British Columbia-based The Very Good Food Company Inc. VRYYF designs, develops, produces, distributes and sells a variety of plant-based meat and other food alternatives. It also happens to be the second plant-based food maker to list on an American stock exchange.
Benzinga had the opportunity to chat with CEO Mitchell Scott about the company's initial public offering, performance amid the COVID-19 pandemic — and ultimate path toward profitability.
IPO Process: VERY became a public company in mid-June as part of an unusual listing process in the food industry, Scott told Benzinga in a phone interview.
Traditionally, food companies seek funds from venture capital and then perhaps are acquired by a multinational, he said.
A customer of VERY who didn't like investing in private companies suggested that the company work on scaling the business before seeking out an IPO on the Canadian securities exchange as a small-cap company, Scott said.
The timing of the conversation coincided with Beyond Meat Inc's BYND IPO in May 2019, which confirmed a lot of retail interest in the plant-based category.
VERY's IPO proceeds were allocated to help the company expand to other categories, like plant-based cheese and dairy sauces through M&A or developed internally, the CEO said.
Related Link: Beyond Meat Promises 'Juiciest' And 'Meatiest' Burgers
VERY's Q3 Results: VERY reported third-quarter results on Nov. 16 that were highlighted by a 26.6% sequential increase in revenue at $1.4 million.
Scott commented in the earnings report that VERY managed to grow revenue at a time when the COVID-19 pandemic "negatively affected our industry peers."
VERY's only other public peer, Beyond Meat, was hurt by ongoing weakness in the foodservice and retail category, Scott said.
In contrast, VERY's business is mostly reliant on e-commerce and the grocery channel, he said.
"Our e-commerce sales went kind of through the roof during COVID and then our grocery store retail sales also saw a really strong [increase] as people are stocking up — they are cooking more at home."
Staying Competitive: The plant-based food category has been growing "faster than companies can keep up with demand" over the last three years, Scott said.
Despite the influx of new competitors, VERY is an established brand with a strong and loyal community, he said.
What separates a company like VERY from a multinational giant is simple, the CEO said: "not everyone wants to purchase from Nestle.
"We really have a niche as a higher-quality product."
E-commerce in particular has been a strong spot for the company, as it offers a direct connection to the consumer versus delivery channels, he said.
Growth Plans: North American plant-based food makers can find success in expanding worldwide, and this is part of VERY's growth strategy for the coming years, Scott said.
VERY will look to create different food products tailored to local tastes when necessary, such as a schnitzel dish for Germany.
In England, the company's model of operating stores that mimic a butcher shop where food products are displayed under a case is one that is already familiar to the public.
2021 will be a "huge scale-up year" for VERY with new manufacturing capabilities coming online, Scott said.
The company is "most likely" expecting to achieve a profit in 2022, he said.
A 'Safer And Healthier' Option: VERY has seen its sales increase because its plant-based products offer an alternative to meat products, Scott said.
Animal products were partially brought offline earlier in the year when some facilities were forced to shut down due to COVID-19 concerns.
"I think people are just starting to see plant-based [food] as a safer and healthier option," he said.
These trends predate COVID-19 and will certainly outlast the duration of the pandemic, as plant-based has become "more mainstream," Scott said.
Meat-eaters in particular are discovering the benefits of substituting plant-based alternatives even a couple of times a week, he said.
"We're not saying, oh here's some strange lentil loaf grillable something," he said. "[We tell them] here's a plant-based steak, here's plant-based ribs."
Large Companies 'Slow to Change': Beyond Meat's partnership with Pizza Hut to offer a plant-based topping and McDonald's Corp MCD recent announcement of working on a plant-based burger are two examples of how "large companies are always slow to change," the VERY CEO said.
For example, the Canadian pizza chain called Panago has been offering plant-based toppings for years, while the national burger chain A&W has been offering a Beyond Meat patty since 2018.
VERY would consider pursuing large-scale relationships with restaurant chains, but it isn't interested in working with fast-food companies for the time being, Scott said.
"We don't really want to be in fast food."
Courtesy photo.
© 2024 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.
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