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The collapse of the Very Good Food Company

The B.C.-based Very Good Food Company, once a darling of Canada's plant-based meat scene, closed last month, prompting worries about the industry's future. Photo provided by Mitchell Scott

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Late last month, Mitchell Scott watched from afar as the company he had nurtured from a farmer's market vegan "butcher" shop to a darling of Canada's nascent plant-based meat industry collapsed.

From the outside, the Very Good Food Company seemed to be doing well. Its trendy bean-based burgers, bangers and briskets were in demand and being sold in about 1,700 stores across Canada and the U.S. The company had successfully appeared on CBC's Dragons’ Den and boasted a popular Victoria, B.C., storefront. Buzz about the company's potential was so high, its stock values soared by 800 per cent the day it went public in 2020.

But below the surface, trouble was brewing. Scott said the company never reliably turned a profit as it invested in new equipment and people to meet consumer demand, and its share prices had been in slow decline for over a year. Last spring, the company announced it was cutting production and staff, including Scott and co-founder James Davison. By September, the new executive team was trying to sell the business to stave off collapse. Those efforts failed, and in late February, the company closed.

"It's just super frustrating," he said of his business' demise.

The Very Good Food Company collapse reflects a broader slowdown in the North American plant-based meat industry. Recent months have seen the stock value of behemoths like Beyond Meat fall, and Canadian giant Maple Leaf Foods has scaled back its plans for plant-based products citing a "marked slowdown" in demand.

Late last month, Mitchell Scott watched from afar as the company he had nurtured from a farmer's market vegan "butcher" shop to a darling of Canada's nascent plant-based meat industry collapsed. 

Some observers have attributed the decline to health concerns about the ultra-processed plant-based proteins that dominate the market. Others, including Dalhousie University food researcher Sylvain Charlebois, point out that plant-based processed foods are more expensive than real meat or dairy. An analysis by the Good Food Institute, an organization promoting plant-based foods, found they cost on average 43 per cent more than real meat.

The industry's decline is a marked change from euphoric predictions by analysts between about 2019 and 2021 that the industry would see "explosive growth" through the 2020s, fuelled by eco-minded consumers. Industry proponents have long claimed "alternative meats'' are key to reducing global meat and dairy consumption, which generate about 18 per cent of global greenhouse gas emissions and fuel biodiversity loss.

The market slowdown has generated a flurry of stories in mainstream media about how the industry failed "to deliver" and is a "flop." But for people like Scott and Charlebois who have closely followed the industry for years, the downturn is not a story of bored consumers and tumbling demand. Scott said demand for his ex-company's plant-based products stayed high, aligning with federal research from 2022 indicating that nearly half of Canadians are trying to eat more plant-based foods.

The tricky part is figuring out what people will eat — and how much they're willing to pay.

"At the end of the day, it's all about cutting costs, making the product more natural (and) with less sodium," Charlebois explained. "That's what the entire industry is battling for."

High costs and health concerns mean the industry is "losing the battle" with meat and dairy on supermarket shelves, he said. As inflation pushes food prices to eye-watering heights, the steep cost of many plant-based products is a "big, big issue." The situation is "a bit of a different story" for restaurants and institutions like schools, who have guaranteed diners and buy in bulk, which can help mitigate cost, he explained.

The industry is settling out after taking the world by storm in the unusual context of COVID-19, Leslie Ewing, the executive director of industry group Plant-Based Foods Canada, pointed out. During the pandemic, more people were cooking at home than usual, driving demand for plant-based products at supermarkets to unusual heights. As the world returns to more normal eating patterns, it's no surprise that "unusual bump" in sales has dissipated, she explained.

Plant-based food manufacturers also continue to face supply chain problems linked to the pandemic, drought, inflation and "global instability" while trying to convince consumers to eat "unfamiliar" foods, Ewing said.

The mismatch between these realities and investors' speculation about what plant-based products could achieve fuelled the Very Good Food Company's demise, Scott said. New foods take longer to develop and adopt than products made by most other startups, making the Silicon Valley-style venture capital approach to financing "challenging."

The stocks were high, but their value wasn’t "sustainable," he said, and eventually, investors started pushing to see the business generate profits. The company struggled to produce its product at scale and find enough suppliers, production facilities, machines, packers and staff to keep up with demand. Eventually, it collapsed.

Despite these challenges, Scott is optimistic about the future of plant-based foods. Even though the "hype has died down," the seed has been planted in consumers’ minds, he said. Charlebois echoed those thoughts, adding research into less processed plant-based products created using fermented or cellular meat and dairy and other ingredients like mushrooms looks promising.

"I don't think vegetable proteins are dead. It's actually the opposite," he said.

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