More on animal-replacement start-ups

Last Autumn, fake meat was all the rage (Newsletter #14). Companies in the space continue to get traction, and retailers are figuring out how to retail it. Kroger, the US’s largest grocery store* by revenue, and second largest general retailer, experimented with placement of plant-based alternatives to meat — moving them from the vegetarian section of stores to the meat section. Every retailer will tell you that placement matters, but a 23% increase over a twelve-week test against control stores is a big difference. And it got better from there — in the June quarter, as consumers stock-piled during COVID-19 lockdowns, Kroger’s sales of plant-based alternatives to meat grew by 75%! The retail world isn’t the start-up world, so you can expect all major grocers around the world to follow Kroger’s lead here. This is great news for producers of these products. The big thing to watch will be whether there’s any backlash. Certainly, some people will have accidentally bought these products, believing them to be meat — and equally certainly, at least in the US, there will be lawsuits as a result. Also, there remains the GMO issue, with the two largest brands in the space (Impossible Foods and Beyond Meat) still failing to meet EU guidelines.

But while meat seems to be “solved”, cheese remains tricky. Cheese alternatives attempting to use the same, natural alternatives that are widely used for milk replacements (think almond milk, oat milk, etc…) don’t seem to work. This is largely tied to the fact that the success of milk comes from a family of proteins called casein, which are found to have an opiate-like effect on the brain (they actually contain opioid molecules, though they don’t appear to be addictive). Given that it appears we need animal proteins to make proper cheese, you would think this would be right up Impossible Food’s alley (their success comes from making real beef proteins from bacteria genetically engineered to produce those proteins from plants). However, as recently as March, Impossible Foods founder, Pat Brown, said that while cheese is the biggest thing he misses, and while “impossible cheese” would be massively disruptive to the $32 billion US cheese market, the company hasn’t been able to pull it off. They still think it’s doable, but they’re focusing on a pork replacement in the near term. But this isn’t the retail world of Kroger; this is the high-tech world of start-ups, and no one is sitting still and waiting for Impossible Foods to do something. New Culture has successfully fermented casein from plant products. Their current issue is scale — while they appear to have succeeded in replicating the protein, they don’t yet know how to do it at anywhere near large enough scale to become a commercial success. Perhaps more interesting is Perfect Day. Perfect Day just extended their Series C financing to $300 million US. They seem to have not only made milk protein from non-animal ingredients (similarly to what Impossible Foods did, Perfect Day genetically modified a strain of fungi which consumes sugars and nutrients and excretes dairy proteins which can then be harvested), they seem to have gotten at least a little scale. Their business model, however, is different. They intend just to manufacture the proteins, and sell them on to partners who create various finished products from them. One notable success seems to be “N’Ice cream”. Although only available in the San Francisco Bay Area at the moment, Smitten (the company which produces N’Ice Cream) has released four flavors so far — Brown Sugar Chocolate, Fresh Strawberry, Coconut Pecan, and Rootbeer Float. Like the products of Impossible Foods, while these are technically vegan, they’re still the real deal, which means they’re not suitable for consumption by those who have a milk allergy.

* as a complete aside, I grew up in a state neighboring Ohio, where Kroger was founded. Kroger groceries were one of the largest chains in my childhood. Whilst researching this, I was shocked to discover that Kroger has 2,750 supermarkets … and 170 jewelers. I don’t know what that means, or how to understand it at all ¯\_(ツ)_/¯

Posted in Newsletter, Technology and tagged , , .

Chris Richardson has strong opinions on just about everything. Just ask.