Unilever’s sale of The Vegetarian Butcher caught the eye for a number of reasons, with those doing business in the plant-based meat market largely positive about the deal.
The transaction, however, has sparked questions about how JBS, the meat giant that’s the new owner of The Vegetarian Butcher, will look to grow the brand’s sales, especially in a market where the going has proved a lot tougher than some in the sector were suggesting a few years ago.
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But, first, to Unilever’s rationale, with the FMCG giant receiving some criticism among the plant-based industry’s proponents.
That Unilever has offloaded the Dutch-based business is little surprise. It was only in November that UK broadcaster Sky News said Unilever had hired bankers to work on selling the assets. Bought seven years ago, Unilever, which under previous CEO Hein Schumacher had been looking to dispose of assets in food, clearly didn’t see a future for The Vegetarian Butcher in its slimmed-down portfolio in the sector.
Last month, Unilever announced the surprise departure of Schumacher (after just 18 months in the role) and the promotion of CFO Fernando Fernandez to the top job. A desire to speed up the implementation of the changes Schumacher had put in place appeared to be central to the decision.
And a thirst to accelerate the trimming of Unilever’s food portfolio seems important to Fernandez, who, speaking to analysts earlier this month, said that process has “not really been happening that quickly”.
Unilever was still “committed” to grow its position in food, Fernandez said, but he underlined the company had identified around €1bn ($1.1bn) tied up in “non-core” food brands.
While we’ll never know how much JBS paid for The Vegetarian Butcher, we do know it was one of those businesses Unilever no longer deemed “core” to its efforts in food.
Unilever’s decision has been questioned in some quarters. “Kodak missed the digital [camera]. Nokia missed the smartphone. Today Unilever might be missing the plant-based revolution,” Abhishek Sinha, the founder and CEO of Indian plant-based meat business GoodDot Enterprises, posted on LinkedIn this week.
“Unilever’s plan to offload of The Vegetarian Butcher – formerly its crown jewel sustainability brand – is reminiscent of an all-too-familiar tale: a heritage giant leaving too early from innovation. Even with a robust brand, QSR partnerships, and an increasing global demand for alternative proteins, Unilever never really supported TVB in strategic markets such as India, the US or China.”
Given the internal push at Unilever to scale back and focus its efforts on fewer assets and the external conditions facing plant-based meat brands across a number of key markets in recent quarters, Unilever’s decision is understandable.
Amid pressure on sales – sparked by mainstream consumer concerns about taste and price – the plant-based meat category has endured a tumultuous period, marked by consolidation and by companies going out of business.
That The Vegetarian Butcher has found a new owner has been welcomed by executives in the sector.
“Far from this being a step back for plant-based, I see this consolidation as a step forward and opportunity for Vivera to couple two powerhouses of R&D,” James Bryce, the MD of UK food-and-beverage ingredient supplier Daymer Ingredients, said.
Elysabeth Alfano, the CEO and co-founder of US fund VegTech Invest said the deal, which remains subject to the usual closing conditions, “brings together two influential players in the diversified protein space – combining heritage, scale, and innovation”.
“This consolidation signals the accelerating transformation of food systems – where purpose-driven companies are building the next generation of protein to reduce reliance on industrial animal agriculture,” she said.
On the other hand, the reaction to the deal was peppered with concerns about the motivations of JBS, one of the world’s largest meat processors. There were posts online that wondered whether the company, through its ownership of Vivera and soon The Vegetarian Butcher, is looking to control the market for plant-based alternatives. JBS would counter that it is looking to become a supplier of different protein formats as consumer tastes evolve.
“We have strengths that will complement each other big time but, foremost, we have a shared ambition to give the plant-based meat movement the positive impulse that the world for our grandchildren deserves,” Vivera CEO Willem van Weede said.
Together, the two companies could benefit from supply-chain and production synergies, which could, in turn, help on being more competitive on costs, which is critical to narrowing the price gap with conventional meat.
And, while the data has suggested the markets for plant-based meat in the US and the UK particularly have struggled in recent quarters, trading conditions in some countries in Europe have been relatively more favourable.
Robert Lawson, managing partner at UK-based consultancy Food Strategy Associates, says the team at JBS/Vivera will face some tricky decisions selecting which brand to focus on in markets like Netherlands and the UK where both are present in major multiples.
“Expect Vivera to bring The Vegetarian Butcher production in-house and to strip out costs to restore profitability to the business. What they do with the brand is more difficult to predict as it has some positives, albeit Unilever can hardly claim to have done their strongest brand marketing here,” Lawson tells Just Food.
“There would have been few takers for The Vegetarian Butcher – a rather confused brand; what is an art deco woman wielding a machete got to do with plant-based healthier diets? – with thin geographic coverage outside of the Netherlands, a significant and vulnerable foodservice contract with Burger King and eye-watering losses.
“But for Vivera, possibly the only business that could make sense of this acquisition without starry-eyed optimism about the future of plant-based meat alternatives, this represented an opportunity to claim leadership in the important Dutch market and to strengthen weak positions in the UK and other European markets.”
He adds: “The combination of Vivera and Vegetarian Butcher is not an end-game consolidation. Further consolidation will happen and weaker brands will continue to go out of business – leaving room for stronger businesses to capture scale. Plant-based now needs to emerge with more professional marketing and sales, better NPD and efficient supply chains.”
