Fungi-fueled alt meat startup Meati Foods has embarked on its second round of layoffs in three months as part of a “structural reorganization that impacts nearly every part of the company.”
VP marketing communications Christina Ra told AgFunderNews that, “60 roles were eliminated, but 30 of those individuals were offered new roles. Of the 300 people at Meati, we expect that approximately 30 will depart, equivalent to 10% [of the workforce].”
The layoffs—first reported by The Denver Post—follow a 5% reduction in headcount announced in early June and came as Circana released data* showing US retail sales of meat alternatives have continued to slide, falling 12.2% year-over-year to $81.6 million in July, with unit sales down 18.7%.
‘The job cuts are a necessary part of ensuring we achieve a sustainable business model’
Meati, which has recently opened a new production facility in Thornton, Colorado, to make mycelium-based whole cuts through biomass fermentation, is a “young, disruptive company bringing a novel food to the forefront of a highly competitive industry in a challenging economic environment,” added Ra.
“This structural reorganization impacts nearly every part of the company. While incredibly difficult, the job cuts are a necessary part of ensuring we achieve a sustainable business model. Despite creating incredible products and an excellent commercial start in market, we must be nimble and focus on near-term profitability.”
That said, Ra claimed that Meati’s products—launched in March and now available in retailers including Whole Foods, Meijer, Fresh Thyme and Sprouts—are bringing incremental growth to the segment, with four out of 10 people who buy Meati products categorized as new to the alt meat category.
“Very few brands have ever entered the market in this way, with immediate category leadership and extreme consumer resonance,” claimed Ra. “Frequently, Meati is the #1 SKU in the animal-free meat category and all SKUs sell in the top quartile. Meati is delivering on dollar productivity, outperforming the alt protein category average by 150%.”
‘Our confidence in Meati’s trajectory remains unwavering’
Asked if Meati had revised (down) bold projections shared by president and COO Scott Tassani earlier this year, she said: “Our confidence in Meati’s trajectory remains unwavering. The market opportunity remains, but we’re implementing a lower cost structure in service of a sustainable business trajectory, which simply means it might take a bit longer.
“Given the market uncertainties, we’re hesitant to peg a specific timeline, however we’re confident that once achieved, Meati will be one of the fastest brands to ever achieve $1 billion in revenue.”
As for the path to profitability, she said: “Every industry is facing the same economic headwinds, and more so, a shift in priorities when it comes to disruption and innovation. High-growth demonstration was a longtime king, and we’re in an economy that requires profitability and a proven plan for long-term growth.
“Meati became a proven leader in record-time, and we’re in a great position to pivot. We’re focusing on smart growth, resilient profitability and fulfilling our mission of elevating humanity’s health and longevity through the boundless potential of MushroomRoot, delivering one of the most compelling, nutritious and sustainable new food products the market has seen in decades.”
Mycelium-based whole cuts
Founded in 2015 by engineers Dr Justin Whiteley and Dr Tyler Huggins, Meati is seeking to differentiate itself in the meat alternatives market with a fungi-based platform capable of producing whole cuts of alternative meat from mycelium, the filamentous-like roots of mushrooms.
The Boulder-based startup—which has raised well over $250 million from investors including Revolution Growth and Grosvenor Food & AgTech—recently started production at its “Mega Ranch” in Thornton Colorado.
The Thornton facility will ultimately be able to produce 40 million pounds a year (the equivalent of about 151 million 120g steaks), said president and COO Scott Tassani, who told reporters in February he expected to capture “20% of what we think will be a $5 billion retail market in five years.”
While such bold predictions raised eyebrows at the time, given that the firm was barely out of the starting blocks, Meati has the potential to disrupt the market, Tassani told AgFunderNews.
“We have a pipeline of customers that want Meati, and it’s unlike anything I’ve ever seen in my many, many years at General Mills, and I’ve launched thousands of new products. The first third of the Mega Ranch is fully operational at this point and we still have significantly more demand than we have product [to supply] in the near term. However, we will have a national omni-channel footprint by the end of 2023.”
*According to Circana data crunched by 210 Analytics, US retail sales of meat alternatives fell 8.3% to $1.1 billion in the 52 weeks ending July 30, 2023 (total US, MULO, integrated fresh). Unit sales fell 16.6%.