In a stark illustration of the current headwinds facing the alternative protein sector, Marlow Foods, the parent company of mycoprotein pioneers Quorn and Cauldron Foods, has reported significant financial losses for 2023. This development highlights the complex landscape navigated by fungal-based food producers in today's market.
Credits: Quorn
Financial Snapshot
Marlow Foods, acquired by Filipino food conglomerate Monde Nissin in 2015, posted a pre-tax loss of £63.4 million in 2023. This figure represents a fourfold increase from the £15.4 million loss recorded in the previous year. Even after tax credits, the company's losses surpassed £50 million.
Revenue for the group declined by 7% to just under £205 million, marking its lowest point since 2017. This downturn has primarily been attributed to inflationary pressures and decreased demand in key markets such as the UK and US.
Market Challenges and Strategic Responses
The alternative protein industry has faced significant hurdles recently, with Marlow Foods' experience mirroring broader sector trends. The company cited "material external pressures of input cost inflation and the decline in demand in the UK and US retail markets" as primary factors behind their financial struggles.
In response to these challenges, Marlow Foods has implemented several strategic measures:
Restructuring UK operations, including redundancies across various departments
Scaling back US operations, exiting certain retail and foodservice channels
Rebranding its foodservice division as Quorn Pro
Launching Marlow Ingredients, a new division supplying mycoprotein to other producers
Bright Spots Amidst Downturn
Despite the overall challenging landscape, some areas of Marlow Foods' business showed promise:
Foodservice sales increased by 5% to £28 million
The newly launched Marlow Ingredients division generated initial sales of £300,000
International expansion with KFC's adoption of vegan chicken products outside the UK helped boost revenues in that segment by 7%
Looking Ahead: Blended Products and Industry Collaboration
Quorn CEO Marco Bertacca remains optimistic about the future of mycoprotein, stating, "We truly believe that there's nothing quite like mycoprotein. Fungi and fermentation can be the protein solution the planet needs."
In a notable shift in strategy, Quorn announced a partnership with the UK's National Health Service (NHS) in June 2023. This collaboration aims to provide mycoprotein for blended meat products in hospitals, signalling a move towards more flexible product offerings.
Bertacca elaborated on this evolving approach: "Once upon a time, we were effectively competing with the meat industry – only making products that were alternatives to theirs, and encouraging people to switch. Of course, we still offer these products, but as human knowledge has evolved, businesses are evolving, including ours."
Industry Implications
Marlow Foods' financial challenges reflect broader trends in the alternative protein sector. However, the company's strategic pivots – particularly towards blended products and B2B ingredient supply – may offer a blueprint for other mycoprotein producers navigating this complex market landscape.
As the industry continues to evolve, collaboration and diversification appear to be key strategies for companies looking to weather current market conditions. The focus on mycoprotein's unique properties and potential for addressing global protein needs remains a central theme for companies like Quorn as they adapt to changing consumer preferences and economic realities.