The inside story of Meatless Farm’s rise and fall

Veganuary founder Matthew Glover has rescued Meatless Farm through an acquisition of the assets via VFC, the plant-based challenger brand he started with Adam Lyons in 2020.

But while it is great news for the brand, the 50 unemployed Meatless staff in Leeds won’t be celebrating. And there are still questions to be answered about the way Meatless axed the whole UK team before administrators were even appointed – and without proper consultation.

But the bigger question is: where did it all go wrong? It’s easy to blame a slowdown in plant-based sales amid the cost of living crisis, but for a brand with a £90m-plus valuation to implode so spectacularly warrants further investigation.

The financials paint a very unflattering picture: costs of £79m over the past three years and combined revenues of just over £31m.

“Those numbers are unbelievably bad,” says one industry source. “Meatless’ gross margin was essentially 0%. They literally gave it away at cost and all their losses were their enormous overheads. Utterly insane behaviour.”

Yet founder Morten Toft Bech, a Danish entrepreneur with a tech background, told The Grocer in May that operationally, Meatless was “doing really well” and was an “otherwise good and healthy company” save for a big investor (understood to be Korea’s SK Inc, which had already sunk £30m into the brand) unexpectedly pulling out of a planned £35m capital injection.

“Nobody expected this irrational outcome after six years of many ups and downs, but always forward motion,” he also told investors in a letter sent after the collapse.

Media reports on Meatless in February this year also quote Bech’s predictions of 30% sales growth in 2022 to £25m – a long way from the 10% decline to £11.2m in sales outlined by administrator Kroll in a teaser – seen by The Grocer – as it tried to lure in new investment in May.

“Nobody expected this irrational outcome after six years of many ups and downs”

Morten Toft Bech, Meatless Farm founder

Meatless Farm had never had a problem raising cash. As well as SK, investors included Channel 4 and thousands of crowd backers, and in November 2022 a report in Business Korea revealed Korean VC firm Aju IB Investment invested $7m in Meatless.

Those investors are now staring at losses of close to £90m, The Grocer understands. And an investment source rages about “the circus” that is alt meats, with “out of control, over-hyped valuations” that “hoodwinked” investors, as Meatless delivered single-digit gross margins with an ingredients panel “closer to something seen in a chemistry set”.

‘Poor management’

So who’s to blame for Meatless burning through £90m in such a short space of time?

A former senior employee blames “poor management from the top”.

“We had a landgrab approach to go into Netherlands, Germany, Spain, Portugal, Canada, the US, without really nailing our core UK market and, more importantly, product. This comes from Morten as the founder, but I also think he’s been badly advised and led down the wrong path,” the employee says.

Meatless spent a fortune on high-end offices, with a four-floor Leeds headquarters and another HQ in Amsterdam, plus a factory in Almere in the Netherlands employing an extra 50 staff, even though sales in Europe amounted to just £1m.

“The US is also a very difficult market to conquer from the UK, so a lot was spent there as well,” says another source.

“The figures don’t add up. It was all too much and huge mistakes were made.”

In a labyrinthine group structure, a Dutch holding company owned the shares of the UK business, with Leeds responsible for sales, marketing and a test kitchen, and Amsterdam responsible for fundraising and group HQ functions. According to reports in the Dutch press, the Netherlands side of the group is also going through bankruptcy proceedings.

“They literally gave it away at cost and all their losses were their enormous overheads. Utterly insane behaviour.”

A factory and separate ingredients subsidiary in Canada – Lovingly Made Ingredients – also launched in 2021, but does not appear to be part of the Kroll administration process.

An open chequebook wasn’t just reserved for offices and factories. “Salaries for the senior team were unbelievable,” one plant-based source adds.

The former Meatless staff member says millions were wasted hiring (and firing) executives in Amsterdam, including former Lidl chairman Jesper Højer, appointed as chairman in 2019, and Dior Decupper, who became global CEO in 2021 and lasted one year before Bech retook the reins.

There was also Benjamin van der Kloet (chief marketing and culture officer), Ferry Kamp (chief growth officer), former Coca-Cola head of media Lone Thomsen (chief marketing officer), Dr Peter Hynes (head of research and development) and ex-JP Morgan and Credit Suisse investment banker Leopoldo Zambeletti (director).

“All of a sudden, the Amsterdam office was leading the way with an ivory tower, dick-swinging attitude: changing the packaging, the brand etc,” the ex-staffer says.

Højer also brought cyclist Mark Cavendish into the Meatless fold in 2021 for an unknown fee. In his ‘Tour De Force’ autobiography, Cavendish highlights close ties with the Danish executive, crediting the ex-Lidl chairman with saving him at a career low point and sourcing finance for a salary and expenses to put a cycling team together by arranging a partnership with Lovingly Made Ingredients, and becoming an ambassador for Meatless Farm.

Football crazy

Cavendish wasn’t the only sporting link where Meatless money was squandered.

A deal with Spanish football club Real Madrid was also struck in 2021 – costing £4m, according to the Meatless employee – despite the brand having no meaningful distribution in Spain – to promote “sustainable eating habits and education around the world”.

The sight of club – and Brazilian – legend Roberto Carlos holding a Meatless Farm apron at the Bernabeu stadium certainly generated lots of press for Meatless and got exposure for its environmental mission to reduce meat consumption.

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However, a supplier source says giving that money to Tesco  would have “made much more sense” to gain the brand exclusive status in the plant-based aisles and getting the retailer to pull its own-label range.

“A lot of staff could see all the above was wrong,” the Meatless employee says. “Why couldn’t the leaders?

“There’s a lot of lessons in a) making the food superb, and b) not land grabbing. Those were our failures. And we wasted a shit tonne of money either side of that.”

Legal fees

A December 2022 feature in Business Insider also details how much time and money Bech spent fightng the meat lobby over the usage of labelling plant-based products as bacon, burgers and mince.

Bech also told the publication that Meatless had spent about 5% of its venture-capital backing on lawyers looking after its trademarks, descibing legal bills as “insanely large for the size of company we are”.

Plant-based future

For Glover, the Veganuary, Veg Capital and VFC founder: “Meatless shot for the moon – as have others – but there is an inevitable resetting for the category to be done, with lots of consolidation and more casualties to come.”

It’s early days for the resurrection of the Meatless brand, but the priority for VFC CEO Dave Sparrow – who led the rescue deal – is to “get the much-loved Meatless Farms products back on the market”. And he’s confident sustainable growth can be achieved in the mid term.

“We aim to sustainably grow the brand across consumption occasions, channels and countries, offering consumers great tasting vegan products and ultimately fulfilling our mission of removing animals from the food chain.”

Some will doubt that. And the collapse of a well-known brand reinforces a media narrative suggesting the plant-based bubble has truly burst. But the basket case that is Meatless Farm is not the testbed on which to judge the category.