Losses have raced to more than £60m at Marlow Foods as the owner of Quorn and Cauldron continued to restructure the business amid a further deterioration in the meat alternatives market.
Revenues at the group, which was acquired for £550m by Monde Nissin in 2015, slumped 6.9% to £204.9m in the year to 31 December 2023, according to newly filed accounts. It took sales back to levels not seen since 2017 as demand for plant-based products fell away.
The decline was mostly recorded in the supermarkets as retail sales at Marlow fell 8.6% to £170.7m, with the QSR division also down 11% to £6m as the rollout of its vegan chicken in KFC across Europe was offset by a reduction in business at Greggs.
Foodservice – with the division rebadged as Quorn Pro during the year – continued to offer some optimism as sales increased 4.7% to £27.9m, while the newly launched Marlow Ingredients, which sees the group selling mycoprotein as an ingredient to other food manufacturers, generated initial sales of £300k.
The overall decline in the top line, coupled with one-off exceptional costs of £47m as the group restructured and another £6.6m to service its borrowings, pushed Marlow to pre-tax losses of £63.4m, a big jump from 2022’s £15.5m.
Stripping away the costs related to redundancies in the UK and US, and the impairment in value at its Billingham factory, Marlow recorded an underlying operating loss of £10.6m in the year, £9.7m higher than in 2022 as price hikes, a lower marketing budget, tight cost controls and efficiencies from restructuring were not enough to offset a slump in volumes and ongoing input cost inflation.
Marlow Foods CEO Marco Bertacca called it “a challenging year” as high inflation and interest rates continued to put pressure on consumers and the group’s cost base.
He added that despite the pressures, Quorn remained as the category leader and continued to innovate with new product launches, including a relaunch of the snacking range and a first for frozen with Cheesy Nacho Nuggs.
“Almost 40 years ago, our company started with the launch of Quorn, the first consumer brand for vegetarians and vegans,” he said. “Our business has evolved over time, and we are now at the forefront of helping everyone eat less meat. We truly believe that there’s nothing quite like mycoprotein. Fungi and fermentation can be the protein solution the planet needs.”
Quorn still holds the title as the biggest name in meat-free, but its dominance of the category has dwindled in recent years, with smaller rivals such as The Tofoo Co and This eating away at its share.
The business announced ambitions to become a billion-dollar brand following the takeover by Monde Nissin in 2015, investing hundreds of millions of pounds in its factories, hiring hundreds of new staff and growing its presence overseas, with a particular focus on the US.
However, since the end of the pandemic, and the peak for the meat alternatives category, cash-strapped shoppers have retreated from the market, and there has also been a growing backlash against perceived ultra-processed foods.
A number of brands in the space have gone bust and volumes at category leader Quorn – as well as at Cauldron – have been in freefall.
Quorn has also beat a retreat overseas, writing the value of its US business down to zero in 2022 as the plant-based hype withered.
International sales in 2023 fell 7.9% to £43.7m, with figures in Europe down 6.9% to £28.7m and the rest of the world down more than a quarter to £15m.
Quorn has restructured its operations in the UK, simplifying the business and reducing roles in the retail, supply chain, R&D and support functions. It also let staff go at its Billingham factory.
Operations in the US were also reduced, with the group exiting a number of customers in the foodservice and retail sectors, significantly lowering marketing investment and eliminating a number of roles.
The group did not spell out how many staff it let go and did not respond to The Grocer’s request for more detail.
The Companies House accounts showed average staff numbers in 2023 fell from 874 to 934.
Accounts for Monde Nissin UK, which is the immediate parent of Marlow Foods, revealed group pre-tax losses of £166.1m in 2023, compared with £214.7m in 2022.
The losses were caused by the company writing down the value of its investment in Marlow Foods by £158.2m last year and by £204m in 2022.
The accounts also revealed Monde Nissin UK issued new shares of £195m to refinance debts, repaid £51m of external loans in Marlow and also issued £27m in new shares in March 2024 to pay an external bank loan.
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