Monde Nissin to continue growing meat alternatives

MANILA  -Philippine-listed conglomerate Monde Nissin Corp. pledged to keep growing its meat alternative segment as part of a long-term bet on food security even after a significant valuation cut at the business contributed to a P13 billion loss in 2022.

The meat alternative arm, led by the flagship brand Quorn, booked a non-cash impairment loss of P20.5 billion last year amid slowing sales and a sharp rise in interest rates in response to soaring consumer prices.

The impact was blunted by the robust growth at its Asia Pacific Brand Food & Beverage Segment (APAC BFB), which makes the Lucky Me! instant noodles, biscuits and baked goods.

APAC BFB, which accounts for 80 percent of sales, saw revenues jump 8.4 percent to P58.55 billion in 2022, the company said in a stock exchange filing.

Meat alternative revenue grew 1 percent, pushing up Monde’s total net sales last year by 6.7 percent to nearly P74 billion.

Long-term growth prospects

Monde CEO Henry Soesanto said during a briefing on Thursday meat alternatives will endure despite an ongoing restructuring and rationalization of Quorn, a nearly 40-year-old brand that was acquired by Monde in 2015 for $831 million (P45.2 billion).

Monde Nissin restructures alternative meats business

“Quorn has gained loyalty from huge numbers of consumers that assures its further growth and the world’s population continues to grow along with the protein requirement,” Soesanto said.

“The traditional supplies will be impossible to keep up with demand… and this gives us the confidence the continued long-term secular growth of alternative protein despite the category’s slowdown at this point in time,” he said.

The multibillion peso write-down of the meat alternative business also reflected softer demand prospects in the segment as persistent high inflation forces consumers to shift to more inexpensive options.

Following discussions with their auditors, Monde chief financial officer Jesse Teo said the segment’s valuation was cut by 43 percent to £380 million (P25.6 billion).

The impairment loss was mainly accounting in nature and principally involved intangible assets such as goodwill and brand and would not affect Monde’s regular operations, he explained.

Equity restructuring

Related to this, Monde said on Friday it will implement an equity restructuring using its paid-in capital to eliminate a P7.15 -billion deficit on its year-end finances.

Monde earlier said it would divert initial public offering proceeds to APAC BFB. This includes the addition of new lines for its rapidly growing bakery business.

Teo said Lucky Me! also saw strong recovery in terms of market share and sales after a chemical contamination issue weighed on demand in the latter part of 2022.

Core gross profit for APAC BFB slid lower by 7.2 percent to P18.2 billion in 2022 due to higher input costs, which were offset by price increases.

The company said it would also grow its quick service restaurant presence in Europe. In the Philippines, Monde invested P820 million last January to acquire a 15 percent stake in businessman Jerry Liu’s Figaro Coffee Group.

“We are almost at the end of the first quarter, during which we have seen a rather slow start for meat alternative but strong topline growth in our [Asia Pacific] business to which we will accordingly redirect a significant proportion of our remaining IPO proceeds,” Soesanto said.

“This coupled with our expectations to benefit from lower commodity prices as the year progresses is giving us cautious optimism for both top and bottom-line growth this year,” he added.

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