Maple Leaf plans review of plant-based division after sales declines

Dive Brief:

• Following disappointing sales in the last two quarters, Maple Leaf Foods is going to review its plant-based division, Greenleaf Foods. In its latest earnings report released Thursday, sales in the company’s plant protein division were down 6.6%. The previous earnings report, released in August, saw sales in that division down 20.7% compared with a year earlier.
• Michael McCain, CEO of the Canadian meat giant, said in his earnings call that growth rates for its plant-based products “have, to be frank, evaporated.” He said the company would be looking at the space as a whole and what has changed for consumers in the last year. The results of this analysis will be presented in the future, but McCain didn’t say what some of the outcomes might be.
• Maple Leaf Foods owns plant-based brands Field Roast, Chao and Lightlife, all of which were acquired in 2017 as a strategy to invest in the fast-growing plant-based sector. 

Dive Insight:

Plant-based products have been on a fast track to growth during the last several years. According to SPINS data, in the 52 weeks that ended July 11, refrigerated plant-based meat sales were up 19.1% and frozen plant-based meat sales were up 9.2% compared to the year prior. The International Food Information Council found that about two-thirds of Americans ate plant-based meat and dairy analogs in the last year, with 20% eating them daily and 22% eating them weekly.

But behind those numbers, there’s a lot of nuance that isn’t reported. While sales in general are up, these statistics don’t go deep into what is selling and what is not. 

Maple Leaf executives said on the call they are seeing a general slowdown of all of their plant-based brands in all categories. In this review, they plan to focus on consumers and figure out the root cause of this change in behavior. McCain demurred when he was directly asked if the company may sell Greenleaf or find a joint venture partner, but said the 2017 acquisitions that created the division were rooted in the thesis of them having at least a 30% growth rate. 

“Our goal will always be to create long-term value,” McCain said on the call. “Make no mistake, we’ve done that in this business to date with a materially larger business than we acquired. Our investments so far have been well placed, our teams have done a remarkable job competing in this space. However, if the facts change, our forward investment thesis has to change with it.”

Maple Leaf’s review of the business — and its lower numbers overall — are somewhat surprising because the company has actively invested in and promoted its plant-based brands in the recent past. In August 2020, Lightlife unveiled a reformulated clean-label plant-based burger — and an ad campaign that specifically called out Impossible Foods and Beyond Meat for the more chemical-sounding ingredients in their burgers. By May, Lightlife had cleaned up the labels on all of its products. The company also said in May it had figured out how to make the most meat-like plant-based chicken through advanced high-moisture extrusion, and has been rolling the improved product this year.

Greenleaf also recently launched several new products, including a Field Roast plant-based pepperoni at both stores and at Little Caesar’s pizza locations. An unbreaded version of the new plant-based chicken made its debut last month in the prepared foods area of 500 Whole Foods Market stores. And Maple Leaf invested $100 million in a Lightlife tempeh plant in January.

The plant-based sales slump may go beyond the Greenleaf brands. Beyond Meat, one of the market leaders that is publicly traded, saw its shares fall two weeks ago when it reduced its third quarter outlook to net revenues of about $106 million from prior guidance of $120 million to $140 million. The company reports its earnings next week, so the extent of the shortfall is not known. Beyond Meat said in its release that it had seen an unexpected decrease in retail orders and delays in distribution expansion and shelf resets because of labor shortages and shortfalls in foodservice.

Kellogg, which owns MorningStar Farms and its Incogmeato brand, also reported a decline in brand sales in the last quarter in its earnings report this week. The amount of decline wasn’t quantified in the earnings report or presentation, and Kellogg CEO Steven Cahillane didn’t seem too concerned about it in the earnings call.

“When you look to consumer behavior, when you look to the consumer research we have, there’s still a lot of enthusiasm and excitement around plant-based,” Cahillane said. “And so, we think going into next year, you start to see healthier growth rates.”