Accelerating the Impossible Growth: A Case Study of Impossible Foods, Inc.
- pundarika lestari
- Aug 5, 2020
- 5 min read
Updated: Jan 26, 2021
This case study, written for one of my assignments at UQ Business School on June 2020, presents the challenges and opportunities faced by Impossible Foods and proposes six recommendations to scale up the business.
By 2035, kids everywhere will look up to their parents, incredulous, and say: "I can’t believe you used to eat meat that came from an animal!" - Pat Brown, CEO & Founder of Impossible Foods.
Since the past decade, animal agriculture has generally been recognized as the major contributor to climate change. To address this issue, corporations and start-ups work hard to invent various protein alternatives, ranging from plant-based meat, lab-grown meat, to insect-based meat. Impossible Foods is one of the key players in the plant-based meat market, offering ‘the veggie burger that bleeds'.
The Impossible Journey
First, let's take a look at the Impossible journey. It was all started in 2009 when Professor Dr. Patrick O. Brown – a medical doctor and biochemist – decided to leave his professorship at Stanford to pursue a mission to address the climate change problem. Seven years later, after USD 80 million in research and development (Alvarez & Kindred, 2020), Impossible launched its first product: Impossible Burger.
Unlike the majority of plant-based products that targeted vegans or vegetarians, Impossible Foods has been targeting hardcore meat-eaters since its debut in 2016. The company believes that only by serving the mass market they can create real environmental impact. Quoting Dr. Pat Brown from his blog, “We’re not going to solve (the environmental) problem by pleading with consumers to eat beans and tofu instead of meat and fish. Even many of the world’s most ardent environmentalists, acutely aware of the destructive impact of their diet, continue to eat animals every day" (Brown, 2018).
After years of research, the scientist rooted in heme as the magic ingredients. Heme is an iron-containing molecule that gave meat its red color and ‘meaty’ taste. It makes Impossible Burger looks and tastes so similar to beef, with a rich flavor that satisfies the discerning meat-eaters.
Up to today, Impossible Foods had raised around USD 1.3 billion with an estimated valuation reaches USD 4 billion (Lee, 2020). Impossible Burger is now ready for order in 17,000 restaurants across the US, Hong Kong, Macau, and Singapore. Just recently, the product also available at ±1,000 U.S. grocery stores (ImpossibleFoods, 2020). Other than the legendary burger, the company offers Impossible Sausage and Impossible Pork.
The plant-based industry is still in a relatively early stage of its lifecycle and therefore offers significant room for further growth (Deloitte, 2019). Riding on the industry’s growth and anchoring on the company’s core competence, the opportunity for Impossible Foods to scale up seems limitless, from market expansion to product diversification. At the same time, the company also needs to overcome multiple challenges that may threaten growth, such as supply shortage, consumer trust issues, and increasing market competition.
Challenges, Opportunities, and Recommendations
Modify value chain to scale up production capacity
The first challenge is to build production capacity that can fulfill the hypergrowth. Impossible plays in a relatively new category (plant-based meat) and continuously penetrates new markets. With this high level of uncertainty, the conservative demand-projection method that currently used by the company may need to be evaluated. Following the shortage in 2019, the company has appointed OSI (one of the world’s largest food co-manufacturer) to mitigate the risk of future shortage, but there is no guarantee that this partnership will fully solve the (future) supply issue. On the other side, building a new production facility will cost too much, and appointing new suppliers is challenging because the heme-extraction process is complicated.
Considering this limitation, it is recommended for Impossible Foods to switch the Oakland plant to be a ‘heme factory’. Oakland plant will focus only to produce heme, instead of running the end-to-end production process. As explained on the diagram below, heme from Oakland plant will then be distributed to multiple suppliers for mixing, packaging, & delivering. The proposed model enables the company to outsource production in multiple suppliers, reducing dependency on a single supplier, and thus scale up the supply. At the same time, this model also protects the company’s core IP of heme extraction.
Grow top line by penetrating into new channels
After securing the supply, the next step is to expand its product availability to more channels. Penetrate new market will help the company achieve its topline target and gain profit margin to fund growth.
Market expansion and product diversification
There is a huge opportunity for the company to establish a presence in more countries as the surge for plant-based alternatives is expected to continue across all geographies. While the growth is driven by the North American market, the trend is also anticipated in the Asia Pacific (driven by China) and LAMEA regions. At this moment, Impossible Foods offers a replacement to beef and pork, but there are countless opportunities to diversify the product range. Looking at the carbon footprint from the world’s major protein, lamb, cheese, and seafood may be considered as the next product innovation.
Implement Open Innovation
One of the challenges faced by Impossible Foods to diversify its product range is limited R&D resources. Open innovation can be a solution to augment the company’s innovation capability. Open innovation enables the company to leverage knowledge, technology, and skills from other firms and accelerate the innovation process while reducing internal R&D spending and effort (Sarkar & Costa, 2008). Therefore, it is recommended for Impossible Foods to start adopting Open Innovation. To kick-off, the company can form a small project team under the R&D department. They are responsible to engage with potential partners and future collaborators, from start-ups, restaurants, universities, researchers, or end consumers. To facilitate interested partners, a dedicated section can be provided on the company’s website (image is adapted from www.impossiblefoods.com, for illustration only).
Build Brand Equity
Strong brand differentiation is vital to maintain the company’s competitiveness. The rapid growth of the plant-based market has allured many enterprises to exploit the opportunity. Beyond Meat offers a plant-based burger, sausages, and chicken made from pea protein (Hoffman, 2019). Memphis Meats extracts stem cells from living animals and sell ‘lab-grown meat’. Exo Protein produces ‘insect-based protein’ like cricket protein bars. Food conglomerates like Tyson, Smithfield, Perdue, Nestle, and Hormel also launched meat-alternatives. Brand differentiation and unique value proposition are essential to make sure Impossible can stand out against the competition and be the customer’s first choice.
Recruit Diverse Talents
Along with the business growth, the management should consider recruiting talents from a more diverse background. In 2015, 95% of the employee was scientists, making the company is dominated by the ‘lab culture’ (Alvarez & Kindred, 2020). To scale up the business operation, the company cannot rely solely on scientists, but rather need to recruit talents from various backgrounds (food industry, consumer goods, technology), expertise (marketing, operation, finance), and even demographic (gender, race, culture). Diversity is a key driver of innovation and is a critical component of being successful on a global scale (Forbes Insights, 2019). Having a diverse workforce will help fuel the business to scale up and expand operations in the domestic and international markets.
These recommendations will help Impossible Foods to achieve its 2035 mission: to make the global food system truly sustainable by eliminating the need to make food from animals.
Thank you for reading my first post! Is there any other thing you would add as a recommendation for Impossible Foods? Feel free to share your thoughts!
Drop me a message if you are interested to read the full case study. Please connect with me on LinkedIn for more (upcoming) articles about innovation, entrepreneurship, and digital transformation.
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