Impossible Foods, a plant-based company, and Kroger Co., the nation’s largest grocery chain, are working on a new alliance, according to Stuart W. Aitken, Kroger’s Chief Merchandising and Marketing Officer, who spoke at an investor event last week. Impossible Foods will collaborate with Home Chef (a meal kit startup Kroger bought in 2018 that is now offered in stores) and Custom Made Meals (a Denver, CO-based maker of entrées and appetizers for the retail sector).
During the investor event, Aitken remarked, “We are incredibly proud of our Home Chef brand, which became a $1 billion brand in 2021… And we’ll continue to expand this brand across our family of companies. Our assortment is connecting with the customer through ready-to-eat meals, rotating seasonal programs, new appetizers as well as our first plant-based protein, in partnership with Custom Made Meals and Impossible [Foods].”
Kroger’s Plant-Based Products
In recent years, Kroger has been experimenting with the lucrative plant-based market. In 2019, Kroger released Simple Truth Plant Based, a line of vegan deli slices, dairy-free dips and spreads, and its own plant-based burger patties and grinds, as an extension of its private-label brand Simple Truth. Kroger will add 50 more goods to the line in 2020, including vegan chicken patties, almond milk-based yogurts, dairy-free cheeses, and oat milk-based ice creams.
To learn more about this area, Kroger conducted a product placement test using a three-foot vegan meat display case put inside the meat department at 60 Kroger test shops in Denver, Indiana, and Illinois from December 2019 to February 2020. The research, which was conducted in collaboration with the trade organization Plant Based Foods Association, indicated that placing plant-based meat in the animal meat area raised sales by 23 percent. “This test demonstrates that plant-based meats have progressed from specialized to mainstream,” stated Sean Brislin, Kroger’s merchandising director, in a statement at the time.
Plant-Based Meat Brands and the Cost of Meat
Following Kroger’s investor presentation, Credit Suisse analyst Robert Moskow sent a note to his clients about Impossible Foods’ cooperation with Kroger. “We view this test as a threat to Beyond Meat, because it demonstrates the willingness of a big competitor to ‘margin down’ into co-branded private label products in order to maximize the reach of its products… The test is still in the early stages, but it looks like it will be similar to the co-branding strategy that Costco’s Kirkland brand uses in the fresh meat case with big suppliers like Tyson,” Moskow wrote.
However, Beyond Meat has had a collaboration with Thrive Market, a company that works similarly to Home Chef, since 2020. Thrive Market’s Beyond Meat collaboration was expanded in 2021, and the company now provides a number of co-branded goods produced using its plant-based meats, including lasagna, shepherd’s pie, and enchiladas. Thrive Market sells Beyond Meat’s goods through its retail channel, similar to how Kroger sells Impossible Foods’ products.
While Impossible Foods and Beyond Meat are rivals, they have a shared goal: to eliminate animal-based goods from the market. As a result, both firms have sought to sell their goods anywhere animal meat is marketed, including meal kit companies, retailers, foodservice providers in a variety of categories, and more. While meat corporations may drop their margins to compete, Impossible Foods and Beyond Meat are trying to achieve price parity with animal-derived meat for the larger benefit of replacing the animal agricultural business with a more sustainable method of food production.
To that aim, Impossible Foods is working to replace all animal foods with plant-based alternatives by 2035, and has reduced the cost of its goods by 15% in wholesale pricing in 2020 and 20% in retail pricing in 2021, making them more cost-competitive with beef. Beyond Meat, for its part, has lowered costs to make its plant-based goods more accessible to consumers, especially during the COVID-19 epidemic, when animal meat was scarce. One example is Beyond Meat’s Cookout Classic, a bulk 10-pack of their Beyond Burgers that retails at around $1.60 per burger and was introduced in 2020 in a majority of Target and Walmart locations nationwide, as well as other stores.
Source: “WHY THE LARGEST SUPERMARKET CHAIN IN THE US IS PARTNERING WITH IMPOSSIBLE FOODS” by VegNews