Future Food Now #8
Welcome to another edition of FFN. The format is evolving and starting from this issue I decided to add more of my own commentary and observations. Look for “My take” section after each of the main stories. Let me know what you think.
Cheers - Michal
Australian startup V2food developing a plant-based Whopper
Jack Cowin, source: AFR
V2food is an Australian plant-based startup with a pretty unique story and some ambitious goals. They have been in a stealth mode up until recently.
It is described as a joint-venture with both involved parties providing specific support. First one is Main Sequence Ventures, a US$165m “deep tech” investment arm of Australia’s national science agency CSIRO.
Second JV partner is Jack Cowin, a billionaire and owner of master franchise of Burger King in Australia - which is called Hungry Jack’s in the country due to trademark issues. While the name is different, the format and the menu are similar to BK, with Whopper being the flagship burger.
Each partner has initially put part of AU$1.25 million (US$850k) investment into the startup. But non-financial contributions seem much more relevant here: CSIRO claims to provide a unique IP related to plant-based protein as well as their team of food scientists, while Jack Cowin obviously gives access to his fast food chain. For V2food CEO role, they recruited Nick Hazell, who used to work as R&D director for Mars and PepsiCo.
It is no surprise that the first announced product is a plant-based version of the Whopper, with a plan to offer it at 440 Hungry Jack’s restaurants across Australia. Asked about the launch date, Nick Hazell replied: “very soon”. He told me the company is already testing prototypes of ‘v2whopper’ with consumers, in blind tests comparing it to Beyond Meat and Impossible Foods products (with positive results).
But for V2food the Whopper is only the beginning. According to Nick, the company wants to “be part of the great meat industry of Australia” and plans to develop various plant-based meat products, targeting not just Australia, but APAC region. In fact, Jack Cowin is already involved in a global meat supply chain via his other company, Consolidated Food Co.
My take: It’s a new normal at this point to hear about a company heavily involved in a meat and/or fast food industry jumping on a plant-based bandwagon. But how committed is Jack Cowin? He was quoted saying that “to feed 10 billion people with meat is a very inefficient way to do this”. He has a lot at stake with all his businesses relying heavily on animal meat supply. So far, his investment seems very modest, especially when compared to money raised by top plant-based meat brands (over US$1 billion between Beyond and Impossible). It’s not clear how advanced and relevant is the IP that CSIRO contributed. It’s likely that a lot more money and time will be needed to deliver superior products. But given Jack Cowin’s long track record in spotting and executing on consumer/market trends, this venture can very well be the next big thing.
Singapore-based Karana raising $1.5m to make meat from jackfruit
Karana's first product, source: company
Most of the plant-based companies are recreating the flavour and texture of meat using protein isolates, binding ingredients and technologies like extrusion. But some are taking a different route by working with whole foods that naturally mimic meat.
One of them is Singapore-based startup Karana, which is currently raising US$1.5m seed round.
Karana is co-founded by Dan Riegler and Blair Crichton. Dan is an American who spent the last 6 years in South East Asia, working in insect protein and agri-commodity supply chain. Blair is from Hong Kong, a former banker at HSBC, previously worked for/with Impossible Foods, New Age Meats and GFI.
Dan and Blair describe Karana as “Asian food brand of the future focused on re-inventing iconic Asian products to be indulgent, healthy, plant-based and sustainable”.
They said they are “not scared of technology” and plan to use food science and biotech to “enhance consumer experience and nutritional profile”, while still focusing on whole plant products.
The startup’s first product is built around young jackfruit. Abundant in South & South East Asia, jackfruit has a superior nutritional and environmental profile. It has been used in some traditional Asian cuisines as a meat replacement (e.g. in rendang cubadak in West Sumatra) and more recently has been rediscovered by plant-based chefs in the West.
Karana’s Organic Young Jack is available to consumers online in a retail pack (jar) and has been “soft launched” with five chefs at selected Singapore restaurants. Founders told me they are already developing version 2, which will be “more convenient and consumer-friendly” and can be “used as the base ingredient for great tasting Asian favourites”.
My take: Consumer surveys indicate a move towards plant-based easing is mostly health driven. Mainstream plant-based meat companies tend to focus on environmental aspects of their products. They can certainly claim some health benefits over animal meat, but I’d argue there is a substantial group of consumers open for options with better nutritional profile (e.g. less sodium, fewer additives). This is an opportunity for Karana, and other startups from “natural meat mimics” category - if they can also nail “the big three”: taste, price and convenience.
Plant-based pork market in Asia gets competitive... and goes halal
Quite a few interesting new developments in a plant-based pork space in Asia.
Hong Kong-based startup Omnipork, part of Green Monday Group, started to use “OmniMince” as the name of the product in selected markets. The company representative explained that they plan to apply for a halal certificate for the product, which would not be possible if the word “pork” is used. The product will continue to be called “Omnipork” in the countries where no halal certification is obtained (e.g. Hong Kong and China).
OmniMince has been used as a brand during the product launch at Grand Hyatt Erewan hotel in Bangkok in July. Thailand is not typically considered a major halal market with only 4.5% of the population identifying as Muslim.
Interestingly, the final stage of manufacturing and packaging of Omnipork/OmniMince is actually happening in Thailand (while the initial “dry” mix is prepared in Canada).
Asian meat-free pork market will soon become more competitive as Phuture Foods is planning to debut its plant-based Phuture Minced Pork product with Hong Kong as their first market, followed by Singapore in few months. The startup has been raising capital last months and secured initial funding from Brinc accelerator and other investors from HK.
The product has slightly different ingredients than Omnipork. For protein blend, both companies use soy, but while Omnipork has pea & rice proteins, Phuture decided to go for mung bean. For fat, Omnipork uses palm oil, while Phuture went with coconut oil. Phuture also claims to have no added sugar, more protein and more fibre than Omnipork (I was not able to verify it as I have not got a full ingredient/nutrition profile). Both products are fortified with Vitamin B12.
Phuture Foods, which is originally from Malaysia, also told me their manufacturing and warehousing process is designed to be compliant with Malaysian halal standards and they are planning to apply for halal certification in the future, but that’s not a priority for them.
My take: It was just a matter of time before Omnipork gets a competitor. They are going after a huge category, and it will take multiple companies to disrupt the animal-based pork market. Big guys may also join the party soon - when Impossible Foods recently did a limited release of its new “sausage” product, it showcased it in siu mai dumplings for this Engadget story. Apparently, Impossible had to make a relatively small adjustment to their beef product to achieve “pork” flavour and texture. With Beyond Meat debuting its first ground beef SKU recently in the US retail stores, we may see ‘ground pork’ as a new category with products from more and more players.
🇨🇳 KFC has launched its first meat-free burger in China. A portobello mushroom and dairy cheese patty may not sound groundbreaking, especially when compared to Quorn-based Imposter Burger at KFC UK, but in fact it is quite a milestone for Chinese QSR sector: a nationwide rollout of a meat-free option by the largest fast food chain in the country (6000+ outlets), accompanied by a media campaign, involving some local celebrities (videos here and here).
🍔 Impossible Foods is now present at over 160 food service outlets in Singapore, only four months after the launch. Per capita, it’s actually more than in its home market, the United States. Not entirely surprising, knowing how receptive SG market is when it comes to new food trends. Some of the new venues like PizzaExpress replaced Beyond Meat products with Impossible’s, while others like SaladStop! are now carrying both brands. The company also launched an exclusive partnership with food delivery service Deliveroo. Back in May Impossible announced its largest funding round yet: US$300m Series E, led again by Asian investors Temasek and Horizon Ventures with a rumoured valuation of ~US$2b. The round brought its total funding to over US$750m, nearly twice as much as raised by Beyond Meat.
🥚 JUST Inc. has entered into a partnership with South Korean premium egg producer GanongBio to manufacture its plant-based JUST Egg product. No timeline was given, but it will likely take a while - a similar deal was announced by JUST in Europe in July 2018 with Eurovo Group and in February with PHW with “first products expected to be available in Q4 2019” (source).
🐓 Sunfed Foods from New Zealand has expanded to Australia with its Chicken-Free Chicken product, available exclusively at Coles supermarkets. Priced at AU$11 (~US$7.75) for a 300g pack, it is about 10% cheaper than in NZ. The company remains the top funded plant-based startup in the Asia-Pacific, so far raising over US$7.5m, mostly from Australian investors.
🍕 Hell Pizza, one of New Zealand’s top pizza chains, has introduced a new limited-edition meaty pizza across its 70+ outlets, and as a marketing stunt for the first few days has not informed customers it is using Beyond Burger as a topping, explaining they “wanted to see if people could tell the difference between a plant-based patty and a meat version”. The chain had sold 3,000 pizzas before revealing it has been made with Beyond Meat’s product. According to an online survey, 80% of customers were “pleasantly surprised or unfazed” to find out it was plant-based and 70% said the patty tasted just like meat. While other companies around the world did similar stunts, I am not aware of any on that scale (thousands of consumers). Not surprisingly it drew a lot of media attention and even a regulatory inquiry. Hell Pizza announced the pizza is now sold-out and it has no immediate plans to bring it back “due to cost of Beyond Meat” (Beyond Burger in NZ is 50-60% more expensive than the US).
🐟 Quorn has expanded the range of 100% plant-based products in Australia, introducing Fish Free Fillets, Pepper & Herb Sausages and Gourmet Burger. Australia was one of the fastest-growing markets for the company in 2018 (+38% YoY compared to +24% in the US and +7% overall), according to this FT article. Quorn’s global sales in 2018 have been ~US$275m.
💰 Angel Food, New Zealand’s leading dairy-free cheese producer, has launched a new crowd-funding campaign, planning to raise up to NZ$385k (US$260k) with a pre-money valuation of ~US$3m. Their products are available at 700 retail and food service outlets. During the last financial year, the company had sales over US$1m on 20% gross margin and US$180k net loss (mostly due to investments in new staff and new co-packer - a prior year has been profitable). Full financials in the investment prospectus here.
Articles, resources, and events
🎙️ Australia’s first-ever pitch event for plant-based and cell-based meat startups is organised by Food Frontier in partnership with the State Government in Melbourne on July 29, with very limited seating availability. The participating startups are already selected. Investors can visit event page and enter their details on the waitlist.
📅 ProteinTECH 2019 in Auckland, New Zealand on July 30-31 is almost sold out (register here). It will bring together alternative protein entrepreneurs and investors as well as meat industry representatives. I will be there, speaking about investing in plant-based and cell-based startups.
👍🏼 Follow Future Food Now’s Facebook page for updates.