Could the Filipino Firm Monde Nissin Make Quorn a Global Brand?

Quorn, which was put up for auction, has a new owner. Philippines-based noodle producer Monde Nissin has purchased the booming meat substitute brand for £550 million, pipping rival bidders including Bird’s Eye owner Nomad Foods, chip maker McCain and global dairy giant Danone, to the post. The move surprised many in the industry as meat substitutes is a negligible market in the Philippines, the country that accounts for almost the entirety of Monde Nissin’s packaged food sales. In addition, the wider region of Asia Pacific is not a particularly lucrative market, with sales of meat substitutes in Asia Pacific representing less than 3% of global category sales in 2015. So, what has really triggered Monde Nissin to buy up Quorn for such a large sum?

Meat Substitutes Sales 2010/2015/2020 and Growth 2015-2020


Source: Euromonitor International

Note: The above figures are based on the preliminary Packaged Food 2016 data.

The allure of meat substitutes

Quorn is forecast to reach sales of over US$250 million in 2015, up by US$100 million from 2005.  As one of the most popular meat substitute brands in the world, Quorn has enjoyed a boost in sales following the horse meat scandal in the UK and has also benefited from campaigns such as Meat Free Mondays, backed by Sir Paul McCartney or meatless Thursdays which is becoming increasingly ubiquitous in many European cities. The British mycoprotein, which was fermented from a strain of fungi in Buckinghamshire in response to fears of a global food shortage in the 1960s, is now eaten by 14 million people worldwide and reached as far as South Africa in 2014 and will be launched in additional European markets before the end of 2015.

Quorn Value Sales in its Largest Markets 2010/2015


Source: Euromonitor International

Note: The above figures are based on the preliminary Packaged Food 2016 data.

While Quorn is rapidly expanding in Europe and has realised sizeable share in the US and Australia, the brand lacks presence in Asia Pacific, which is forecast to generate the bulk of value growth in total packaged food. Quorn’s absence from the largest region in the world limits its geographic growth potential. The acquisition by Monde Nissin might, in this sense, enable the brand overcome the challenge and help it become a global brand. Quorn could potentially be positioned as an alternative to tofu, which is a popular staple in many parts of Asia. Monde Nissin could also offer Quorn as a snack to accompany or complement noodles, which is the company’s main area of specialisation. This might help familiarise Asian consumers with the meat alternative.

Taking advantage of Europe’s growing noodles market

Another potential motivation behind the purchase of Quorn might be Monde Nissin’s ambition to broaden its reach into pastures new. Buying Quorn will enable Monde Nissin to make its debut in Western Europe, which is a US$1.1 billion market for noodles and is forecast to post a constant CAGR of 4% over 2015-2020, quite a staggering rate given the overall stagnancy in the region’s packaged food sales. Monde Nissin could very well use Quorn as a vehicle to introduce its brands in Western Europe and by exploiting Quorn’s distribution network, it could leverage its Lucky Me! brand to gain a share from the growing noodles market in the region.

Monde Nissin is also rumoured to be preparing for a potential stock market listing next year. The purchase of Quorn has almost doubled Monde Nissin’s current business and has the potential to further boost its value, if the company manages to expand the brand’s footfall in Asia. However, the deal also made Monde Nissin leverage a lot which might keep potential investors alert. In order to accelerate sales in the Philippines and wider Asia Pacific region, Monde Nissin needs to ensure that the product is priced at a competitive rate, is available in the main grocery stores and other key distribution channels and carries a unique selling proposition. If it is retailed at a similar price point as in Europe or Americas, the product might fail to take off in Asia Pacific where consumers are becoming increasingly more price-conscious. This might in turn negatively impact the brand equity of the company’s other brands.