Insider No. 38: Plant-based everything and the rise of replacement foods

Meatless burgers may have put protein alternatives on the map, but beef is just the beginning. From fish to chicken and even pork, there’s a growing list of startups racing to replace meat as we know it.

Meanwhile, this plant-based coup isn’t isolated to just animal protein — the dairy industry is also under siege. Milk, yogurt, cheese, ice cream... You name it, and there’s an incredibly well-funded startup seeking to make dairy obsolete.

But even as investors pour millions into innovative startups, Big Food isn’t going down without a fight.

Setting the table: As the momentum behind replacement foods reaches an all-time high, it’s worth considering the following: which startups are leading the way? Where do industry incumbents fit in? How is the market reacting? And how will consumers react to a world where their food is engineered in a lab or made out of plants? Let’s take a look.

Where’s the beef?

Whether it’s health concerns associated with eating meat or the environmental impact of animal agriculture, more and more Americans are choosing to reduce meat consumption and seek out meat alternatives instead. In fact, a recent Nielsen Homescan survey found that 39% of Americans are actively trying to eat more plant-based foods.

This shift in consumer preferences is bolstering plant-based meat sales, which could increase by 1,000% in the next decade to reach $140B, according to investment firm Barclays.

But plant-based is only one piece of the puzzle. A number of companies are working to bring cell-based or lab-grown meat alternatives to marketing. Combined, A.T. Kearney predicts that by 2040, cultured meat will make up 35% of meat consumed worldwide, while plant-based alternatives will account for 25%.

When it comes to plant-based meat alternatives, Beyond Meat and Impossible Foods are leading the charge. While the former is riding the wave of a successful IPO, the later recently raked in $300M in new funding, bring their funding total to $750M. In both instances, demand for each company’s burgers has repeatedly exceeded supply — a seal of approval from consumers and a sign of significant upside in the market.

While Beyond Meat and Impossible Foods dominate the headlines, showing up in grocery stores and fast-food chains while teasing the idea of dairy and fish replacements, there’s a growing list of competitors taking shape.

JUST, Mosa Meat, Memphis Meats, Aleph Farms, and New Age Meats are developing lab-grown protein alternatives. Before The Butcher, recently purchased by the owners of the Jensen Meat Company, is prepping their soy-based meat alternatives for scale. Meanwhile, UK-based The Meatless Farm Co. is set to make its US debut at Whole Foods Markets nationwide.

At the same time, market leaders and Big Food brands are doubling-down on plant-based meat:

Beyond Beef

Plant-based or lab-grown notwithstanding, burgers are merely a slice of the replacement food pie.

Something fishy. Fish and seafood now account for nearly a fifth of the animal protein people consume. But, demand has led to overfishing and unsustainable farming practices. Increasingly, plant-based and lab-grown production seem to be inevitable. Finless Foods ($3.5M in funding), Wild Type ($3.5M), BlueNalu ($4.5M) and Shiok Meats ($4.6M) are developing lab-grown fish and seafood. Meanwhile, Good Catch ($18.7M), Prime Roots ($4.5M) and Ocean Hugger Foods are working on plant-based alternatives.

Dairy’s downfall. In 2018, sales of dairy milk plummeted by $1.1B in 2018. At the same time, dairy alternative startups saw over $200M in total investment, with three companies (Ripple Foods, Califia Farms, and Kite Hill) raising $40M or more, per Food+Tech Connect. Looking ahead, oat milk, plant-based yogurt, and non-dairy ice cream represent huge opportunities.

Tastes like chicken. Poultry might prove to be the final frontier of fake meat. Apparently, replicating the texture of chicken breast, thighs, and wings is a tall order. As a result, companies in the space are having to start by developing “nuggets.” Rebellyous Foods ($2.2M in funding), Nuggs ($7M), Sunfed Meats (NZ$10M/US$6.76M), and JUST ($220M) are among the companies hoping to make headway. In the meantime, Chick-fil-A and KFC are said to be exploring meat alternatives.

Looking ahead: At this point, it’s clear: innovation will remake our food system. What’s less clear, though, is how it all plays out. Already, we’ve seen legal challenges related to what constitutes “meat” and “milk.” Separately, there are health concerns, like the fact that plant-based meat is a processed food. And there’s skepticism that lab-grown meat will simply replicate many of the existing issues of our current food system.

Nonetheless, the replacement food revolution has only just begun. If Beyond Meat’s reception is any indicator, expect to see more investment dollars fuel faster innovation as meatless meat move further into the mainstream.

🚲 Just the beginning

There’s little doubt that connected equipment and technology-enabled workouts are the future of fitness. What’s less certain, though, is what the path between our analog existence and high-tech future holds.

Disconnected. The new breed or at-home options combine personalized instruction with elements of community, competition, and accountability in order to make workouts less boring and more effective. But, ultimately, users are alone. As an article in The Verge pointed out, “the future of fitness is together, but alone.”

Goals. As Stephen Intille, an associate professor at Northeastern University specializing in health technology, points out, these devices are largely dependent on the goals people set for themselves. Users might not see desirable results if they don’t also change their diets or sustain their exercise habit. Going beyond the bike or streaming workout, making a comprehensive lifestyle change isn’t a pillar of connected fitness — yet.

Data. Following the lead of Fitbit and the Apple Watch, connected fitness companies could partner with insurance providers, research centers, and other health-related companies, providing incentives for consumers in exchange for exercise data. Both Tonal and Hydrow told The Verge that they’re not actively pursuing this option but haven’t ruled it out.

Platform. While Peloton is diversifying its equipment line, with the bike, treadmill, and rumors of other devices, Mirror wants to be the hardware that serves up the best fitness experiences from studios like CorePower Yoga, Pure Barre, and Physique 57. Meanwhile, Technogym appears to be taking the middle ground, offering multiple pieces of equipment and content from partners like Rumble.

Zooming out. Given the speed of innovation and the rate at which new products are hitting the market, it’s easy to lose sight of how young this category really is. Peloton didn’t deliver its first bike until 2014. Prior to that, cardio equipment hadn’t evolved in decades. Now, it’s getting hard to keep up. While it’s too early to tell where we’ll end up, it’s clear that we’ve only just begun to scratch the surface.

🍼 Gerber for grown-ups

If ready-to-drink shakes, vitamin packs, and nutrition bars aren’t your style, there’s a new healthy snacking/supplementing option. Introducing Buddy Nutrition, baby food pouches for adults.

Hippeas creator Livio Bisterzo and Dan Obegi, the former chief digital officer of GNC, have teamed up to create a personalized nutrition company that delivers supplements via whole foods.

The company’s first product is a “smoothie shot” — the equivalent of a handful of vitamins or powdered supplements and mashed fruits like blueberries or bananas, all delivered via a squeezable pouch.

To date, the company has raised $1.7M from Forerunner Ventures, Strand Equity, and a number of family offices and angel investors.

The near term: Buddy Nutrition plans to launch a protein powder, followed by nutrition bars and other snacks. As time goes on, the company intends to become a more sophisticated platform for personalized nutrition. Speaking to Nosh, Obegi said artificial intelligence will be used to help customers select their “shots”, make recommendations, and follow up to adjust the formula as needed.

Zooming out: When it comes to nutrition and supplements, personalization and convenience are the name of the game. With the introduction of questionnaires, a number of DTC vitamin companies were able to differentiate themselves from the competition. Now, as personalization becomes commoditized, innovation will come in the form of delivery (i.e., smoothie shots) and more comprehensive personalization based on AI, DNA, and blood tests.

The future is plant-based

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🚲 Just the beginning

🍼 Gerber for grown-ups

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The future is plant-based

Headlines & Happenings

🚲 Just the beginning

🍼 Gerber for grown-ups

📰 WHAT WE'RE READING

💰 Money Moves

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