Quorn bites overhead with packaging_press crop

Quorn has unveiled a raft of NPD in the past year

Profits at Quorn have retreated as soaring costs put pressure on margins and an increasingly crowded meat-free category saw sales dwindle at the market leader.

Newly filed accounts for Marlow Foods, the parent company of Quorn and fellow plant-based brand Cauldron, revealed a 4.8% drop in revenues to £224.9m in the year ended 31 December 2021.

Shrinking trade with the supermarkets, with sales at the retail division down 8% to £201.5m, more than offset strong double-digit growth (up 35.3% to £23.4m) at the foodservice operation, which supplies the likes of KFC and Greggs.

A host of new challengers in the category, such as The Vegetarian Butcher, Beyond Meat, This and Meatless Farm, as well as entries into the market by sausage maker Richmond and frozen giant Birds Eye, presented shoppers with a growing variety of products eating away at sales for Quorn and Cauldron.

The UK meat-free market is worth £578.9m [NielsenIQ 52 w/e 18 June 2022], according to the latest Grocer category report, but increased competition saw Quorn’s market share fall from 44.9% at the end of 2019 to 27.1%.

In the accounts, Marlowe Foods also blamed ongoing disruption from Covid, Brexit and inflation in key commodities towards the tail end of the year for its struggles.

Chief commercial officer Peter Harrison highlighted “many positive aspects” of Quorn’s 2021 trading performance, including an NPD blitz.

“Increased NPD investment delivered six out of the top ten best-selling new launches in UK retail, where the Quorn brand continued its clear category leadership, and our foodservice business continued to enjoy significant double-digit growth,” he added.

However, higher brand and R&D investment, along with building inflation, put pressure on margins at Marlowe Foods in the year, with operating profits down 36% to £8.7m.

Quorn was acquired by Philippines-based Monde Nissin in 2015 for £550m and set itself ambitious to grow the brand to a $1bn business by 2027.

Harrison said Quorn had started 2022 “strongly” with penetration up almost 10% in the first four weeks [Kantar 4 w/e 23 January].

“We continued that success into the second quarter, delivering Quorn’s market share growth across frozen and chilled in Q2 this year, and we see this continuing to build month by month,” Harrison told The Grocer.

“We will continue to encourage shoppers to try meat free more often.

“We have an exciting NPD pipeline across both chilled and frozen, including the relaunch of our chilled ready meals range next week.

“At the same time, we are adapting to the rapidly changing economic environment, with laser focus on what really has a positive impact on our stakeholders, whether that be our people, the category, our customers and consumers – and, of course, our planet.”

He said Quorn was “the beacon brand” within the category.

“This will be vitally important as the nation navigates the turbulent economic times,” he added.

“Shoppers know our products are synonymous with quality, taste, sustainability and value for money, evidenced in our recent market share growth. We have a high level of trust and loyalty from our shoppers, that will be a real benefit to retailers.”

Monde Nissin raised $1bn in an IPO on the Philippines Stock Exchange in June 2021, with £240m earmarked for investment at Marlowe to underpin the growth effort in the UK and overseas, particularly in the US and Asia.

Quorn committed to invest £150m in production over three years after seeing its sales growth hit by capacity constraints during the early stages of the pandemic in 2020 as it struggled to keep up with demand.