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Impossible Foods CEO: ‘Hyper-growth’ is offsetting cost inflation

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Impossible Foods CEO Peter McGuinness speaks with Yahoo Finance Live about expanding the plant-based food business into the UK, inflationary pressures, and potentially taking the company public at some point.

Video transcript

[MUSIC PLAYING]

- Welcome back, everyone. As the market rout continues to deepen and worries over consumer spending may persist, inflation as well as the rising cost of food production are also in focus. Meatless alternative maker Impossible wants to do and defy the impossible. Well, not do the impossible-- but perhaps do the impossible. Anyway, they announced plans to expand into the UK. Joining us now to discuss those efforts is Peter McGuinness, who is the Impossible Foods CEO. And we know you want to defy the impossible here, Peter. But particularly here, as you look across the environment, consumers both in the restaurants and in the retail section of the categories that you play within-- what are you seeing in terms of the activity and the purchasing patterns?

PETER MCGUINNESS: Yeah, we're seeing an increase in sales. We're happy with our performance. If you look at our last two quarters, we're kind of averaging in that 60%-65% growth in sales. So that's really good. And some of that is just our base business continuing to increase. Some of that's new distribution. Some of that's new innovation, like some of our pork products and our chicken nuggets. And we have been able to keep prices steady, despite inflation, due to our redundancy in our supply chain, due to the efficiency and productivity in our plants, and due to just the growth we're experiencing in our operating leverage. So we feel great about the category. We feel great about our business. So we're feeling good right now.

BRIAN SOZZI: Peter, I'm trying very hard not to ask you about yogurt. I know that is now your former life. But look, I went to the supermarkets recently--

PETER MCGUINNESS: Brian, how are you?

BRIAN SOZZI: I'm hanging in there. I'm just trying to survive the week. Look, I went to the supermarkets recently, and I'm starting to see discounts on plant-based food. That is not something I have come to see from you and your largest competitor. What is it about the marketplace right now? Are consumers just trading back to meat? Or has there have been some kind of shift in the marketplace?

PETER MCGUINNESS: No, I think planned promotions are a good thing. They're good for trial, right? And when we look at our business, we have relatively low awareness and relatively low trial. But we have high repeat because people are pleasantly surprised about how good our products taste. So for us, it's about trial and awareness. And planned promotions are a good thing. What you're seeing in the aisles is actually animal products going way up. If you look at beef, it's gone up 30%-40% in the last year.

And we've been able to keep our prices steady, so we're quite price competitive. Now, the value proposition transcends price, right? These products are better for you, and they're better for the planet. And now with technology, the taste is so much better. And in fact, many of our products are preferred to the animal product. So if you can get taste to where it needs to be, and texture, and have that be equal or better than the animal product, and it's better for you and better for the planet, it becomes quite a robust value proposition.

JULIE HYMAN: Hey, Peter. It's Julie here. You may have been able to keep price steady, but I can't imagine you've been able to keep cost steady unless you're living in an alternate universe-- between fuel and input costs, right? So are your margins getting squeezed if you're keeping prices steady?

PETER MCGUINNESS: They're not right now because I think when you look at 65% growth, you do get quite a lot of operating leverage and fixed-cost absorption through the system. So that hyper growth has enabled us to offset inflation through productivity and absorption. And that's where we are right now. Now, if that changes we reserve the right to take price.

JULIE HYMAN: Finally, Peter, I'm not as polite as Mr. Sozzi, so I'm going to ask you about yogurt, albeit indirectly. So you were president at Chobani-- that's what we were referring to-- which was a pre-IPO company and is now not really because reporting says it's not going to go public anymore. Now you're in another pre-IPO company that there's been talk before about going public. Tell us what's up.

PETER MCGUINNESS: Yeah, I think we reserve the right to go public at Impossible. And it's on the table, but we'll go when we need to go. The balance sheet is strong. Our cash position is strong. So we have a lot of investment dollars to do what we need to do. So there will come a time where I think it'll be right for us to go public, and we'll keep you posted on that. But that time is not now.

JULIE HYMAN: We appreciate it. I like that. We reserve the right to go public. Peter McGuinness, good to catch up with you in your new role there--

PETER MCGUINNESS: Good to catch up with you.

JULIE HYMAN: --as CEO of Impossible Foods. We appreciate it.

PETER MCGUINNESS: Have a great day. Thank you for having me.

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