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Yahoo Finance’s Alexis Christoforous and Dennis Woodside, President of Impossible Foods, discuss the company’s cutting suggested grocery store pricing by 20%.
ALEXIS CHRISTOFOROUS: The Impossible Burger just got a little more affordable at your local supermarket. For the first time, the plant-based food maker Impossible Foods is cutting prices of its faux meat at the grocery store by 20%. Joining me now is the president of Impossible Foods, Dennis Woodside. Dennis, always good to see you. So why the price cuts at the retail level? And why now?
DENNIS WOODSIDE: Yeah, well, our goal is to replace all animals as a part of the food system. It's very harmful for the environment. There are much better options with plant-based meats. But to do that, we need to have a product that tastes great, is nutritious, and is affordable. And this is the first step for us getting down to the price of commodity ground beef. That's the goal-- compete with the cow, and to do that, we have to price like the cow.
And we've grown so fast over the last year-- our production is up, like, nine times in the last two years-- that we've been able to get economies of scale out of the business and efficiencies in our production footprint. And we're just passing those along to the consumer with this 20% price reduction.
ALEXIS CHRISTOFOROUS: So I understand you want to sort of find parity with regular beef prices out there. With this latest price cut, where does-- how do Impossible Foods products stack up against those in terms of cost saving?
DENNIS WOODSIDE: So with the latest price cut, we're around the price of organic beef, right? But there's a whole other layer of demand at even lower price points. So commodity 80-20 ground beef, that's what many, many people purchase. And so, we're going to have to go below even the current pricing at some point. As we scale up, as demand grows, we'll reinvest that efficiency back into our pricing.
And, you know, people are moving to Impossible from animals. 80% of our consumers are switching from pork or beef or chicken or fish. They're not switching from other plant-based products. So we have to compete with the cow.
ALEXIS CHRISTOFOROUS: I know that in addition to this price cut, you had cut prices for distributors, for food distributors, twice prior to this. I'm curious what that business is like for you, also the restaurant business, given the pandemic and all of the dining-related closures that we've been seeing. How has demand been for you?
DENNIS WOODSIDE: Yeah, it's really a tale of two worlds. There are the small operators that are working-- they have one or two restaurants. That's been very hard hit, especially those that don't have drive-through or digital delivery platforms. And then you have, though, the larger operators, like a Starbucks or a White Castle or Burger King. Our business skews towards those larger operators. They've done quite well and probably have gained share in the pandemic. People are still eating. They're just getting their food delivered, or they're going through the drive-through.
And we've been able to launch new products in that environment. We launched the Impossible Breakfast Sandwich in June with Starbucks. And that's done incredibly well, even in a [INAUDIBLE] breakfast that you wouldn't think would do that well with people not commuting as much as they did pre-COVID.
ALEXIS CHRISTOFOROUS: That is interesting. And I know there's just been explosive growth over there at Impossible Foods. You were in about 150 retail stores just a year ago, and now you're in 17,000. What's 2021 going to bring? Will you be in any more retailers, any more partnerships like the one you have with Starbucks that you can share with us?
DENNIS WOODSIDE: Yeah, well, I would just say on 2020, we didn't expect to move as fast into retail as we did. When the pandemic hit, we focused all of our effort on retail. In the beginning of last year, 97% of our business was in food service. So we were fortunate that we've built up this great brand and reputation among consumers, who got used to us at a Burger King or a White Castle or their local restaurant. And so when we went into retail, the consumers showed up. And that enabled us to get into places like Trader Joe's and Kroger and Safeway and Walmart very fast, much faster than most products.
For 2021, it's about continued expansion-- getting the right price on shelf, getting more products on shelves. So there's a whole set of new products that are coming down the pipeline. We've shared our pork product in a small scale last year. We expect that will scale up this year. There's many other products in the pipeline that we're excited about. So it's going to be more about new products, more products, as well as international markets that we see coming online this year.
ALEXIS CHRISTOFOROUS: You think we're going to see fake fish any time soon? Is that in the plans at Impossible Foods?
DENNIS WOODSIDE: Well, you know, it's interesting. The science at the molecular level, the way we do it, has not really been applied to engineering the taste of food. There's no reason we can't engineer the taste of any food over time. And our product is going to get better year after year. We're going to improve things like saturated fat, sodium content, so that it's actually healthier for you, so it needs to get cheaper. It needs to get healthier.
But the cow is not going to get any cheaper, and the cow is not going to get any healthier. So we think we have a very large opportunity ahead of us. About 1 trillion pounds of meat are consumed every year. It's a crazy big market. And, you know, we're talking, right now, in the US, plant-based meat is less than 1% of all consumption. So, very long way for this to run. It's a little like the early days of electric cars. Everybody's going to go, to one degree or another, towards plant-based in the future. Everybody's going to have to have an option on their menu. And we're really just starting.
ALEXIS CHRISTOFOROUS: Definitely a long runway there. You know, the competition in your space is certainly growing. But now you have the emergence of cell-based food makers out there, especially coming from Asia. How does that change things? Or how does that change the addressable market for you?
DENNIS WOODSIDE: Well, it doesn't-- right now, it doesn't really have any impact. And because those consumers, they're all moving from animal products, right? We're not competing so much with other plant-based manufacturers, as much as we're competing with the cow. And so, you have to match the cow on taste and nutrition and so forth. You know, we keep an eye on a lot of base meat. Right now, it hasn't really made much of an impact. But it's certainly something that we follow.
ALEXIS CHRISTOFOROUS: All right, Dennis Woodside, president of Impossible Foods, lots of exciting stuff going on at your company. As always, thanks for being with us.
DENNIS WOODSIDE: Thank you.