The IPO rumor mill is swirling with news that Impossible Foods could be preparing for a $10 billion IPO. Yes, you read that right — $10 billion.
If you aren’t familiar with the company, it develops plant-based substitutes for meat products — similar to the recently IPO'd Beyond Meat (NASDAQ: BYND). You could say that Beyond Meat sort of started the craze for plant-based food alternatives and substitutes for meat products with its IPO. There weren't too many people talking about plant-based alternatives until the news of Beyond Meat’s market debut. Now, most grocery stores have a special (and growing) section for plant-based alternatives.
Impossible Foods was founded in 2011 and is headquartered in Redwood City, California. The company aims to move the food system in a more sustainable way. It has become famous for using heme protein in its burgers, which allows the burgers to have a similar taste to beef. And last year, the company announced that it is aiming toward producing a vegan alternative to dairy milk, which Impossible Foods claims will have the taste and appearance of real cow’s milk. It will be sourced from plant proteins and be used the way dairy milk is used in cereals, recipes, and coffee drinks — even foaming up the exact same way as cow’s milk — a very important aspect for many coffee drinkers.
The company’s website reads:
The outside world, Impossible Foods is a food company — but at its heart is an audacious yet realistic strategy to turn back the clock on climate change and stop the global collapse of biodiversity.
You could say that is a little bit of what Impossible Food’s mission consists of.
The company recently launched its first national TV ad campaign, which could the start of building brand awareness for potential investors and orchestrating hype surrounding a possible IPO or even a move to go public through the special purpose acquisition company (SPAC) route. The company was valued near $4 billion in a recent private funding round in 2020. Some of those venture capital investors have raised about $1.5 billion in the private market. They include Khosla Ventures and Horizon Ventures — along with some celebrity investors like Serena Williams, Natalie Portman, and Jay-Z.
Within the past year and since Beyond Meat went public, Impossible Foods has been able to make a name for itself. It has surged in popularity, which has helped bring in private funding from investors. With this growth, it has been able to expand its retail distribution from 150 stores to more than 20,000 major supermarkets in the last year.
Impossible Foods isn’t the only thing that’s been growing. A report from the Good Food Institute and Plant-Based Foods Association (PBFA) indicates that U.S. plant-based retail sales increased by 27% — reaching $7 billion in 2020. According to Grand View Research, “The global plant-based meat market size was valued at $3.3 billion in 2019 and is expected to grow at a compound annual growth rate (CAGR) of 19.4% from 2020–2027.” And that’s just focused on the plant-based meat market and doesn’t include plant-based dairy alternatives.
These markets will continue to grow and experience increased demand as more people search for alternatives for food products that are high in fiber, vitamin C, and iron and lower in saturated fats and calories. Not to mention these products have a longer shelf life, so they aren’t wasted by grocery stores or consumers because a product has gone bad before it can be used. The greatest free investment you'll ever make.
Throughout 2020, we increased production and achieved record economies of scale, which we passed on to customers with an average 15% wholesale price cut in March — the first of many to come. We accelerated a long-term project to achieve zero waste and modernized our waste infrastructure. We scaled up production of heme — our “magic ingredient” — to keep our supply chain strong. 2020 was the most transformative year since the 2016 launch of commercial operations.
Impossible Foods has partnered with some fast-food restaurants to expose their products to consumers who otherwise would have no interest in plant-based alternatives. Impossible Foods has offered its plant-based burgers with Burger King, Carl’s Jr., and White Castle. A research analyst with Euromonitor, Alex Jarman, had this to say when it came to these types of partnerships with a company like Impossible Foods:
The introduction of a plant-based line by the world’s largest fast-food chain will certainly challenge these brands’ dominance of the plant-based market. In recent years, chains such as Burger King and White Castle gained a competitive advantage against McDonald’s by introducing plant-based options on their menus.
More partnerships like the ones with popular food chains will spread brand awareness to Impossible Foods and that could result in the company being a market leader in the plant-based food and beverage market. If Impossible Foods can come up with an alternative to dairy milk that tastes similar and is used the same way as dairy milk, that would be a game-changer for the company and the market.
A public debut could happen for Impossible Foods within the next year and could value the company at about $10 billion. If a public debut is in the near future, then you better believe you'll be seeing more Impossible Foods advertising and maybe even more partnerships with other well-known companies to help get its products and name out to the public who otherwise would have no idea what this company is about or what it offers to consumers.
Until next time,