Walt Disney (NYSE:DIS) has chosen Impossible Foods as its preferred provider for plant-based meat alternatives. That designation that could see Impossible Burgers appear on menus at restaurants all across Disney World and Disneyland, and on Disney cruise ships.
Although there is no requirement any restaurant actually serve the faux meat burger, gaining the Disney stamp of approval gives Impossible Foods a significant advantage.
The meat case is getting crowded
The theme-park operator said in a blog post last year that plant-based dining would soon be a feature at its restaurants and would include more than simply burgers. Among the menu items expected were plant-based dumplings, tofu bowls, and cashew-based cheesecakes.
Faux beef burgers are arguably a much bigger addition if only because of the growing popularity of the meat alternative in casual and fast-food chains. Impossible Foods and rival Beyond Meat have been adding to their growing roster of restaurant partners using their protein substitutes.
While Burger King is expanding the Impossible Whopper's presence, Beyond Meat is featured at numerous McDonald's restaurants in Canada. Both, however, are facing increased competition from larger, better-financed consumer products companies including Kellogg, Nestle, and Tyson Foods.
Perhaps the biggest challenge to Impossible Foods and Beyond Meat was the announcement Monday by agribusiness giant Cargill, which said it would be introducing a private-label plant-based beef alternative for retailers and restaurants beginning in April.
It has been a difficult road to profitability for these meat-substitute makers, and the possibility of their premium product becoming commoditized by white-label alternatives could undermine the effort. With a pound of ground Beyond Meat costing $10 at a grocery store, or more than twice that of real ground beef, a low-cost meat substitute could easily steal sales.
Ready for a hungry crowd
Which is why Disney giving Impossible Foods its imprimatur is timely. While Disney doesn't provide attendance numbers from its theme parks, the Themed Entertainment Association estimates there were 157 million visitors to Disney parks in 2018, though it's expected to be slightly lower for 2019.
Still, that's a massive audience for the faux-meat company, even if its burgers don't appear on the menus of all restaurants in the parks. There are hundreds of restaurants spread across the parks and on the cruise ships, and while many are small specialty dining spots, even a handful of the major restaurants would be important outlets.
Impossible Foods President Dennis Woodside told CNN Business: "There's a level of trust associated with Disney. If Disney put us on the menu, then people are more likely to try it."
Opening up a big opportunity
Plant-based meat substitutes are still a small segment of the overall industry, but they are growing rapidly. The Plant Based Foods Association says the meat category hit $800 million in sales last year, up 10%, and now accounts for 2% of the total meat segment.
And there are more chances to grow. A survey by the International Food Information Council found only half of respondents had tried a plant-based meat alternative, suggesting there was a lot more upside to be had.
Although there are a lot more alternatives coming to market, the key will be taste, which both Impossible Foods and Beyond Meat have won accolades for. That will be crucial for retaining customers, particularly as low-cost competitors enter the market.
Ready to grow
Yet it was only a month ago that Impossible Foods CEO Pat Brown told Reuters it would be "stupid" for his company to pursue business with McDonald's because it couldn't keep up with demand, and "having more big customers right now doesn't do us any good until we scale up production."
While he walked back the quote the next day, and Disney isn't on the same scale as the fast-food giant, this partnership suggests it may have gotten past the qualms and bottlenecks that prevented Impossible Foods from pursuing big customers. It could be a hint that it's ready for more restaurant deals in the future.