower prices to compete with cheaper regular meat — but to lower prices, it needs a large mass of regular meat eaters. So big new partnerships are key.

  • 90% of Impossible buyers are traditional meat eaters who dabbled in alt meat for reasons like the pandemic meat shortage, according to Impossible's CFO.
  • “We don’t think of it as an alternative (meat) industry. We think we’re making better meat consumed by the meat eater."
  • 18X: How much Impossible grew its grocery presence since March. It also launched direct-to-consumer online sales.
THE TAKEAWAY

The road to mass appeal could be rocky... First, Impossible has a bigger rival: Beyond Meat has a publicly traded $9.4B market value, compared to Impossible's ~$2B private valuation. Second, big consumer brands like Kellogg, Kraft, and Nestle have money to churn out cheaper alt-meat competitors (which they're already doing). Impossible thinks its quality is way better, but it needs growth ASAP to compete. It's already a viable acquisition target for these bigger brands, and may even be open to it.

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