What are some of the main problems in the food system that next gen proteins startups are genuinely keen to solve? In this episode, hosted by Tommaso Di Bartolo, founding partner of Awesm Ventures, watch industry fellows, Neel Vora, VC, PE, LP, Strategic Investments & Corporate Finance, Israel Rossi, Strategic Pricing Analytics at JBS, the largest (by sales) meat processing company on earth, entrepreneurs Christopher Kong, Co-Founder and Head of Business Development of Better Nature, Ltd., and Jacek Prus, Co-Founder and CEO of Kuleana, Inc.
TopFloor: Where handpicked startups present sector-specific innovations to a jury of industry fellows
In Season 2, recognized world-class Researchers, Scientists, Faculty Members, Senior Executives, Experts, Chefs, Investors and Entrepreneurs from around the globe, engage in strategic exchange of views and share startling intel on viable transformative innovation in Agriculture, Food and Beverage, zooming in the next gen proteins space.
Topfloor is where inspiring and passionate game changers, visionary entrepreneurs share startlingly impressive intel on food of the future with a panel of experts.
With Special participation of
Co-Founder & Head of Business Development at Better Nature
Co-founder & CEO at KULEANA | YC S20 | We’re hiring!
Serial entrepreneur w/ 2 exits, author, advisor, faculty, investor.
Tommaso Di Bartolo
- Tempeh and seafood of the future
- The consumer experience
- Market strategies for the alternative protein scenario
Episode's 🔖 Transcription
Tommaso: Today, we have an amazing lineup of industry fellows! Thanks to the audience for joining. Top Floor is a series in which we hand pick startups and they present a sector specific innovation to a jury and after the presentation, the board asks them a few questions.
Tempeh on the horizon
Tommaso:Let’s start with Christopher Kong!
Christopher: Hi, I’m Christopher. I'm the CEO and co-founder of Better Nature. Our mission is to make protein the better way. And what does the better way mean? It means better people, the planet and animals. As you'll all know, our current rate of meat consumption is just simply unsustainable. We also know that it's unhealthy and it's very inherently, not great for the animals that are involved as well. What do we do to make protein the better way? We make protein that's delicious, nutritious, ethical and sustainable and easy to prepare.
While the plant based food market was exploding, we felt that wasn't adhering to one of the main reasons why people are adopting on base foods. In a study published last year by the University of Johns Hopkins, it was found that costs and health concerns are driving consumers to the adoption of plant based foods, not necessarily people's concern about environment and animal welfare. To get some more numbers on that, 65% of consumers are looking for tasty products and 41% of consumers were looking for plant based food products that were free from any artificial ingredients.
However, the products currently available on the market are mainly made using textured vegetables, that are high in protein and versatile and can have the taste profiles modulated. But they typically contain massive ingredient lists with loads of ultra process and artificial ingredients. And they're also, generally speaking, quite expensive. Also, “old school” meat alternatives that were all natural, weren't really quite cutting it either. Because modern day consumers were looking for meat alternatives that could look and cook just like meat.
So, the answer to this conundrum is Tempeh, and that's what we're all about. It is this delicious, nutritious, made of all natural food ingredient using fermented beans, with a process known as Temp Fermentation, that is a food processing technology that originated in Indonesia 300 years ago. And, effectively, takes any grain or seed that it is not lagging to any seed, and converts it into a nutritious and super-versatile alternative. It increases the protein content by about 22% and decreases the content on the back by about 39%.
You can slice it and dice it marinate and cook and all the ways that you traditionally cook your meat.
At Better Nature, we are the world's first food tech company focused on this process of fermentation and innovation. We were founded in October 2018. And since then, we've developed technologies that allow us to reduce the fermentation time from what typically takes 36 hours down to 18. And we've also figured out ways to improve the nutritional quality, the end products, such that our Tempeh is the world's richest plant based source of vitamin B 12. A micronutrient that we know, meat eaters and plant based people who have HIV or besides alike, are looking for in their diets.
Experiences for the consumer
Tommaso: We would like to kick off things with Israel. What's your question to Christopher?
Israel: I think that one of the biggest challenges of the alternative protein is to give consumers an experience equal to that is offered by the ordinary protein. What do you think about proposing this experience for the future?
Christopher: I think we're incredibly close as an industry in general. If we look at what Beyond has achieved, what Impossible has achieved, a lot of the products are effectively interesting, indistinguishable, from what animal products can provide. We are already there with milk, right? I think dairy as a cheese still has a little bit of room to grow, but it's just a factor of time at which innovation will trump.
What animal products can offer, plant based products will be able to offer even better, because we can engineer the products and optimize them for centuries for certain sensory qualities that we can't engineer meet for.
We are developing 3D printing technologies that can produce full cut pieces of meat and growing them using fungal mycelium. So we can know, there's so many things that we can tweak when it comes to plant based proteins, or even cell based proteins to really create the best sensory experience for the end customer.
Speaking about Better Nature, specifically, I guess our core hypothesis is that yes, as much as we can, we want to maximize the sensory experience for the end consumer. However, if we look at the facts, the main reason why people are reducing their meat consumption isn't necessarily because they want to find something else that tastes exactly like meat. They're looking for something that does the same job, but does it more healthily. People all over the world are looking for ways to improve their diet to make them more healthy. But without compromising on the sentiment on the enjoyment of the food.
Also taking a hypothesis, our mission at Better Nature is to produce the best or natural meat alternative products that we can provide.
Tommaso: In the industry of alternative protein, when we got into the go to market strategy, on one hand, you have the investment costs on the R&D side and the innovation that your company brings, but there is no wave of products on the market. The real competition starts when you hit traditional retail challenges, so what's your go to market strategy? How are you going to be different in your go to market strategy?
Christopher: I’ll start with your second question, we believe that plant based foods are here to stay. And we believe that consumers are picking up, for example, Beyond meat products in the same basket where they pick up other beef products. This will only progress in the favor of the plant based space over time and I think Coronavirus has done In many ways of service to the industry, in light of what's happening right now in supply chains, you know, in meat in the processing supply chains.
And as the consumer is looking to adapt or adopt more plant based foods into a diet, my emphasis is that they'll be looking for just healthier options, options that they can consume on a daily basis, without having to worry about what's in the ingredients.
If you look at the back to see the components of the most food products in the market right now it's a massive list. I think consumers will be looking for just more simple, awesome, high quality food product products. And that's where we come in. Our most complicated product has seven ingredients, all of which are organic, or which is all natural, at a price point that is comparable to animal based products.
To answer your first question now, we knew that the one to one connection between us and the customer was absolutely key, we've only been trading for four and a half months , so it is still in the early days of our go to market strategy. Back when we started in January, was something we really focused on, because we knew that we had to establish a brand and had to command the consumers attention because it is becoming an increasingly crowded space.
So by pushing on that, and by insisting that consumers purchase from our website, we have their attention - and we have the email addresses, knowing exactly where they live. I guess, modifying our retail strategy, because of COVID, based on what we're seeing through our e-commerce platform helped us encrasing 70% of our sales online.
Tommaso: Neel, do you have a question?
Neel: [Is it available in? Does it have to be frozen? Kept in freeze? Or it can be in a proper normal shelf space as well.]
Christopher: So our products at the moment are chilled and can be frozen for foodservice applications, for example. It is currently distributed as a refrigerated product.
There are shelf stable options that we can explore. But we feel, in the same way that meat shouldn't be kept shelf stable, if we do the same thing, can compromise on the taste of the product. And quite significantly.
Neel: From a unit economics point of view, or from a pricing perspective, visibly other alternative products available in the market, how do you think your product will be able to
match a chopper? Is it probably being at more premium? Or is at what cost?
Christopher: If we think about it, hypothetically, there's no reason why our products should be any more expensive than animal based products. And that is where we want to position ourselves one day, but, at the moment,is just a scalability issue. We just aren't able to come on the scale animal manufacturers can, and thereby our products are more expensive.
But if we look at the inputs into the production of our products, the primary is 98% we use soybeans, and [Newton beans] on. And, you know, they basically cost next to nothing, because they're being used to feed the animals. So what we're effectively doing is creating a process where instead of taking the soybeans, feeding an animal in and then eating the meat, you take the soybeans, put it into a warm room, ferment it, put into a warm room, and have the end product. So the process of putting something into a warm room is certainly much cheaper than the process of feeding, looking after, processing an animal.
Next-gen of seafood
Tommaso: Let’s get into the next entrepreneur, Jacek you there, you're ready to rock the screen?
Jacek: So in Kuleana, we are creating the next generation of seafood. Now, one reason we decided to go after this opportunity is shown in this graphic here, what you see is: a global fish catch peaked 20 years ago, right about the mid 90s, and we've been using increasing amounts of engine power to capture the same volume of seafood out in the oceans, essentially, we're having to go further to find and locate these species that are disappearing.
There's a whole nother problem that we've found even more specific within seafood - the Tuna’s species being decimated. If you look at Pacific Bluefin tuna or Southern Atlantic Tuna, the populations are incredibly low, almost 2% or below. There's just not enough fish in the sea.
Most of us are concerned with the health of eating especially raw Tuna with mercury and there's also a crime, especially around seafood, where there is very little regulation. A research, made by Oceana, discovered that one in five fish were stolen. And another study done with 32 different Tuna companies, found that only 8% of those companies could say that their supply chain was slavery free.
And a lot of companies have been tackling this supply problem with aquaculture, but it doesn't work for Tuna, for two reasons: First, you have to catch wild tuna, and then put them into these pens to ranch them to grow them, fatten them. And that's just incredibly difficult because the populations are low.
The second reason is because the feed conversion ratio, as shown in this graph is incredibly inefficient.
Our solution is to use plants to create uncompromising seafood. So Kuleana is a food technology company and creates this next generation of seafood, through plants and biotechnology.
Our first product, it's raw tuna, we went after something pretty difficult, something we didn't see in the market being addressed really well. And it can be used in many ways. We're tackling incredibly difficult raw products and, in the future, we're going to apply biotechnology. So this is an emerging, an important part of our company that will use certain processes that will recreate that delicate matrix you find in meat.
It’s quite innovative. And personally, I'm incredibly excited about this, because the impact is huge, we can not only apply this to our products, but license that technology to other plant based meat, and even cell based meat products. So it's a huge opportunity and something we're really eager to pursue more and more.
When global sashimi is at the 10.5 billion market, we're just going to expand this. Because the issue is, the supply cannot meet the demand. There's an increasing demand, especially in poki, and sushi, it's growing all over the world. And one of the huge reasons that we'll outline why we can achieve such a good margin with our product is because Bluefin Tuna sells at an incredibly high rate. So on the high end value, you can sell it for 80 euros per kilo.
The way we're going to get this to customers is through food service. Obviously, this has been impacted since Corona. And we will pivot towards more retail food service centers, like Whole Foods. We're having some initial conversations with an american group called AFC Sushi, that has 18,000 locations all over the country. And essentially, raw Tuna has met the market through food service. So this is naturally the way that we will move as well with our raw Tuna product.
Now, my company has been able to get some pretty interesting press coverage and speaking opportunities. I think this is some early form of validation for us before we start kicking off our sales. And, you know, beyond all the consumers, a lot of [ello eyes] and contracts we're getting, you know, we got quite a few press releases, and we're excited to go speak at some conferences, whenever they get going. Again, there's obviously been quite a few delays.
Neel: Just from a go to market perspective, what are the geographies that you are planning to target?
Jacek: Right now we're targeting primarily the United States, it's a nice homogenous market, the western coast has a lot of raw seafood consumption. And we're doing this through, like I said, food service, but specifically more recently, food service in the retail space.
We also have quite a few customer conversations and in Europe as well. And that's quite interesting for us, too, especially in Spain, we're talking to another chain called KellyDeli, where they have a brand called sushi daily with over 1000 locations, as well.
It took us quite a long time and quite a lot of effort to create a product like this, it's not easy to create raw meat.
Israel: How do you think production on a large scale of this product?
Jacek: We're doing a lot of pilot tests right now with a lot of CO packing setups. We will be able to really expand the market because we can produce a lot of this material. And, currently, the market is just bottlenecked on supply.
When you raise an apex predator, like Tuna, it takes a really long time. Our process is incredibly fast, one of the nice things is that we don't rely on the traditional technology of high extrusion, and this means we're not machinery kept. We actually can use a lot of technology that traditional meat processors use.
So we can, actually, make a lot of this stuff, the only restriction right now it's just the capital we have in the company.
Israel: What's the shelf life of your products?
Jacek: If you freeze the product, which is how we plan on doing a lot of it, the shelf life is it's incredibly long. It's at least four months on the lowest end, but once you go lower on the freeze, the last about two years. And, as we see, this is like comparable to other Tuna products that are kept in really cold temperature.
The reality is the product will be frozen, and then it will be given to the chef and most of our consumers will be at the poke restaurant or the sushi retailer or the sushi restaurant, they will use the fish quite quickly. We have a five day shelf life on the conservative end, which is already longer than some quite a lot of the seafood equivalence. So this is actually quite a nice strong strength of our company because we think we'll be able to reduce food waste there and give the sushi chef or the pokey chef something that's a bit lasting a bit longer.
Tommaso: What's your feedback, from your focus group, regarding the texture, how are you handling this topic of texture?
Jacek: When we first pursued this project, over a year ago, that texture would be the most difficult element. For us we knew this would be incredibly difficult, the feedback we've gotten is actually when you put it in a poker table when you eat it in a sushi roll. People can't tell. Now the reason we targeted this way, it's kind of like the hamburger or the ground beef of the seafood space. Now obviously, if you eat that piece right next to a piece of raw tuna, you'll be able to tell the difference.
One aspect is achieving density of the material, it's not easy to replicate. So most densities are achieved through high moisture extrusion with the processes of applying massive amounts of pressure and heat. The problem with this process is that it eviscerates a lot of the moisture. So you'll see this is actually the first way we were approaching making our product.
We got pretty lucky with our incredible partner, a huge extruder expert, and they did a lot of trials and they were like: “Guys, this is just not going to be possible because the heat takes so much of the moisture.” And so this is something we had to learn.
We started using different processes to increase the moisture and then you know and now we have a process with a few different temperature manipulations that creates a nice density, gray moisture level, I think the trick for us is just increasing the density of the material. I think we can, you know, with a bit of more capital, we can improve that.
I'm really bullish on our biotechnology element of the company, because that is going to be something truly innovative to bind materials in an interesting way.
Tommaso: So thank you so much, guys. I’ve always used to end my conversation with a quote:
Tommaso: “Never forget where you come from, it keeps you humble. But where you come from, cannot limit you where you want to go.”
Disclaimer: The views and opinions expressed in this Podcast as well as in its transcript are those of the participant guest speakers and do not necessarily reflect the official policy or position of proteinX or its partners and sponsors. In the same way, the participant speakers do not endorse any products, services, brands, practices, professionals or views other than what they specifically and directly expressed by verbalizing at the time the episode was recorded. In addition, transcripts are generated using a combination of speech recognition software and human transcribers, and may contain errors. Please check the corresponding audio file (podcast) before ever quoting in print.
And this series is brought you by:
Awesm Ventures: A VC that unlike others, invests exclusively with and on behalf of corporations in fragmented industries. http://www.awesm.ventures
SiliconVal.ly: The Innovation institute focused on helping future-proof corporations in traditional industries. http://www.siliconval.ly .
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