Philippines’ Top Noodle Maker Downsizes Loss-Making Alternative Meats Business

Monde Nissin—the largest Philippine maker of instant noodles by revenue controlled by Indonesia’s billionaire Kweefanus family—is scaling down Quorn’s operations to cut losses at its U.K.-based alternative meats unit.

Quorn’s capacity exceeds what’s needed to serve the U.K. and the U.S. where the company’s expansion didn’t go as planned amid softer demand, according to Jesse Teo, chief financial officer of Monde Nissin. The downsizing could help Quorn return to black, he said.

“The growth wasn’t there so we have to dial down,” Teo told Forbes Asia via video conferencing. “This restructuring is meant to make the business healthier. We over invested in the business not only in capacity.” The group bought Quorn in 2015 for $831 and spent almost $340 to expand the business, bringing total investments to about $1.2 billion.

Monde Nissin will retrench hundreds of Quorn’s workforce as it shuts plants and streamlines its supply chain, Teo said. The £15 million ($19 million) overhaul includes the appointment of a new CEO at Quorn, which in 2021 had 900 employees and exports to 15 countries including the U.S., Singapore and Australia.

“Monde, like many other meat alternative players, misjudged the market,” says John Gatmaytan, chairman at Luna Securities in Manila. “The novelty of fake meat is gone. It’s not gaining traction, and Monde is taking corrective action.”

Monde Nissin CEO Henry Soesanto—who helped transform the company from a biscuit maker into the Philippines’ largest manufacturer of instant noodles under the “Lucky Me!” brand—spearheaded the company’s push into alternative meats amid hopes global trends towards sustainable and healthy eating would boost demand.

Soesanto—a key shareholder of Monde Nissin, along with the company’s chairman emeritus Hartono Kweefanus, his brother-in-law—expanded Quorn by opening a £150 million manufacturing plant in the U.K. in 2018 that doubled its capacity to 40,000 tons a year. Quorn then described the facility as the world’s biggest meat alternative production plant.

In 2021, Soesanto allotted $335 million from Monde’s $1.1 billion IPO proceeds to grow Quorn’s presence in the U.S., then the biggest alternative meats market, while ramping up capacity in the U.K.

But with rising sales and cost pressures at home and abroad, including the U.S., Teo said Monde halted construction of a fifth fermentation plant in the U.K. even though the project is more than 50% completed.

“It’s a declining market and our total volume, instead of going up, is going down and we built all the capacity.”

While Quorn’s position now has improved to a third of U.K.’s alternative meats market, Teo said it’s using capacity equivalent only to 2.5 of its four fermentation plants.

“It’s a declining market and our total volume, instead of going up, is going down and we built all the capacity,” Teo said. “A lot of them are idle so we must restructure.”

Monde’s principals “have their feet on the ground and are realistic about its prospects in the short to medium term,” Teo said. “While we keep our conviction for the long term, we don’t expect any topline miracle in the short to medium term so we must operate as such and trim down what we can trim down.”

As part of its far-reaching revamp, Quorn ended a marketing partnership with Hollywood actress Drew Barrymore that started in 2021 and retrenched several executives who were hired to advance its U.S. expansion, according to Teo.

The restructuring, which includes reducing inventory and cutting delivery time, will generate £8 million in total savings in 2024 and in 2025, when Quorn is expected to be EBITDA positive, Soesanto said earlier this month when Monde reported nine-month earnings that showed its alternative meats business reporting a core net loss of 655 million pesos ($11.1 million). The revamp will deliver £8 million in annual savings from 2026, he also said.

Quorn’s restructuring comes a year after Soesanto, Kweefanus and other major owners set aside part of their shares in the Manila-based conglomerate as a guarantee against the unit’s cumulative impairment charges from 2024 through 2033. Monde booked a total of $548 million impairment charges for Quorn in 2022 and 2023.

While the financial support (equivalent to 12% of the company’s outstanding shares) helped stabilize the company’s stock price, Monde Nissin is still trading 30% below its IPO price of 13.50 pesos per share.

Soesanto, Kweefanus and their family, which includes Monde Nissin president and cofounder Betty Ang, have a combined net worth of $2.2 billion largely on the value of their controlling interest in the company, according to Forbes Asia’s list of the Philippines’ 50 richest that was published in August. Ang, who is married to a brother of Kweefanus, cofounded Monde Nissin in 1979 with her late father-in-law, Hidajat Darmono. Soesanto is married to Darmono’s daughter, Monica, the company’s treasurer.