MILK IS GOING NUTS

©Alfred

The demand for a more sustainable food system is global and growing fast, with much of the shift being led by Millennials and Generation Z. Startups like Perfect Day, Oatly and Califia Farms that are offering alternatives to animal-made protein as well as milk, have long touted their animal and environmentally friendly bona fides.

Dairy-free drinks’ popularity is on the rise as consumers consider options outside of the dairy beverage category. And in November, America’s biggest milk producer Dean Foods said it was filing for bankruptcy due to the continuing decline in consumer milk consumption. Milk sales plummeted to USD 12 billion in 2019 from USD 15 billion in 2015, according to market research firm Nielsen. Almond milk sales, meanwhile, have grown almost 6 percent to USD 1.35 billion, while oat milk surged 662 percent to USD 59.8 million last year.

In a previous post, I have written about the booming market of “plant-based mylks”. In fact, it should not really be all about nutrition, but the shift towards ethical, plant-based living should also be regarded as a way to reduce our on our planet. Besides the ill-treatment of animals, evidence has mounted that the dairy industry is catastrophic for the environment. Animal agriculture contributes more greenhouse gases than aviation, shipping and road vehicles combined. One recent study led by Oxford University claimed that following a vegetarian or vegan diet is the single most effective way to reduce your own environmental footprint. Read more about the unstoppable rise of the mylk: Click here

Oatly, the Swedish sustainable food company, announced this week that it has further bolstered its plant-based movement through an investment of USD 200 million in equity led by Blackstone Growth, along with an array of big individual names including Oprah Winfrey, Roc Nation, Natalie Portman, and former Starbucks Chairman and CEO Howard Schultz. The new investors will join the company’s existing partners, including Verlinvest-CR JV and the company’s founders, on Oatly’s dynamic journey. The injection of capital will fund the company’s overall growth plans, which include expansion in current markets and new production plants and related jobs in Europe, the United States and Asia. By bringing facilities closer to consumers, the company will make the Oatly product range more readily available to the growing community of health and environmentally conscious consumers worldwide.

For Oatly’s CEO Toni Petersson, this investment demonstrates a major step in funding sustainable, society-altering companies. Petersson said: “Leaders in asset management like Blackstone play an essential role in order to create real sustainable change. It is my belief that capital has to turn green and do so for the right reasons. Since we re-launched our brand in 2013, our focus has been to positively impact society by enabling people to change their lives with better, more environmentally responsible food choices, and in so doing, re-shape the food system to better contribute to the future of the planet.”

As part of the company’s overarching mission to reduce the C02e footprint of the food industry by shifting consumers’ consumption choices, the company last year added a carbon footprint label to their products in Europe. By making that data available, Oatly enabled consumers to consider the carbon footprint of their food choices before they buy, just as they do with nutritional content. The label was accompanied by a challenge to the larger industry titled “Hey, food industry: show us your numbers!”

The Oatly campaign delivered several industry-changing results:

• Multiple retailers moved to enhanced product labeling, showing carbon footprints;

• The Deutsche Bundestag (German Parliament) agreed to consider mandating enhancing carbon footprint product labeling into law; and

• Food giant Unilever committed to begin carbon labeling for 70,000 of its food products.

The possibility of reducing the carbon footprint of a resource-intensive food system is what attracted Thematic Investing to lead a USD 50 million investment tranche into Perfect Day, expanding its Series C round to USD 300 million. Perfect Day’s new funding follows last year’s USD 140 million initial Series C, which was led by Horizons Ventures and Temasek, pushing Perfect Day’s total capital raised to more than USD 360 million. Perfect Day takes a different approach from other startups in the space that are attempting to create challenger brands to take on legacy companies. Instead, Perfect Day says it can have a bigger impact through partnerships with established enterprises, selling them its animal-free protein to use as an ingredient in their existing and new products.

Perfect Day produces animal-free dairy proteins through fermentation, a biotech process that enables the company to eliminate the environmental and animal welfare concerns that come from using cows. The proteins, which are molecularly identical to those produced by cows, can then be used in making dairy products like ice cream and cheese. Unlike plant-based alternatives to milk and dairy (think almond milk or soy milk), Perfect Day’s product is identical to dairy proteins and therefore tastes and performs the same way when used as an ingredient. As a result, Perfect Day says manufacturers don’t have to change their process and equipment when they use its milk protein. The company plans to label its product as animal-free whey protein, and items that contain the protein can be labeled as vegan and lactose-free.

The plant-based food sector grew 20 percent in retail sales, while all other foods have seen just 2 percent growth, according to the Plant-Based Foods Association-commissioned data from Nielsen. Mainstream eateries and restaurants have started broadening their milk options as a result of growing customer’s demand. Grab-and-go sandwich shop chain Pret A Manger said it would no longer charge customers extra for plant-based milk.

Los Angeles-based almond and oat milk producer Califia Farms announced Tuesday it raised USD 225 million in funding. The funding was led by Qatar Investment Authority and included Temasek Holdings, an investor in plant-based burger maker Impossible Foods, among others looking for the next plant-based cash cow following the success of Beyond Meat and its vegan offerings that mimic meat. Califia Farms said it would use the new funding to expand its portfolio of oat-based products and develop new items outside of the beverage category.

“The more than USD 1 trillion global dairy and ready-to-drink coffee industry is ripe for continued disruption, with individuals all over the world seeking to transform their health and wellness through the adoption of minimally processed and nutrient-rich foods that are better for both the planet and the animals,” Greg Steltenpohl, Califia’s founder and CEO, said in a statement. “I understand that it may sound naive at times to actually believe that Oatly can change the world—that the impact of what we do can inspire others to make changes that will lead to a global behavioral shift among consumers—but that’s fine.” said Petersson.