Investors are finding Impossible Food’s plant-based meat increasingly appetizing as the brand leans into retail.
Impossible announced last week that it has raised another $200 million in funding, bringing the company’s financing to a total of about $1.5 billion.
This latest round, the second this year, was led by the hedge fund Coatue. It will be used to pay for product development, international operations and more.
The news comes at a time of rapid retail expansion for the plant-based meat maker: In March, the company’s signature product was available in about 150 grocery stores. Now, customers can find it in over 8,000 retailers, including major outlets.
Impossible first debuted its commercial product in restaurants. But it was always planning to go big on retail, Impossible’s chief financial officer David Lee told CNN Business Thursday. Consumer behavior driven by the pandemic — mainly, a spike in demand for protein in grocery stores -— drove Impossible to expedite those plans.
Over the past several months, demand at the grocery store for meat, dairy and other staples has risen as consumers eat most of their meals at home. Impossible reacted quickly.
In April, the company temporarily allowed its restaurant partners to sell Impossible directly to individuals. It later launched a direct-to-consumer platform. And over the past few months, the Impossible Burger hit shelves at Walmart (WMT) and Publix.
Beyond Meat (BYND), Impossible’s main competitor, has also been aggressive in its retail strategy.
During a recent analyst call discussing the company’s second-quarter results, Beyond CEO Ethan Brown said that at the start of the year, products were sold equally in foodservice and retail. In the second quarter of this year, he said, “the balance was 88% retail, 12% foodservice.”
Impossible remains focused on its retail strategy. This week, the company announced that Athleta CEO Mary Beth Laughton has joined its board. “We are eager to tap into her experience and insights in retail, marketing and e-commerce,” during the company’s period of “unprecedented retail expansion,” said Impossible CEO Pat Brown in a statement announcing the news.
But that doesn’t mean it’s moving away from restaurants, said Lee, the CFO.
“We’re very committed to our foodservice partners,” he said. And so far, chain restaurants have remained committed to adding plant-based foods to their menus: In June, Starbucks (SBUX) added a breakfast sandwich with Impossible sausage to its menu. Others, like KFC, are testing out plant-based items made with Beyond products.
Despite the growth in sales and availability of plant-based meats, they’re still far from replacing animal protein. And it’s unlikely that consumers will fully embrace plant-based meats until they’re as cheap as traditional meat, Wells Fargo analyst John Baumgartner said in a recent note.
“Significant price reductions will be necessary to increase both the breadth of purchase and consumption frequency,” of plant-based meat, he wrote.
Though both Impossible and Beyond Meat have lowered prices or offered value packs, their products are still more expensive than comparable animal protein. Lee said that Impossible’s product won’t reach price parity with animal meat until the company is able to achieve the right scale.