Maple Leaf Foods, one of Canada’s largest pork and poultry processors, announced yesterday it would be reevaluating its plant-based protein business. The company’s third-quarter financial results revealed that while its meat group performed well, there was a slowdown in its plant-based protein segment. Sales in the category fell 6.6 percent on the back of declining retail sales.
“We are seeing a marked slowdown in the plant-based protein category performance which may suggest systemic change in the extremely high growth rates expected by the industry,” said Michael H. McCain, president and CEO of Maple Leaf Foods, in a press release. “Given current category performance, such a review is underway which will either affirm or adjust our strategies and investment thesis going forward.”
The Q3 earnings report stated that Maple Leaf’s sales totaled $1.18 billion, up from $1.06 billion in the same quarter last year. Its meat protein sales grew to $1.15 billion compared with $1.01 billion a year ago, driven primarily by higher prices for fresh pork and poultry. Meanwhile, its plant protein sales dipped to $48 million compared with $51.4 million last year.
“Driven largely by the lower-than-expected growth in the plant protein category, [Maple Leaf Foods] does not expect to meet its Plant Protein Group sales growth target for the second half of 2021,” the company said in the same press release.
Maple Leaf Foods’ Stake in Plant Protein
In 2017, Maple Leaf Foods acquired Chicago-based Greenleaf Foods, which owns two of the leading plant-based brands — Lightlife Foods and Field Roast Grain Meat Co. In 2020, the Plant Protein Group generated $211 million in sales in the US, fueled by pandemic purchasing patterns, and up 20 percent from 2019. However, the segment doesn’t plan to achieve profitability until 2023 or 2024.
Lightlife and Field Roast have recently secured deals with major retailers like Walmart and Whole Foods. Last month, Lightlife announced that its Plant-Based Burger, Plant-Based Breakfast Links and Plant-Based Breakfast Patties would be sold in Walmart locations nationwide. Earlier this year, Field Roast announced its Plant-Based Pepperoni and Chao Creamery Creamy Original Shreds would be available nationally at Whole Foods Market stores.
Maple Leaf’s investment in plant protein extends beyond retail deals. In January 2021, the company acquired a 118,000 square foot plant in Indianapolis with the intent to install production equipment to produce tempeh. “At this juncture, given the high demand for our tempeh products, this project offers us the ability to deliver incremental capacity in a cost-effective, timely manner in a location that has synergies with our long-term vision,” McCain said in another press release.
But, given the latest quarterly results, Maple Leaf Foods is reconsidering its future plans for the Plant Protein Group. In the coming months, the company must decide whether its best to stay on course and follow through with its long-term plans, or slowly make its way out of the plant protein segment. For now, it seems Maple Leaf is hoping the segment will rebound in order to hit desired sales growth targets.