eResearch | The plant-based protein or “meatless” industry experienced significant growth in the past year as several emerging companies developed new innovative plant-based technologies, while larger traditional restaurants and retail chains created partnerships to meet public demand.
Recently, Restaurant Brands International Inc. (TSX: QSR; NYSE: QSR), Loblaw Companies Inc. (TSX: L), and Maple Leaf Foods Inc. (TSX: MFI) started to invest in either developing their own plant-based meat processors or acquiring alternative meat products from suppliers such as Beyond Meat Inc. (NASDAQ: BYND) or Impossible Foods Inc.
This week, Starbucks Corp. (NASDAQ: SBUX) announced it is adding a sausage, egg, and cheddar sandwich from Impossible Foods to its menu this summer across approximately 15,000 U.S. locations. Earlier this year, Starbucks announced a partnership with Beyond Meat for operations in China.
Last year, the plant-based protein industry surged as Beyond Meat, a leader in the industry with products in over 3,500 stores and 27,000 restaurants, listed on a public stock exchange and reached over US$10 billion in market capitalization.
Further details on Beyond Meat and its IPO can be found in a previously published article called “Digging into the Plant-based Meat Craze”.
This year, several public plant-based protein companies skyrocketed in stock price, however, most reported heavy losses as significant investments were made into R&D, production facilities, and partnerships.
Burcon NutraScience
Burcon NutraScience Corporation (TSX: BU) is a plant-based technology company with over 285 issued patents for developing protein products using pea, canola, hemp, and flax. Burcon is expected to produce its own proteins through Merit Functional Foods, a joint venture set up by Burcon with three veteran food industry executives.
Merit is building a 94,000 square foot production facility in Winnipeg, Manitoba to produce high quality pea and canola proteins. It is scheduled to be completed at the end of this year.
Burcon mainly generates revenues through its two main canola protein fractions branded under the names Puratein and Supertein, which have royalty agreements with various farmers and companies.
Burcon also signs joint product development agreements with traditional brands who want to use Burcon’s proprietary assets.
Earlier this year, Burcon announced a partnership with Nestlé SA (SWX: NESN), a multinational food and drink processing conglomerate, who plans to use Burcon’s plant-based proteins towards food and beverage products.
Stefan Palzer, CEO of Nestlé, said, “Developing nutritious and great-tasting plant-based meat and dairy alternatives requires access to tasty, nutritious and sustainable raw materials as well as proprietary manufacturing technology. The partnership with Burcon and Merit will give us access to unique expertise and a new range of high-quality ingredients for plant-based food and beverages.”
In Burcon’s most recent quarter, it reported little to no revenue with a net loss of C$1.3 million, a 24% increase year-over-year, attributed to large expenditures in R&D and intellectual property licensing fees. Burcon currently has a market capitalization of C$160 million.
As of this month, Burcon has received C$92 million in investments, in addition to $95 million in debt, recently raised by Merit, to be used towards building the Winnipeg pea and canola protein production plant.
Else Nutrition Holdings
Else Nutrition Holdings Inc. (TSXV: BABY) is a plant-based protein company with 22 patents issued globally, focused on developing plant-based alternative food products for toddlers, young children and malnourished adults.
Else Nutrition was the first company in the world to patent a plant-based, non-dairy, non-soy, baby and toddler nutrition formula.
Traditional baby formulas are mainly produced from either cow’s milk or soy protein, which are both strong allergens. In addition, soy protein is suspected to increase risks in infants due to the high levels of phytoestrogens.
As a result, Else Nutrition is currently developing a plant-based baby formula using almonds, buckwheat, and tapioca, rather than dairy or soy, which reaches an equivalent nutritional value to natural breast milk. Two product lines are currently in development for infants 1-2 years of age and children 3-12 years of age.
Aside from its two products under development, Else Nutrition operates and generates revenue from two other product lines of baby snacks and baby feeding accessories, which were acquired from Golden Heart F.G.C.G Ltd. in 2019.
To market its many new products, Else Nutrition partnered with COVET PR, a national public relations firm in the U.S. who is focused on food, beverage, and beauty, and Mom’s Meet, a community of 100,000 U.S. mothers who are dedicated to exploring new consumer products for their children.
In Else Nutrition’s most recent quarter, it reported revenues of C$254,000, a 5% decrease quarter-over-quarter, with a net loss of C$929,000, improving from a net loss of $1.1 million in the prior quarter. Else Nutrition currently has a market capitalization of C$177 million.
Else Nutrition is well capitalized with approximately C$9 million in its treasury as it raised C$7.5 million last year and C$8 million earlier this year for a total of C$16.5 million in proceeds.
The Very Good Food Company
The Very Good Food Company Inc. (CSE: VERY; “VGFC”) is an emerging plant-based technology company focused on developing, producing, and distributing plant-based food alternatives, who went public this month, raising C$4 million at C$0.25/share.
In 2017, VGFC opened the first plant-based butchery on the west coast of Canada called the “Very Good Butchers” and has since been growing rapidly. VGFC currently has four scientists developing innovative new products, one manufacturing facility currently operating and one currently under development, and over 150 retailer and restaurant customers.
VGFC generates revenues through four channels:
- Retail shop,
- Restaurant,
- eCommerce store, and,
- Wholesale program.
VGFC’s eCommerce store currently has over 700 active subscribers for its monthly subscription plan, while its wholesale program has over 100 active customers, including Whole Foods Market and IGA.
At the end of last year, VGFC entered a lease agreement for a 14,000 square foot facility in B.C., Canada, which is expected to be completed at the end of this year. It will be used for R&D lab spaces, manufacturing and distribution expansions, and a second retail storefront.
In VGFC’s most recent quarter, it reported revenues of C$0.3 million, a 55% increase year-over-year, with a net loss of C$1.3 million compared with a net loss of $0.2 million in the prior year.
VGFC currently has a market capitalization of C$75 million.
Early this year, VGFC received a business loan and an operating loan totalling C$1.24 million, both secured using VGFC’s assets and properties.
Plant-based Protein Market
The plant-based protein industry received high levels of attention due to consistency of products, lower production costs, and benefits in environmental sustainability, however, the industry struggles due to undesirable flavours and sub-par nutritional values.
According to Barclays, the alternative food industry is expected to reach US$140 billion over the next decade, which would account for 10% of the US$1.4 trillion global meat industry
CHART 1: S&P 500 vs BU, BABY, and VERY – YTD Stock Performance
