Noodle Maker Bets Americans Will Dig Quorn’s Alternative Chicken

Monde Nissin Corp. will use some of its $1 billion initial public offering proceeds to expand its Quorn Foods Ltd. fake meat business in the U.S., the world’s biggest market by far for plant-based alternative food.

The Philippines-based company, which also sells staple foods and is the owner of Lucky Me! instant noodles, will use Quorn’s substitute chicken product to take on heavyweights like Beyond Meat Inc. and Impossible Foods Inc. in a sector dominated by faux beef, executives said in an interview.

“Our ambition is to become the king of alternative chicken globally,” Quorn Chief Executive Officer Marco Bertacca told Bloomberg before Monde’s IPO, the largest ever for a Southeast Asian food company. Monde debuted in the Philippines on Tuesday and closed at 13.48 pesos, down from its 13.50 peso IPO price.

Noodle Maker Bets Americans Will Dig Quorn’s Alternative Chicken

Monde plans to increase Quorn’s production capacity and ship to more fast-food chains in the U.S., spending nearly 16 billion pesos ($335 million) to expand its presence in the country. It is also building two fermenters and packaging facilities in the U.K., where Quorn is based and has a 28% market share. Barclays Plc estimates the global alternative-meat market will grow tenfold to more than $140 billion by 2029, or 10% of the meat industry as a whole.

“The alternative meat category is going to explode, and we want to get our capacity ready as soon as possible,” Monde Chief Executive Officer Henry Soesanto said. “We need big money for that.”

Noodle Maker Bets Americans Will Dig Quorn’s Alternative Chicken

There’s some ground to catch up on. Since its 550 million pound ($780 million) acquisition by Monde in 2015, Quorn has suffered construction delays and chiller failures at its facilities, which depleted inventory and forced it to cut back on orders. The compound annual growth rate of Monde’s alternative-meat sales ticked along at only 5% from 2017-2020 despite the boom in the market. Beyond Meat’s sales had a CAGR of more than 130% in that period.

In two years, Monde could bring its plant-based business to Asia, with an eye on the Chinese market as the government aims to reduce meat consumption. Quorn distributes limited amounts in Singapore and the Philippines.

“Europe and the U.S. are at the forefront of alternative protein. Asia is coming up a bit late, but it is catching up in the next two to three years,” Soesanto said in an interview with Bloomberg Television.

Rather than faux ground beef, Quorn will focus on chicken -- the most-consumed protein in the U.S. -- and try to get fast-food chains to include it on their menus. A planned monthlong promotion with Kentucky Fried Chicken in the U.K. saw Quorn chicken burgers “flying off the shelves,” said Bertacca. The “Imposter Burger,” featuring a Quorn “chicken” fillet made with KFC batter and topped with vegan mayo and lettuce, sold out in four days, he said.

Nearly 90% of Quorn’s 2020 sales were from the U.K. and Europe.

In the Philippines, Monde’s portfolio of food staples including bread, noodles and sauces should continue to drive business after profit last year surged 26% to 7.34 billion pesos, Soesanto said. Monde will pay out 60% of net income as dividends, potentially rising to 90% after capital expenditure in the long-term.

The snack maker plans to increase its Lucky Me! noodle sales by making them healthier and offering more flavors, while also cutting palm-oil content by as much as 70%, Soesanto said. Instant noodles accounted for half of Monde’s 68 billion pesos in sales in 2020. The average Filipino consumes only 36 packs of noodles a year, well below places like Indonesia, Vietnam and South Korea, where the number is over 60, he said.

Chief Strategy Officer David Nicol said Monde is on the lookout for ventures where it can provide food technology and partners can oversee local supply chains.

“Given its dominant position in the Philippines, Quorn will be its major growth source going forward,” said Gerard Abad, chief investment officer at AB Capital & Investment Corp. in Manila. The IPO should put Monde in a good position to capture a significant share of the expanding meatless market, he said.

AIA Investment Management Pte, Eastspring Investments (Singapore) Ltd. and Singapore state investment fund GIC Pte are among cornerstone investors, according to Monde’s IPO prospectus. Soesanto said in a statement last week there’d been “overwhelming interest” from international and domestic investors.

Los Angeles-based Beyond Meat surged more than 800% in the three months after its sizzling May 2019 listing in New York, and it remains almost 500% higher than its IPO price. Impossible Foods is preparing a public listing, Reuters reported in April.

Monde’s goal is for Quorn to at least match the pace of growth in the global alternative-meat industry, even as new players like Nestle SA and Unilever join the fray.

“If we get even 5% of that huge market, we will be very happy,” Soesanto said of the U.S. “We don’t want to be left by the bus.”

©2021 Bloomberg L.P.

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