Transcript

Replay: Plant-based foods need a makeover, with Peter McGuinness

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1:20 Join us at masters of scale dot com slash apply twenty six. That's mastersofscom slash apply. Twenty six. Bob Safian here, host of Rapid Response. Today we're spotlighting a special episode recorded live at Climatech This Year in Boston with the CEO of Impossible Foods, Peter McGuinness. In our conversation, Peter shares wisdom about evolving your brand and admitting your mistakes, ideal reflections and motivations as we enter the new year, and all take stock of our work.

1:57 Our lives and everything in between. We hope you enjoy and we'll see you in the new year with all new episodes of Rapid Response each Tuesday and Friday. Starting January third. А штронгли болів. that we all in plant based meat have to completely overhaul and change how we go to market, how we communicate, and how we product develop.

2:21 We're not gonna out advertise and outspend the meat industry. We need to outsmart them. And we're better together than we are apart. I do speak regularly to many other plant-based CEOs. They're not the competition. If I steal from the eight billion dollar pie and don't go after the 1.4 trillion dollar pie.

2:43 We even advanced the value of the company for our shareholders and we sure have an advanced climate. So that's why I tell everyone, the industry's dead. hasn't even gotten started. That's Peter McGuinness, CEO of Impossible Foods. Peter was on rapid response two years ago when the plant-based industry was surging.

3:03 Today the industry is struggling or correcting as Peter puts it, but He says that's not a bad thing. Спікін лайн стеж е Кламатек ТВ тварифор ін бастин. Peter talks plainly about how impossible is responding to the meat culture war. The missteps and plague plant based players and what he's doing to tell a better story about a huge opportunity.

3:27 Even if you're not interested in the food space. Peter offers valuable insights about evolving a brand, admitting your mistakes, and more. I'm Bob Safian, and this is Rapid Response. I'm Bob Safian and I'm here with Peter McGuinness of Impossible Foods at the Climatech 2024 in Boston. Peter, it's great to be here with you.

3:55 Good to be here, Bob. So um the climate conversation usually centers around fossil fuels, uh renewable energy, electric vehicles. Food and agriculture, not so much. And that that's something you're trying to Change? Yeah, it w definitely trying to change. It's not top of mind. It's not directly linked

4:19 Um and so it's an education process. It's a complicated thing. Right. the impact of agriculture and food is on And they certainly Don't think about it when they're having a burger or

4:34 When they're having a steak or they're having a hot dog, they're not sitting there saying, Oh There's more land being cleared and there's more water being used. There's more G H G being admitted. I like the hot dog. Right. It's a moment. I'm having a moment at a baseball game. I'm having a beer with it. It's fun. Yeah. So I don't think people want to bring a heaviness to their food either.

4:54 Yeah. So it's complicated. So so Two years ago you appeared on on my podcast and at that point there was Lots of enthusiasm and kind of a a tailwind behind plant based Foods.

5:08 Plant based meat in particular, and since then Things have kinda cooled sales have slowed for the industry by by double digits. This Kind of struggles were these things that you

5:21 Expected Anticipated Surprised by Well, first of all, it's just a coincidence that I'm CEO now that and things have cooled. Um no, we saw it coming, I think. Um and I wouldn't call it cool, I would call it maybe a correction.

5:36 Mm. I think you know in the stock market. You know, it goes down a thousand points. Is that cool or is it was just overheated? Yeah. And so I think

5:46 Some of the novelty's wearing off. I think some of it Was a bit overblown. And so some of it's a correction. Some of it is a cooling. And some of it is a reality that we need to change. Um so we saw it coming, we didn't know

6:00 The depth and degree. Yeah. Um And it's really up to us to reverse it. Right, and not be a victim. But um yeah, the category's down, the sector's down, there is a bit of a cloud around it.

6:12 For a whole host of reasons. Uh and and it's not good. Yeah. I feel good about where we are. I don't feel good about where the category is. Can can you explain what you mean by that? Yeah, I think um Look, you always want a growing category'cause you want that pie to be bigger.

6:31 Yeah. And in this case you want plant base to be bigger because that means the animal industry be smaller. And you're actually moving the needle. On animal welfare. And climate change. Um

6:43 We're doing well. But that's not You know, an award I want to win. I don't want to be the fastest and only growing plant based Meat company in America. I'd actually like us all to grow.

6:55 But I don't want everyone else declining and uh us the only one up. I don't think that's a great thing. My interest is not to steal share from other plant based meat companies. in the eight billion dollar global space, it's really to go after the one point four trillion dollar addressable animal market, chicken, beef, pork. Globally one point four trillion. That's the market, right? That's gonna drive the value for the company.

7:20 It's gonna drive drive the value for the consumer, it's gonna drive the value for the planet. And we don't need to rearrange the deck chairs uh within plant based. Yeah. And unfortunately there's a little bit of that happen. We're way, way up in share, and it's coming from other plant based companies. But that's not the intent, that's not the goal. That's not sustainable.

7:40 The end state. So th this correction, I wanna ask you a little bit more about it because I feel like there are two Um main emerge one about health and one about politics. So for first health. There's been pushback that

7:56 Plant based. me like may not be healthy or as healthy. We you know, I I've even heard this from family members and I'm not sure where they're getting it from, although Maybe they're getting it from the meat industry. Has that happened?

8:12 How have you let it happen? Is it is it true? Yeah, sure. It is the elephant in the room. I don't know that we let it happen, but it happened. So maybe we did let it happen. Um, look, I think you know it's a bit of a smear campaign. There's a lot of myths and misconceptions.

8:29 around what plant based meat is and what it isn't. Um And the meat industry threw a couple of terms around. They throw a lot of things around, but there's a few that stuck. And we need to admit it. as an industry fake faux processed.

8:42 Yep. And they stuck. And you if you say it enough, people will believe it. And so they just keep hammering away at that, and we've done a really bad job of refuting it. So is there a stuff not healthy? No, it's complete BS. It's made from plants. And I don't want to get into

8:59 A war with the animal industry because I don't think that's the way to grow plant based, but you know, meat is a animal meat's a class one carcinogen. You know, we're made from soybeans that are And yeah, we also hear our stuff's bad for you. It's from China and all the stuff. It's you know, grown in America, made in America. And look, we have as much, if not more, in some cases

9:24 protein than the animal product. We have As much, if not more, iron. We have more fiber. We have zero cholesterol.

9:33 And we have half the saturated fat. Mm. Impossible burgers are not healthy compared to the animal product. I mean it's c it's kind of ridiculous. But again We need to play offense and set the record straight. And we have not done that individually as impossible We have not done that collectively as a category. So it's a bit of a shame on us and you know, we're we're starting to now

9:55 Put the gloves on. And fight fire with fire. But we've let it happen for too long and it is hurt this industry. Your industry colleagues or competitors, however you want to talk about it. Let's go for colleagues. At Beyond Me, they have chosen to reformulate their product And bring in sort of medical experts to attest to its healthiness. Now it your beef light was recently certified by the the American Heart Association, but you haven't leaned in in the same way in like, oh we have a a new formulation.

10:29 Why is that? Listen, I think I admire Beyond Me and I want them to succeed. And you know, everyone has their own playbook. Yeah, I've been in the food industry a long time. Reformulating your food's always not the Wisest. Sometimes it works, sometimes it doesn't because people a lot of people who liked it the way it was. Uhhuh. So that's a risk.

10:48 Look, we're on We're on We're not reformulating. We're just uh Revising, curating I think that's continuous improvement. I think that's just smart good business.

11:00 Medical experts are fine. In the end of the day. It's food. People want it to be delicious first. So the way I kinda look at this, and I think we've gotten it all wrong for so long. Is look, we're making delicious, nutritious food. If you want to go down the rabbit hole of animal welfare and climate change and GHG and trees and

11:20 Land and all that kind of stuff, we can do that. Yeah. There's very few people that want to. But Everybody wants Good nutritious food.

11:29 Yeah. You can't argue with that. So we're focusing a little bit more on taste followed by nutrition. Because if it doesn't taste good It is a non Starter. To me the stickyest

11:40 Mm. Critique in some ways is that word you mentioned, processed. Because of course it it is processed. And it will always be processed because you're taking Something that is a plant and and you know, seventy percent of the grocery store is processed. So that's another It's a very clever word, right? So you go to any grocery store, seventy percent of the store will have a processed food.

12:02 The way I define processed is food that doesn't deliver nutrition. So a Twinkie's processed. There's nothing good about a Twinkie, uh it does taste pretty good. Um but it delivers no nutritional value and it's highly artificial. Right. Now that to me is the textbook definition of processed.

12:20 Anything that's derived from something is technically processed, which is why it's a very clever word they chose. All right, so I so I want to go to the second point, which is about um politics or what has been referred to sometimes as the meat culture wars. Um the idea that eating plant based food is a political statement, right? I mean I I first noticed this, I think it was Twenty twenty two when Cracker Barrel started

12:50 Um offering your impossible sausage and there was like this social media like Uproar over it. I w do you y I'm sure you remember this moment. What did you hear? What did you do? What how did this come to you? I mean flash in the pan or upward.

13:07 I'm not sure. But look, I think This goes back to how The plant based industry was launched. And create it.

13:17 It was launched as a industry against something. We are against the cattle industry, we are against cattle farmers, we are against the slaughter cartel. And it was very politicized. Very politically charged.

13:31 Partisan. It pissed people a lot. a lot of people off and it was very polarizing. And regular people in America was like oh that's just the the elitists talking and that's the coasts.

13:45 And that's the uh that's academia. Um And and it is more expensive. But it's coming down. So animals gone up twenty percent in the last year and a half because their input costs are way well. But so you know.

14:00 The industry should be for something. Mm. We're making better food for more people. We're putting Good options for people to try. I don't have a problem with cattle farmers, they're hard working people. We don't America doesn't want a civil war. Against you know, it it's just silly. So let's be for something. Let's be inclusive.

14:18 Let's invite meat eaters to try our products because we believe in our products and then we think they're delicious and nutritious. Let's not insult them. Let's not judge them for eating meat. People have been eating meat for thousands of years. And oh by the way, it was also launched as a either or. If you eat meat, you're a Neanderthal. And you don't get it.

14:36 And you're stupid. Well Almost the majority of America are flexitarians. And I knew this, you know, when we launched Oat Milk or Chebani. And we see a lot of impossible

14:47 Folks. You know, five burgers a month is what the average American Consumes. If two of them were impossible. Your cholesterol would go down by fifty points and we grow five hundred percent. The scale is so large, but you don't have to say, Stop eating an animal burger.

15:02 Start incorporating this into your diet. See if you like it. And so just how we went about it was all wrong. It was very judgmental and it was kind of angry and there was a lot of rhetoric. And frankly A lot of zealot behavior.

15:18 And It didn't work. Yeah. So we have to kinda change the playbook and our messaging and how we communicate and behave and talk to people. There's a candor in Пітер'змент of his own business that Провод'я за лесенко. Вот арсумці або єсе. And are they correct? Sometimes we need to re examine our perspective so we can strengthen those things that pass the test and refrain that don't.

15:47 Especially if you're trying to be a disruptor like plant-based meat is. After the break, Peter explains why emphasizing the climate advantages of plant-based food has backfired. and how impossible leverages retail partners like Burger King and Starbucks. Stay with us. Humans will never be more intelligent than AI.

16:16 Those were great at AI and those that went out of business because they weren't. How do we build a future? That is human centered. I'm Rana El Calyubi. And on my podcast Pioneers of AI, we answer that question and so many more. As an AI scientist, entrepreneur, and investor, I know what it takes to build AI that works for everyone.

16:39 Every week, I sit down with the pioneers shaping our future, and we take you behind the scenes of the AI that's transforming our lives. Find pioneers of AI wherever you tune in. Hey listeners, Bob here. If you listen to Rapid Response on Masters of Scale, you may be missing half the show because every Friday we release a second Rapid Response exclusively in the Rapid Response feed. The guests and topics are just as compelling and timely. From Ford CEO to NASA's administrator to the lessons from The Devil Wears Prada. It takes about 10 seconds to find, just search rapid response wherever you listen to podcasts and hit follow to make sure you never miss an episode. I hope to see you there.

17:32 Before the break, Impossible Food CEO Peter McGuinness talked about how Impossible is battling the meat industry while wooing meat eaters. Now, Peter shares lessons he learned from marketing oat milk for Chobani and how he balances patience and impatience in his strategy. Let's get back to it. You mentioned your work at Chobane with oat milk and your your background is As a marketer

17:59 You guys recently launched a like a marketing campaign this spring. Which doesn't focus on health claims. It it doesn't focus on environmental claims particularly Y you know, you move from green packaging even, right? Like are there things that you learned when you're marketing oat milk at At Chobani that you're applying here about sort of the way to attract

18:24 Sure. Hearts and minds and bellies? Well listen, I think you know, we didn't launch oat milk at Tibani against the dairy industry because ninety nine percent of our business is dairy. So we actually called oat milk Lactose free milk. Yeah. Who the hell likes lactose? Whether you're a vegetarian, vegan Or consume animal products, right? Uh we could launch Impossible as zero cholesterol meat. Mm.

18:46 Who likes cholesterol? Whether Republican, Democrat, young, old, rich, poor, educated, not educated, you know cholesterol's not a good thing. Right. So you could simplify this. But you didn't do that with We didn't we didn't do it yet. I mean, look, we did change our packaging because the green packaging wasn't appetizing. You eat with your eyes. Right. So we didn't want to be greenwashed with everyone else. We leaned into red.

19:07 Mm. Like animal products. Yeah, like it's meat. But what we led with in the campaign was deliciousness. This is really good food, you should try it. In the end of the day, we have less than twenty percent awareness of impossible, so eighty percent of the country hasn't heard of us. That's a very

19:23 Easy thing to fix through paid owned nerd media. Just never did it before. Um and so Message hierarchy value propositions critical here. For

19:34 Ten years the industry led with climate. We do research when you tell someone you're about to eat a burger that's good for the climate. The taste cues Drop in half. People think it's gonna taste terrible.

19:46 Because it's a climate burger. Can taste good. It's a really interesting psychological thing. So you don't leave with climate. There's not enough people that care about it. It's unfortunate. It's our job to make more people care about it.

19:59 But it's not your broadest marketing Vehicle. Delicious. Tastes good for me. Uhhuh. First because I care about me.

20:09 Right. And oh by the way, then it's good for the planet, it's good for animals. So it's not like we're not gonna talk about climate. We're just not gonna lead with climate. This This marketing message that you have to get out, y you don't have the resources that the the meat industry has, right? So even though you want to reach that other eighty percent, like you don't have the dollars to do all that the way you want to. It I I know you guys have leaned into partnerships as a big part of your strategy. Is that partly why?

20:40 Yeah, I mean look, uh we're not gonna out advertise and outspend the meat industry. We need to outsmart Then We don't have the resources, uh, not even close to the resources. They have a lot of cash. They're extremely large. They're very well coordinated. And they're very well lobbied.

20:56 We don't have the luxury of any of that. Yeah. So we're gonna have to be scrappier and smarter. And we're better together than we are apart. Now the other thing we've done in this Crazy industry. is we've been all about ourselves because we've had our own unique challenges of scaling, of profit margins, of lack of profitability. Many are going under out of business.

21:16 And so it's kind of survival, and we have him banded together. in a cohesive collaborative way To get a good narrative out there. It's Wasn't sinister. It wasn't

21:29 Everybody's just fighting for their own survival, right? And kinda got tunnel vision. Where the meat industry said, You know what, we're just gonna combine wits, we're gonna combine Um money.

21:42 We're gonna combine muscle. And we're gonna erase them. So I I don't blame'em. You know? For you to

21:51 succeed in that like do you need to Help. Your colleagues sort of uh uh address the challenges that they face against me in a different kind of way? Like are you trying to Teach them learn from each other or or do you just like

22:07 I can't really do that. I have to keep my head down. Control what I can control and hope that I can learn from them and they can learn from me. Uh in the end of the day, I'm not a prophet or an oracle or the ultimate expert here. First and foremost, I'm paid to grow impossible. But that does not mean that has to be at the expense of the categories. So I do try to help. And I do reach out and I do attend a lot of conferences and I do speak regularly to many other plant based CEOs.

22:35 Because in the end of the day that's the right thing to do. That's the category we're in. And they're not the competition. Mm. You know, worst case scenario they're frenemies. But they're really friends, right? And again, that doesn't move the needle.

22:49 If I Steal from the eight billion dollar pie and don't go after the one point four trillion dollar pie. We have an advanced value of the company for our shareholders and we sure have an advanced climate. Yeah. It's such an interesting um conundrum because People who go into the business of doing this are maybe compelled not necessarily because

23:10 Oh, this is gonna taste great. Yeah, and the value propositions has been muddled. It was it was, you know, launch as a climate burger. Yeah. What the hell is that? Look. In the end of the day, and I tell this to my team, I tell this to anyone will listen

23:24 Uh and it's okay to admit it's nobody's fault. We failed. This thing was supposed to be massive. That's why I said, Is it a correction? Is it cooling? Whatever. Uh It's two and a half dollars in the US. That is a pebble in an ocean.

23:38 Right. And I'm not trying to denigrate the industry I'm in. I'm just saying we all have to Take a long time Look. At ourselves.

23:47 And be open to change. And so I think we have to rewrite the playbook. I think You know If you think you're gonna do the same thing over and over again, you know And expect a different outcome, right? Definition of insanity.

23:58 I strongly believe that we all in plant based meat have to completely Overhaul and change. how we go to market, how we communicate, and how we product develop. Why?'Cause I think we have a brilliant case study.

24:14 Of a small category that's declining. Mm. And I'm not trying to be negative. I just think we all have to kinda co own that. And I think we all have to admit that to move forward. Your relationship with Burger King. Sure. In Middle America. Um some public comments from their leadership recently have been a little bit lukewarm about

24:39 About plant based. How do you approach that relationship? How much of the new campaign is geared To to them and their audience? Like I think the tide rises all both, so I think You know, when we advertise everything works better.

24:53 We love our Burger King relationship. Um, you know, it's five years strong. Right. Yeah. No one's had five year relationships in food service. And we're in all Burger Kings in the US. Weren't all Starbucks.

25:06 One of their best food performing items in Starbucks is our impossible sausage sandwich. It's not a vegan build. It's got an egg and cheese on it. But the meat is not pork. So it's still a win. And that's another reason why I'm saying like we should Do this practically.

25:21 It's always difficult when your business uh certainly From my point of view as a media person, where like so much of our uh success is based on another platform, whether that was Facebook at some point or TikTok or whatever. And you're kind of straddle some of that too, because a lot of your reach. has to do with some of these partnerships. I mean we're in IHOP and we're in Applebee's and you know, we're in Burger King and we're in Starbucks, so food service is a big deal. We have like fifty eight thousand food service locations, but there's one point four million In America. So I tell the team.

25:52 Great job. But you're not done yet. You barely started. So that's the scale of this thing, right? We're number one in food service in all of plant based And we have less than sixty thousand locations out of one point four. Retail is a good hedge fund to the food service. So we only hit retail two and a half, three years ago.

26:10 You couldn't buy it at a grocery store. And now we're in retail. We have about a thousand total distribution points, but there's eight thousand in total, so we have seven thousand more to go. It's a really, really good start, I tell the team. We're Walmart, we're at Target, we're now at Whole Foods. But

26:26 Not in every store, not with all of our SKUs so that's why I tell everyone like The industry's dead. It hasn't even gotten started. Yeah. When you look at the household penetration, right? Under ten percent. So ninety percent of the country hasn't even tried a plant based option.

26:41 That's a huge opportunity. Yeah right? Yeah. The awareness eighty percent hasn't heard of. The sixty thousand out of one point four million, the one thousand out of eight thousand. By the way, these are all movable, doable things. Food companies have done it for twenty, thirty years. So the challenges we have as an industry, yes, narrative. Right. Formidable competitors like the meat.

27:02 industry. But Most of the challenges are things like Making it more available. You know, selling more into stores and you know

27:13 Just get a sales force. I mean this is not high math stuff. It's doable. It's blocking and tackling. It's blocking and tackling. We just haven't done it. The idea that plant based food is critical to the climate crisis. It certainly is. But how important is that to your business, to your customers, to your investors, or is it more

27:34 Like an internal issue. For your team. For you personally. Yeah, I mean look, the ultimate mission is To reverse climate change, right?

27:45 How you go about that? can be debated and discussed, right? Yeah the biggest lever to do that is Agriculture. Now the problem is people don't equate it, right? Now I would love the government, you know, there's a sweeping climate bill and you're getting eight thousand dollar

28:01 Tax relief checks. To buy an EV. There's nothing about food. Yeah. So I would love the government to assist In availability awareness.

28:13 Um And also incentives. Without making it political. But but you don't have a lobbying arm that is robust enough to get that to happen, yet. believe we do right now. Now it would be nice if the government looked at this thing in a very intuitive way.

28:29 I mean the math is the math and the facts are the facts. So the fact this was omitted I mean food's the most important thing. It's the largest industry in the world. It's the one thing we have to do. You can live without a car. You can't live without eating. So it's pretty mind boggling that this was completely omitted and missed. But

28:47 We didn't lobby it hard enough too, so we're to blame as well. It's but it's it's so interesting that the the mission as you come back to it is about climate. And yet the success of that mission In not necessarily leaning into that as

29:05 The message. Yeah. In the end of the day, we have a calculator on our website. It's the simplest thing. The more plant based meat that's consumed. The less water. is used the less land is cleared and the less G H H is emitted.

29:21 So When this industry was launched, we're a tech company. We don't eat technology. We're a climate company. We don't eat climate. So what we need to do is get more people eating These products

29:34 And that's gonna ha that's gonna do the most good. Not only for your own Nutrition. health and well being, but the planets. So I think we just went about it. I mean I hate to say it. We may just have to admit we're a food company.

29:48 Yeah, I mean it's interesting. It's Almost like To raise capital. The things that get investors excited are new technology, climate, you know, oh these are

30:01 Tech companies have great margins. Food businesses not so much, right? Not so much. And and it sort of drove you down a road that maybe wasn't the best place to be. For the consumer. Yeah. plant based burger that tastes like an animal burger, there is technology involved. It ain't easy. Trust me.

30:21 Um So but it's how you communicate about your products. I joke around with the team at Impossible, so I said, I'm gonna split the difference. We're a tech enabled food company. So we'll innovate like a tech company, but we're gonna operate like a food company. Right.

30:34 I believe in that, right? Yeah. But how we communicate to a consumer to get you to buy it. She got a lead but taste. And follow up and nutrition.

30:43 And then maybe tertiarily get into animal welfare and climate. And it sounds like the the other part that's counterintuitive is you you have to be patient, but you also have to be impatient at the same time to be able to make the changes you need to make, right? It's a long road to to Well you're trying you're you're trying to change eating habits. Over hundreds and thousands of years. Yeah.

31:03 It just doesn't happen overnight. It really doesn't. Well, Peter, thank you so much for doing this. Great to chat with you. Thanks, Bob. Always good to see you. And thank you, everybody. I'm really impressed by Peter's willingness to admit to impossible's mistakes. If customers aren't responsive to climate messaging, it makes sense to pivot.

31:27 Focus on the taste. and have climate impact be a positive byproduct. It's a reminder for business leaders everywhere to meet customers where they are. Even when you're trying to change a marketplace. The high-minded ideals that define your mission, maybe it's okay to hide them a bit. It's like

31:45 Trying to get your kids to eat their vegetables. Lecturing them just makes them frown. In the end. You gotta make it appealing. I'm Bob Safian.

31:54 Thanks for listening. Rapid response is a wait what original. I'm Bob Safian. Our executive producer is Eve Tro. Our producer is Alex Morris. Assistant producer is Masha Makutonina. Mixing and Mastering by Aaron Bastanelli.

32:17 Theme music by Ryan Holiday. My head of podcasts is Letal Malad. For more, visit rapidresponsshow.com.