How Impossible Foods coped with a decimated restaurant industry

Even before this pandemic plant based meats, were making all kinds of inroads impossible foods, a good example. And then COVID comes along and lots of people get their mind open to doing new things on top of their pre existing interest in new things. But at the same time, shopping got kind of complicated. Some folks aren't sure where they should be buying things. They almost fear the grocery stores, sometimes But now they're also wide open to new innovations. It's an interesting mix. Now what? [MUSIC] Pat Brown is here. He's CEO and founder of impossible foods. And Pat tell us last time you and I talked it was pre COVID Tell me what you've learned at impossible during COVID. A lot of people come to this show and they say we've learned interesting little things about ourselves. One of the hardest impacted businesses is restaurants. More than 95% of all our business was in restaurants in March. And so we accelerated the plan that we already had, which was to roll out in grocery stores. And now we're in more than 10,000 grocery stores across the country in every state. So that that was not caused by but catalyzed by the COVID outbreak. Changed how we interact with some of our restaurant customers and we've helped them try to get through the, the epidemic by enabling them to saw our product, frozen directly and consumers and so forth. We've upped our what we call our social good efforts. Donating product to food banks and organizations that are trying to get out. People who are struggling and we also learned that many aspects of our business can function remotely which I was very dubious that we could kind of Keep our Mojo and hold the company together if we weren't all in one big room, which was. Yeah, I was curious about that because whenever I visited you guys, I've been in a big r&d facility where there are lots of people working on things, hands on. You're a hands on business. You don't make bits and digits. You make food. or the safety of our employees. And the same was true for our production workers where it is hands on can't can't just do it. By zoom, we shut down the physical operation for a period for close to a month for our production facilities and for our r&d was more than a month. And we use the time to create a much safer working environment, put a lot of procedures and protective measures in place. We've resumed production Maybe 80% resumed our full R&D operations and productivity. We've kicked all the non R&D people out of the facility. So that gives us a lot more space for social distancing. And Fingers crossed so far we've had, you know, zero cases of transmission. No good. A lot of the brands that we've talked to on this show, the steam keeps coming up during the COVID era, they've learned to get better at it. Accessibility is often the word that comes up. That's often because they have a digital product. Maybe the synonym for you is availability. And in fact you've made and are making some announcements around that. Just in the past month or so we launched in Trader Joe's and Walmart. Earlier we launched in Safeway Albertsons, Kroger AGV. [CROSSTALK] [LAUGH] [LAUGH] Now we're launching in Target stores nationwide over the next week or so. And the bigger news perhaps is we're expanding into our by far largest international market, We just had, Let me ask you about the Canadian launch. To those of us who aren't in the food business, we'll take a look and say, Okay, that sounds like a, like a quantitative launch. It's just more of the same thing from one big industrial market expanding up into another adjacent one, but is there also some qualitative differences in how you Present yourself in that market versus here or is it literally just a quantitative expansion? I would say it's somewhere it's somewhere in between. From a logistical standpoint, a lot of the supply chain Canada is the same as in the US. So there's that From a cultural standpoint, there's a lot of similarities between Canada and the US. Canada has been by far we've had literally thousands of inbound requests coming from Canada to launch there and restaurants and, and grocery stores and so forth. It's, it's by far the biggest source of inbound conquest. There's that, there are parts of Canada that are French speaking. So we've, you know, we have to obviously have all our information in French as well as English and there are different regulatory requirements and so forth with respect to labeling, etc but it's minor stuff It's it, I would say was relatively nothing is easy. Yeah, But I would say it was relatively easy among all the international markets. It was a relatively easy one for us. Unfold a package of the product out of my freezer and I'm looking at over here as it drips and thaws which will get it ready for weekend use. I don't see the V words on here anywhere. No vegan, no vegetarian. Still not part of the message. Why is that? You know, we have nothing against vegans and vegetarians and they are certainly allowed to buy our product. But the only consumer that we care about from a mission standpoint is someone who would otherwise be buying meat from an animal that is 100% The consumer we're thinking about when we're creating our products. Our mission is to completely replace animals as a food technology globally by 2035. We're serious, we're on trajectory to do that. It's inevitable. The era of history only goes one way here. But we do that by making products. That meat loving consumers voluntarily choose in place of the animal products. That's why we invested so much in R&D to create a product that's not just a decent plant based burger but something that a very significant fraction of meat lovers Substantially prefer to the standard calibers and we've been very successful actually in targeting meat lovers. You know the the restaurants that have launched our product. And this is true in Canada. The restaurants we're launching in Canada just has happened in the US and Hong Kong and Singapore. These are restaurants run by, I would say world renowned chefs who are famous primarily for their meat dishes, okay? their meat as opposed to vegan cafes and such. Yes. And and, and that's not by accident and there's two to two messages from that. Number one These are people who make their living in a reputation by delivering pleasure to meat loving consumers, okay. It's a big deal to choose to put something on their menu and it has to be not just good but it has to be good meat. It also has I think the value of Sending a message to consumers that this fear that you have that a plant based product can never deliver what you value for me, is misplace.If these chefs whose reputation is online Considered to be delicious, neat. You can you know lower your barrier to trying something new. Let me ask you about about branding in the food business. Chicken and poultry bird meats are often branded Foster Farms produce something like that but when you go to the grocery store Cow, and pig and fish meats usually aren't. They're just this sort of generic thing that is served by your grocery butcher or fish counter. And yet here is a strongly branded beef. What's the strategy there as opposed to long ago, you could have decided, hey, we're gonna make this a grocery store. Representation, just like beef to be more like beef, as opposed to saying no, we're gonna take this into its own brand cuz that's a that's a key decision. It's necessary for us because what we've done is we've created an entirely new category of food, okay? It's not a veggie burger. And it's not meat from animals, it's plant based meat. Okay? There's never been such a thing before. And meaning meaning a product made from plants that delivers what hardcore meat lovers want from me. This is an entirely new thing. So we have to distinguish ourselves. Obviously from the animal based product, and also from all plant based products, all previous and even current plant based products. Because this is plant based meat, it's not fake meat. First of all, we only want meat loving. Well, we'll take vegans, but our target consumer is someone who loves meat. And those consumers, by and large expect the plant based product to be terrible, okay? And if they tried most plant based products, I think they will regard as a completely inadequate replacement for meat, but not our product. And so it's critical for us to distinguish them from the other stuff 2035 let's go back to that in the occasional interactions I have with big food companies out there that make all kinds of foods and many of them have now started to make some kind of a plant based meat or so they say They will often infer that Yeah, you guys have this commanding power in plant based meat. They'll concede that at this point, but they also at the same time will give me the impression that Meat itself from animals is not under threat. They've got kind of a dichotomous thing there. And at the same time, they'll also admit that much of their market is in so called flexitarians, which are meat eaters, and that they're already having some erosion in their core meat eater. So there's a lot of interesting sort of Almost conflicting awarenesses there. What do you know that they don't about 2035. we are growing exponentially and our growth is coming at the expense overwhelmingly at the expense of the incumbent industry. We had data from consumer interviews about When they choose to buy our product, what's a displace in their diet. Now we have actual data from grocery stores that track individual consumers through their loyalty cards and so forth. And and it supports what we had had. Gleaned from the interviews, which is the large majority of the purchase of our product come at the expense of the animal based product. These are consumers that historically have bought ground beef from cows. And if you look in their receipts, what our product is displacing, More than 70% of what's being displayed is ground beef from cows. Okay, okay, so that's interesting that's what they're doing not what they're saying which is always the more interesting insight.>> Yes, yes exactly and, and and that's exactly what we want. Okay for us a sale only really Counts in terms of our mission if it erodes the sales of the incumbent industry. And it's working. And I'm sure they're looking at the same data and seeing the same thing. And again, this only goes one way. Not only are we growing production and distribution and so forth and awareness. Our products are getting better. They're going to be getting more and more diverse. The incumbent industry is stuck with a prehistoric technology. It's ridiculously inefficient, not only from an environmental resource standpoint, but economically that's why asymptotically we're going to be able to compete Successfully on price with these guys, and they can't make their product any better. It's just this. They're stuck with this prehistoric technology that's fundamentally unimprovable. And they've done a lot of things with the supply chain to make it more efficient. They've turned slaughterhouses into gruesome Assembly lines, but that's about as far as it can take them. We have all kinds of ways that we can improve our supply chain, our production efficiency, the quality of our products, both deliciousness, nutritional value, affordability, and all of that. This only goes one way, the demise of that industry is inevitable. They're fighting a weird rearguard action right now. And I think that difference you point out in the difference in the amount of innovation headroom between the two is quite stark. We've been talking to Pat Brown, CEO and founder of Impossible Foods. [MUSIC]