Alt-meat producer This has reiterated its plan to hit profitability this year after failing to stem widening losses in 2023.
While This has defied diminishing demand for plant-based products – its sales were up 47% to £17m in the year ended 31 December 2023 – it has found reducing the cost base far more difficult.
Following efforts to streamline the company’s supply chain, gross margins narrowed only slightly last year from -10% to -8%, meaning it still costs This £1.08 to make every £1 of product sold. That translated to a pre-tax loss of £12m in 2023, up from £10m the year before.
This has frequently pledged to hit profitability by 2025, telling crowdfunder investors in June that it planned to grow gross margins to +30% in the next 12 months, while co-founder Andy Shovel predicted last October the business would be profitable by the end of 2024.
CEO Mark Cuddigan, who joined the company earlier this year, reiterated the guidance again this week, telling The Grocer that while cost-cutting measures began in 2023, “the majority of the related margin benefits will be realised in 2024 and 2025”.
He added the business has also focused on optimising its operations, and “the combined result of these efforts will see us deliver a positive gross margin in 2024, with margins forecast to step on again in 2025”.
The manufacturer came under pressure from investors this year after its latest funding round saw it valued at £50m, a sizable drop from a £150m valuation in 2022. The valuation was made when private equity firm Planet First Partners invested £20m in the business. According to the latest accounts, This sought out additional funding “to secure its cashflow in order to meet its obligations”.
At the time, Cuddigan, alongside co-founders Shovel and Pete Sharman, wrote to investors to explain the drop was due to an “extremely different” investment market for food and drink companies, with valuations down across the board.
The trio said This was still the fastest-growing brand in the plant-based category, and gross margins were “growing strongly” with a plan to get them to +30% in the next 12 months.
However, they recognised “on the face of it, [this] isn’t great for those investors who participated in those [earlier] rounds”.
Crowdfunders have pumped over £13m into the company since it launched.
News of the latest losses for This follow Marlow Foods, the owner of Quorn and Cauldron, reporting a sales slump in 2023, with losses stretching to more than £60m.
This, by contrast, continues to grow sales and is now the fourth-biggest chilled brand after volume and value sales rocketed by more than 30% in the year to May, according to category data from NIQ.
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