The tragic fall of The Vegan Kind

Just 18 months after its £3.5 million Series A round, The Vegan Kind closed shop in an abrupt fashion. Having thrived and built an enormous brand following since 2013, how did TVK come to this?

In April 2021, The Vegan Kind (“TVK”) had the world at its feet with £3.5 million from institutional funding, 200,000 visitors per month on their website, and a 36,000 sqft warehouse that stocked nearly 6,000 different vegan products. Their products and services strongly resonated with a loyal customer base, scoring 4.5/ 5 on Trustpilot and 4.8/ 5 on Feefo. A clear leader in the vegan online retailing space, it seemed that TVK was ready to take on the big players like Ocado to make “a vegan lifestyle easily accessible to all”.

Fast forward to October 2022, less than 18 months since Series A, The Vegan Kind was no longer a viable standalone business and consequently sold in a pre-packed administration to Lillie SPV Ltd. In November 2022, TVK announced they had to wind down both their online supermarket and subscription box service entirely. It is likely that by this point, most, if not all, of TVK’s staff were made redundant and the warehouse shut down.

Many TVK customers were saddened by this news, as they shared a stream of supportive messages on the TVK website and social media.

“Oh no! That's very sad to hear! You guys have been the best vegan shop out there by a long margin. So sorry to hear that. All the best ❤️” - Marvin

On 5 December 2022, The Vegan Kind further announced that Wholefood Earth will now run the TVK website and reinvigorate the TVK brand. Consistent with this announcement, a former employee revealed on Reddit that Wholefood Earth has acquired all of the intellectual assets, including the brand, website, and social media pages.

Wholefood Earth is a family-run online wholefoods store in the UK. Prior to taking over TVK’s website, Wholefood Earth appeared unconnected with The Vegan Kind or Literacy Capital (TVK’s majority shareholder after the founders stepped down, more on this below).

In my direct conversation with an ex-employee at The Vegan Kind, they confirmed that "all 38 of the staff were made redundant in the end. TVK only sold the intellectual assets to Wholefoods Earth rather than the business as a going concern, so none of the TVK staff was transferred to Wholefoods Earth. Wholefoods Earth indicated to the TVK staff that they were not hiring."

It is unclear at this stage how Wholefood Earth plans to integrate the TVK digital brand or branded products into its portfolio. There is speculation that TVK will become a marketplace for vegan brands who receive and fulfil orders themselves, rather than being shipped from TVK. Whether true or not, given the turmoil endured by TVK in the past 6 months as well as the scale of its operations, the transition will likely take some time.

Time for a deep dive

For a business that had thrived since 2013, why did it suddenly become no longer viable as a business? Today, we look into The Vegan Kind’s unique journey from a part-time startup out of the founder’s apartment to becoming the largest online vegan supermarket in the UK, and how the seeds of failure were sown at the peak of their success.

The early days

The Vegan Kind was founded by Karris and Scott McCulloch in 2013, while both were still working full-time jobs in banking. TVK was the couple’s first entrepreneurial journey. In an interview with Healthpreneur, Scott mentioned that Karris quit her job at Santander in 2014, when it became obvious that the space required for business outgrew their apartment. When TVK transitioned from a subscription box service into a supermarket, Scott also left his job to focus on TVK full-time.

Subscription boxes - “It’s like a birthday every month”

The initial problem statement looked something like this:

Sourcing vegan options in supermarkets can be frustrating and time-consuming. Consumers spend a lot of energy checking labels and are still left unsure.

Inspired by the beauty subscription box market, Karris spotted a gap in the vegan space and thought of a great solution.

We ship a box of vegan goodies straight to your door every month, so you no longer have to check the labels or worry if the product is vegan!

The subscription first started with just vegan snacks in November 2013. This was the first of its kind in the UK. The business took off very quickly thanks to the ingenious idea, Karris’ understanding of the vegan community, and Scott’s sales experience in business banking. According to their Pitch Deck in 2020, TVK broke through the 10k subscriptions for vegan snack boxes just after a year and reached 70k monthly subscriptions in 2019.

The initial target audience for the subscription boxes was the vegan beginners who would struggle with identifying what’s vegan at the start. The snacks box contained 5-8 vegan products. Customers did not know in advance what would exactly be in the box, but they knew all products were vegan. This made the product inherently exciting - people couldn’t wait to find out what was in the box each month. The vegan boxes also created a lot of FOMO, as friends of the customers felt missing out when seeing this month’s surprise box.

At the price point of about £10 per month, the value that the customer got from each box was also higher than if they bought the product individually. From a financial point of view, subscription boxes provided a stable recurring revenue stream that most businesses would be jealous of.

Once the snack boxes proved to work, offering cruelty-free beauty boxes became a natural choice. TVK started the vegan beauty box subscriptions in November 2014, which grew to an impressive 12k bi-monthly subscriptions in 2019.

TVK Supermarket - “It’s like Asda but all the products are vegan”

Prior to launching the supermarket in 2016, TVK had always sold a few branded items on their website. However, as more chilled vegan products became available in the market (e.g. dairy and meat substitutes), TVK believed there was a lot of value in offering a full-fledged online supermarket.

While two different clientele, the subscription customers and supermarket shoppers actually fed into each other. Once adapted to a vegan lifestyle, those who bought subscription boxes often checked out the wide range of products offered on the supermarket site. In 2021, TVK supermarket boasted to be the largest vegan offering in the world, with nearly 6000 products available.

The supermarket shoppers would also click on the subscription box offers, as they liked the idea of receiving a box full of “new-to-market, hard-to-find, exciting products.”

Win-win partnerships

According to this interview with Totally Vegan Buzz, Karris lead the product content, HR and accounts, while Scott focused on marketing and sales. Karris and Scott not only came up with an amazing product but also pitched it well to the customers and investors.

To the underrepresented brands, TVK presented a unique marketing opportunity. TVK was exceptionally good at reaching out to the underrepresented brands that are aligned with their vision. These brands in turn gained a new marketing and distribution channel to put their products in front of more people.

Karris and Scott weren’t just satisfied with making a quick profit. They always focused on building a brand and community around the mission of vegan accessibility. It was not by accident that they created the biggest online vegan supermarket with little initial outside funding. Later, we would argue that when Karris and Scott eventually stepped down from TVK, TVK also lost their X-Factor.

Leveraging Social

Social was a big part of The Vegan Kind’s strategy. TVK boasts 144k followers on their supermarket Instagram page and 150k followers on their subscription box Instagram page. In comparison, Ocado UK, with a £6 billion market cap, has 153k followers. TVK was also very good at leveraging influencer marketing, by sending influencers their subscription boxes, who in turn would support TVK with “unboxing” videos.

Karris and Scott treated social media as a place where customers could connect with their personalities. Going through TVK’s page, I found that up to 2020, Karris and Scott frequently shared photos of their family, with plenty of posts about animal rights and vegan memes.

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In the following sections of the article, we explore the market size of the vegan food market, TVK’s crowdfunding success, Literacy Capital’s involvement in Series A, the macro headwinds for the plant-based industry, the resignations of Karris and Scott, and the backlash from customers, employees, to individual shareholders who invested in TVK’s crowdfunding.

How big is the vegan food market?