As plant protein startups garner funding rounds on the order of several hundred million dollars from venture capital firms, large multinational corporations (MNCs) have also been making their bets. While activity from MNCs in the plant proteins space is nothing new, especially since 2018, the type and/or scale of recent moves is worth noting. In this blog, we outline three MNC moves and discuss their associated implications for the ecosystem.
1. Cargill establishes a joint venture with startup Bflike for its vegan fat & "blood" (April 2021)
Cargill has been building out its plant protein business over the past several years, with at least $300 million worth of investment being made. The strategy comprises a joint venture with U.S.-based pea protein manufacturer Puris, investing a total of $100 million between January 2018 and August 2019, and the $200 million transformation of a German processing facility from corn to wheat processing, which started in July 2019.
The recently established JV with Bflike expands Cargill's core competency beyond the plant protein ingredient itself. The strategic move exemplifies how to bolt on processing and formulation technologies that help reach "sensorial parity" between animal- and plant-based products. The JV serves as an avenue to enhance finished products for both Cargill (like its PlantEver brand in China) and its CPG customers.
With Cargill's strategic moves and the megamerger between IFF and DuPont Nutrition & Biosciences completed in February 2021, ingredient companies should expect intensified pressure to serve as a "one-stop-shop" to co-develop plant-based products with CPGs, bringing together bulk ingredients, flavors, and the like.
2. JBS agrees to acquire plant-based meat company Vivera for $410 million (April 2021)
- The sheer dollar amount of this acquisition and the acquirer being a legacy meat company are most noteworthy. In fact, to our knowledge, this is the largest acquisition made by a legacy meat company in plant proteins so far. The deal disrupts the trend of market introduction through launching internally developed products, as already done by JBS itself as well as Tyson, Smithfield Foods, and others.
- The pace of M&A activity in plant proteins by MNCs has waxed and waned, with the most noteworthy instance up to this point being Unilever's purchase of The Vegetarian Butcher in December 2018. Nevertheless, the implication here is around the allocation of funds for organic versus inorganic growth in plant proteins – and know that the former is viable and much less expensive.
3. Post Holdings leads $25 million Series A round for plant-based meat startup Hungry Planet (April 2021)
- Post's major motivation for this deal is to complement offerings from its Michael Foods subsidiary, which sells processed egg and potato products. The investment from Post came shortly after establishing a distribution partnership with Hungry Planet in January 2021. This in and of itself warrants attention, demonstrating how to expand a product portfolio and test out scalability with plant-based alternatives that are naturally complementary.
- The industry momentum indicates an opportunity to take existing feedstocks and use them for new plant-based applications. What was not shared publicly but is in the realm of possibility is the fit of Hungry Planet's products, some of which contain wheat protein, with Post's cereal business. PepsiCo and its JV with Beyond Meat formed in January 2021 emulate a similar connection, given PepsiCo's vast supply network of oat, potato, and chickpea (each being a potential plant protein source) from its Quaker, Lay's, and Sabra brands, respectively.
These events underscore the growing need to add technologies and products that are inclusive of plant-based alternatives and round out your existing businesses. As a start, survey the evolving plant proteins landscape to support partner search and selection.