In 2009, Heather Mills purchased Redwood Wholefoods, a health food company operating since 1993. The company would become VBites and go on to develop and sell 130 products to more than 20 countries. Fifteen years later, just last week, Mills bought the company once again. Here, she explains some of the events that happened in between, and puts the record straight in terms of several misreported details around the situation.
In 2018 Heather bought a second factory in Newcastle to focus on cheese alternatives, launching Morrisons’ first vegan cheese product as a private label. The following year, at the height of the plant-based boom and just weeks before the Beyond Meat IPO, VBites acquired a 385,000 sq ft factory in Peterlee with intentions of creating a “plant-based Silicon Valley” in the North East of England. Shortly afterwards came Brexit, creating an export nightmare, destroying products worth hundreds of thousands of pounds at the EU borders, and destroying many businesses, Mills says.
Then, at the beginning of 2020, the pandemic arrived, and food service establishments around the world were sent into the abyss, with no indication of when normality could return to business.
Amid the global chaos, rumours began to circulate that VBites was closing doors, and Mills defended her business, stating that furloughed employees would return to work as soon as pubs and restaurants began to open. A VBites spokesperson responded to the rumours that “Peterlee was bought and heavily invested in to bring employment to the North East to scale for the vegan plant-based food industry. The owner has put millions into the plant with no support from the Government or the banks. As soon as the restaurants open we will be re-evaluating the situation.”
Fortunately, VBites Corby was one of the few vegan companies that operated an online store, and was still manufacturing throughout Covid, selling to supermarkets and health food stores, meaning that although a third of the business was closed due to the pandemic, customers were still able to purchase the products, and retail sales grew by about 2000%, helping to offset the lack of foodservice sales, Mills stated at the time.
Pfeifer & Langen
What happened next is a matter of contention. In 2021, Pfeifer & Langen acquired a 25.1% minority stake in VBites, allowing its Peterlee site to reopen after a hiatus. The new Peterlee plant was to expand production after the Pfeifer & Langen announcement, creating over 320 new jobs in the area. The partnership with VBites, according to Pfeifer & Langen, was to complement its previous investment in German pea protein brand endori.
Benjamin Rekab, managing director of New Food at P&L, said at the time: “With VBites’ vast product range and Endori’s EU-based production capabilities, the two companies will support each other in expanding their cross-border distribution in all plant-based categories, so that, for example, vegan, functional fish or cheese products of the VBites brand can be introduced to the German market. With this partnership, we are pursuing a medium and long-term strategic approach with regard to our market presence in the internationally growing plant-based category. However, we are also aiming for short-term benefits for both sides, which will boost both VBites and Endori in their day-to-day business.”
Mills describes what took place from her perspective, explaining, “When we took on a minority investment from German food conglomerate Pfeifer & Langen, we were promised £42 million of vegan cheese business by one of their team.”
Essentially, VBites had scaled up into the Peterlee factory on the understanding that P&L would only invest on the basis of very large scale, stating that an individual at the conglomerate “wanted us to be the plant-based hub making £42 million worth of cheese [but] then they put a hold on it [after we had done] the work scaling and moving factories.”
“I was advised to step away from the running of the business and leave it to the experts and a new executive management team,” Mills says, adding that everything she attempted, for example moving at speed to compete with growing competition, fell on deaf ears, missing huge opportunities in the market.
Due to the new executive management, incredible amounts of paperwork and board-level discussions took place with minimal action, “and we had already left the small factory and excitedly scaled into the Peterlee site so the overheads were huge. Large corporate businesses seem to talk a lot and move very very slowly, whereas we are a speedboat and can make things happen very quickly,” she adds.
Setting the record straight
On 11th December 2023, VBites entered administration, and the news was widely reported internationally, stoking the flames of the Vegan Bubble Has Burst narrative. In response to the noise, Mills says that “the market may have been challenging but we have survived plenty of market challenges and bumps in the past – in my view the company has been very poorly run for the past 18 months which led to a tremendous amount of waste and lack of strategic focus.
“I was advised to step away from the running of the business and leave it to the experts”
“On top of that, we were given very short notice from our investors of their intention to withdraw funding, and my proposals to continue funding the business myself were rejected – so, yes, it was unnecessary in many ways, however, a reset was entirely necessary and I’m delighted to be back at the reins now, we are already at break even, the amount of unnecessary waste in large corporate ways of working is irresponsible, so I am working with my team to capitalise on all the terrific IP and opportunity that still exists within the business. And bring it back to the 17% EBITDA it used to be, before Brexit and Covid.”
Heather and her team also want to make clear the situation surrounding the reported debts and liabilities with some suggesting there was eight million in debt. This was not, in fact, a debt, says the entrepreneur. It was an investment to scale the factory and buy millions of pounds worth of machinery which remains the factory and could have been asset financed, but instead, P&L chose to pull out. The company did not need to go into administration, she argues. The previous management had lost £3 million worth of business, otherwise, all of the staff could have been rehired.
“Instead, we have 42 staff and will rebuild. My staff were told they could not talk to me so I could not reassure them that I would do anything to save VBites. It was awful,” she laments.
The reacquisition
On 17th January, a deal was struck for Mills to purchase the assets for £1m ($1.2m), with the deal covering the VBites name and intellectual property, along with facilities and machinery. Vegan Solo Consulting, owned by Mills, “was selected as the preferred bidder [against 5 other bidders] as its offer represented the best overall outcome for creditors of the company in the circumstances,” according to administrators Interpath Advisory.
Mills said at the time that the acquisition had come at great personal cost. We asked about the perceived level of risk involved. “I’ve never taken a penny of dividends from VBites in decades to support cashflow, only loaned the company millions of pounds and 20 hour days, so to that extent it’s all at personal risk.
“I believe in the company’s mission and its purpose to facilitate the transition to a plant-based diet”
“As part of the deal to resurrect the business, I wrote off my director’s loan to the business of £5M and paid a significant additional fee to re-acquire the company IP and assets. I believe in the company’s mission and its purpose to facilitate the transition to a plant-based diet for the good of human health, the animals and the environment. Money has never been a motivator for me.”
On moving forward with cohesion
“The plight of VBites is not an isolated case and I think it’s important to take stock and highlight the various factors that are contributing to the struggles of companies like ours in the current market,” Mills stated in December, upon the news of the insolvency. So, how can others take stock, and learn from VBites’ troubles?
“There’s no one-size fits all or silver bullet solution for businesses struggling in our area, however, there are common denominators that many of us can point to in our struggles. A lack of cohesion as a sector is one of them. As I keep saying, one of the major factors behind the successful (although entirely factually misleading) publicity campaigns that the meat and dairy industry are waging is that they are well organised and united in their messaging as well as heavily funded by the taxpayer. Sadly, often these days it doesn’t matter if what you say is ‘right’ as long as you say it with panache, consistency, and via well-loved influencers or affectionately quirky marketing gimmicks.
“As a plant-based sector, we’re currently too divided, too self-interested, and too naïve to battle against the coordinated campaigns that legacy, government-backed sectors are capable of waging. That has to change. We also have to be conscious of the impact of corporate greed. Many plant-based businesses have gone under because of unfulfilled promises from corporate investors that sensed a chance to make a quick buck off the back of the Beyond Meat IPO.”
“As a sector, we need to ensure we’re not enticed into ‘uneasy’ partnerships and that our growth plans and foundations are solid and stress-tested. Other than that, as soon as the economy improves, the inertia of the plant-based movement will gain momentum again and the long-term future is still very bright – companies just need to be efficient and profitable or well-funded enough to reach the other side of this mini-correction. The logic is irrefutable and the conclusion is inevitable.
“Many plant-based businesses have gone under because of unfulfilled promises from corporate investors”
“The planet cannot survive the environmental pressures placed on it and the resource depletion inflicted by the current model of mass animal farming and ultimately governments will learn (slowly, as they usually do) that the ill-targeted subsidies that currently prop up the meat and dairy industries and make their products affordable, will have to be shifted to a sustainable model of plant-based farming – which will still return a tremendous profit for those involved in the process.”
Version 2.0, a market mover
“We have already developed a version 2.0 of plant-based food, soon to launch, that we believe will be a market mover,” said Mills on the announcement of the repurchase. What will this look like?
“I’m sure you can appreciate we’re keeping new product development close to our proverbial chests until it’s time to introduce it to our customers, but having been innovating in this sector for 30 years, we’ve had a lot of time to focus on what a healthier, tastier dietary future full of gut-healthy, clean label, delicious products could look like, and there’s still plenty of scope for more innovation and improvement.”
“I have always wanted to channel efforts to where we can make a real difference and help drive this movement forward”
What will remain and what will change with the VBites brand? “Our commitment to excellence and the highest quality product production will remain. Ultimately we intend to be prominent in both the branded and white label sectors but I believe it’s important to first and foremost retain a strong relationship and base with our loyal customers who have helped us on this journey for the past 30 years, then look at what’s achievable in the medium-long term. I have always wanted to channel efforts to where we can make a real difference and help drive this movement forward and that’s what we’ll continue to do.”
On future availabilities of VBites products, Mills, who was recognised by the Guinness Book of Records last year as the fastest disabled speed skier in the world, again keeps her cards close to her chest. She explains that the company has “always been interested in feeding locally as well as international distribution – having delivered to 24+ countries in the past. We’re still eager to make our products as readily available as possible and we’re looking at many different channels and ways of achieving this in the future.
“My mission has always been to ensure that my neighbour next door can get their hands on one of our products if they want to – whether that be VBites branded, or a vegan cheesy fast food pizza.”
Clearly, Heather is not ready to give up either on plant-based or on VBites. What gives her the confidence in the brand and the industry moving at this point in time? “I believe it’s the right thing to do – ethically – for human health, animal welfare, and the future of our environment. I am not financially motivated, yet I understand others’ motivators and know we must make a profit to survive and encourage investment for others.
“We’ve started this journey together now, so let’s stay on the bus and finish it.”
“I am mission-driven, this is the only way to ride the waves, most investors are risk averse and they complain when they see success they did not support, this has also been a motivator for me my whole life. I see a future where we flex our diets towards a more sustainable, ethical model as wholly achievable. I am ecstatic at the progress that the sector has made in the last five years compared with my previous 25 operating in it. We’ve started this journey together now, so let’s stay on the bus and finish it.”
It’s now or never
We asked whether she might have a message to convey at this stage, whether for the industry, the parties involved in the situation as above, or to the general public.
“…we should be strong, united and consistent in our messaging to the public and in our efforts to shift the needle”
“My message to the industry as a whole would be the one I’ve outlined concerning unity and galvanised messaging – many of us have the same root beliefs and have had the same fundamental realisations regarding the necessary change that we need to effect in order to preserve both human and planetary health for future generations – so we should be strong, united and consistent in our messaging to the public and in our efforts to shift the needle with third parties such as farmers and governments regarding their provision of subsidies.
“My message to the public would be that they can be sure that plant-based products are here to stay and they’ll be rewarded for supporting us as we grow. if you consider how nascent the plant-based industry is and how far it’s come in such a short space of time compared to how established the meat and dairy industries are – it’s quite incredible. And essentially that shift is occurring because it’s the right thing – it needs to happen – for all the reasons I’ve outlined.
“My message to the big corporates who are only in it for the money, is to have patience if they want to have a planet for their own children to live on, and to know there is no choice.
“Greed has destroyed the planet and we have to fix it, now or never.”
