While no buyer has been announced yet, the receiver remains optimistic about closing a deal in the near future. The Merit plant, which specialized in pea and canola protein production, could potentially be a valuable asset for a buyer looking to enter or expand in the plant-based protein market.
As the plant-based protein market continues to grow and evolve, companies like Burcon Nutrascience are positioning themselves for success by investing in commercial-scale production facilities and innovative extraction technologies. With a focus on quality, sustainability, and meeting the growing demand for plant-based proteins, these companies are poised to make a significant impact in the food and beverage industry.
The Challenges Faced by Merit Functional Foods: A Closer Look
Merit Functional Foods, a Canadian plant-based protein company, has been facing financial difficulties that have led to its receivership. Despite efforts to find a buyer for the plant, no asset purchase agreements have been executed so far. The receiver is actively communicating and negotiating with interested parties to acquire the plant.
PwC, the firm overseeing Merit’s receivership, has requested the court’s authorization to borrow an additional CAD$2 million to cover expenses, including property insurance costing CAD$1.5 million annually. This request has the support of Merit’s creditors, who anticipate repayment from the proceeds of the plant’s sale. The total expenses for managing the receivership are projected to reach $9 million, raising questions about the decision to foreclose on Merit rather than allowing the plant to continue operations and build a customer base.
Why Did Merit Functional Foods Face Financial Challenges?
In a LinkedIn post in February 2023, Merit Functional Foods co-CEO Ryan Bracken attributed the company’s financial struggles to various factors, including higher raw material costs, rising interest rates, and difficulties in securing funding due to a decrease in risk appetite among lenders and investors. Additionally, delays in the commissioning of a new product further exacerbated the situation.
On the other hand, co-CEO Barry Tomiski pointed to the influx of cheap imports from China as a significant factor in Merit’s downfall. Tomiski highlighted that Chinese companies were flooding the Canadian market with subsidized high protein content pea protein, making it challenging for domestic producers like Merit to compete.
“The continuous competition from low-priced imports from China created a significant hurdle for us,” Tomiski explained. “Despite offering a superior product, the market preference for these cheap imports made it nearly impossible for us to establish ourselves.”
Despite the challenges faced by Merit Functional Foods, the company’s co-CEOs remain optimistic about finding a solution to their financial woes and potentially reviving the business in the future.
