Bitter bankruptcy of a producer of vegan food

The Styrian Veganz Food Factory GmbH has failed. The producer of cashew cheese alternatives has spoken out at the Leoben regional court Credit reform filed for bankruptcy proceedings. Six employees lose their jobs. The company’s history is an example of how quickly the dream of the vegan revolution can collapse.

As the bankruptcy filing shows, the company was in a difficult economic situation from the start. The precarious situation became apparent in the short financial year of 2022: sales revenues of only around 17,000 euros were offset by significant costs. The result was an annual loss of around 180,000 euros – a sum that represented an enormous burden for a young start-up.

The background

In parallel to the operational difficulties, the company invested heavily in building a cost-intensive operational infrastructure. Significant funds were tied up, particularly in the production area. These investments would prove to be a disastrous mortgage. The deficits that arose in the development phase and beyond were initially covered by the German parent company or sole shareholder. But this support could only temporarily conceal the structural problems.

At first, the business model seemed to have potential. During the COVID-19 pandemic, the market for plant-based foods boomed. Consumers became increasingly interested in vegan alternatives, supermarkets expanded their product range, and the industry spoke of a sustainable paradigm shift in nutrition. The Veganz Food Factory benefited from this trend and was initially able to successfully place its products.

But when the special pandemic situation subsided, a sobering turnaround came. The demand for plant-based products fell significantly and consumer behavior normalized. What industry experts described as a temporary dip turned out to be a crisis that threatened the existence of many smaller producers. The expected sustainable market penetration did not materialize – a scenario that put not only the Veganz Food Factory but the entire industry under pressure.

High losses

The company’s already established fixed cost structure proved particularly problematic. Personnel, production and operating costs continued, while sales were not sufficient to cover them. The resulting losses led to a continued deterioration in the economic situation. The company fell into a vicious circle: in order to remain competitive, it had to produce, but every production unit deepened the losses.

What made matters worse was that two strategically important cooperation partnerships, on whose integration and economic cooperation the further development of the company was largely based, ultimately could not be realized. These collapsed partnerships meant the final end to any hope of a turnaround. Without these strategic alliances, the company would lack important sales channels and possibly additional sources of financing.

Available means of payment are finally completely exhausted

The management ultimately had to accept the bitter truth: it was no longer possible to continue the company under the existing economic conditions. This business decision came as no surprise when you look at the numbers. The negative equity had increased to a dramatic 925,000 euros by 2024. At the same time, the liquidity situation continued to deteriorate until the available means of payment were finally completely exhausted.

According to the 20024 balance sheet, the liabilities amounted to 1.399 million euros.

The situation is described unequivocally in the insolvency application: “The debtor is no longer able to pay its due liabilities. The debtor is insolvent. The liabilities mathematically exceed the assets. A positive continuation forecast could no longer be made.” Business failure could hardly be formulated more clearly.

A continuation is not planned, and a sale to interested parties also seems unlikely given the desolate financial situation. The company is now to be closed. Production has already been stopped and the systems are at a standstill. What remains is debt, disappointed hopes and the question of whether the business model would have been fundamentally viable or whether it was doomed to failure from the start.