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In what is a significant restructuring move, Colorado-based mycelium meat startup Meati has cut its workforce by 10% and shuttered its pilot plant as it looks to become profitable. Meati, which had let go of 17 employees (about 5%) in June, says the layoffs affect all parts of the business and plans to add 100 additional positions to boost production.
Meati confirmed to Green Queen that the company has laid off 30 employees from its 300-strong workforce, including a few executive-level employees, while the actual number of positions eliminated is 60. The mycelium meat maker says some people in these roles will be deployed to new positions within the company, and those who have been let go will be offered a “comprehensive support package”. This includes severance pay, health insurance plans, career outplacement services, and employee assistance programs.
In January, the company opened a ‘mega ranch’ in Thornton, Colorado capable of producing tens of millions of pounds of its mycelium-based steaks and chicken breasts to rival the output of animal farms. It followed a $150M Series C raise last year, with an extension round last week bringing its total financing to over $325M. In May, it debuted its products at 380 Sprouts Farmers Market stores across the US, and Meati says these are now available at 1,500 stores nationwide.
Restructuring towards profitability
But despite this recent success, the business has been forced to restructure. “Meati is a young, disruptive company navigating uncharted territory – bringing a novel food to the forefront of a highly competitive industry in a challenging economic climate,” a Meati spokesperson told Green Queen in a statement. “Each of these factors requires us to regularly evaluate every aspect of our operations.”
They added: “These job cuts, while incredibly difficult, are a necessary part of ensuring we achieve a sustainable business model. Despite creating incredible products and an excellent commercial start in the market, we must be nimble and focus on near-term profitability.”
Speaking to the Denver Post, Meati COO Scott Tassani said: “With the cost of capital being higher, there’s a direct challenge for an accelerated pace of profitability. One of the things we have decided is that we have to get to a more sustainable business model that’s not just all about growth and speed.”
Despite the layoffs and closing of its pilot plant in Boulder, Colorado, Meati remains confident about its growth trajectory. “Very few brands have ever entered the market in this way, with immediate category leadership and extreme consumer resonance,” the company’s spokesperson told Green Queen.
“While our path forward has changed shape, we’re confident that the changes we’re making are the right course of action to support Meati’s continued growth and leadership. Meati’s team will continue to grow as nearly 100 additional positions are added in the near term to expand production capacity.”
Tough going for plant-based businesses
The layoffs at Meati follow similar developments at other plant-based food companies in the last year, with the alt-meat industry experiencing a decline in sales and consumer interest. Alt-meat giant Impossible Foods cut 20% of its workforce (132 employees) in February, after laying off 6% a few months before, while competitor Beyond Meat similarly let 19% of its staff go last October, affecting 200 employees and Eat Just, Inc made 18% of its workers redundant earlier this year.
According to insights firm Circana, retail sales of vegan meat alternatives fell by 12.6% to $106.8M in the five weeks to July 2, 2023, with units down by 19.8% year-on-year. And for the year to July 2, 2023, sales declined by 7.3% year-on-year, while units saw a 15.6% drop. These figures coincide with a Gallup poll that found that the number of vegans has hit a 10-year low this year.
A recent Mintel survey of 1,400 US consumers suggests that only 20% followed a meat-reduced diet this year, with inflation causing 53% of consumers to try fewer new foods like plant-based substitutes. Participants cited taste (48%), nutrition (35%), cost (34%), texture (24%) and processing (21%) as their primary concerns against alt-meat, with 30% of flexitarians avoiding plant-based meat alternatives because they are overproduced.
Meanwhile, companies have ceased operations, filed for bankruptcy, fallen into administration, gone into receivership – or even come close to the brink. But a 2023 Kantar report suggests that while plant-based food brands have seen a 10% drop in sales, private-label supermarket offerings have grown by 14% in the last year. Along these lines, Tassani told the Denver Post: “We are very confident that we will exit the year with thousands of stores carrying our product and we’ll be on the path to profitability in 2024.”
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