Plant-based Dairy Company “Perfect Day” Announces Extension of Series C Funding Round to $300M Led by CPP Investments

eResearch | Earlier this month, California-based Perfect Day, Inc., a food technology company focused on plant-based dairy products, announced an expansion to its Series C funding round through a US$160 million investment led by the Canada Pension Plan Investment Board (“CPP Investments”), increasing total proceeds to US$300 million.

CPP Investment’s Thematic Investing group led the funding expansion with US$50 million in capital, through its recently announced Climate Change Opportunities strategy. Perfect Day was Thematic Investing group’s first investment for this new initiative.

Leon Pedersen, Head of Thematic Investing at CPP Investments, said “Sustainable technologies like Perfect Day are poised to capture structural shifts in industrial practices, physical resources and consumer preferences for environmentally conscious options, which are well-suited to our long term investing approach. We look forward to building our partnership with the company and its management team.”

The initial Series C funding round closed at US$140 million at the end of last year, which was led by previous investor, Temasek Holdings Private Limited, an investment firm who was a part of Perfect Day’s prior Series A and Series B funding rounds. Temasek Holdings and Horizons Ventures, another existing investor, both participated in the recent extension of the Series C funding round.

Temasek Holdings is a Singapore-based company owned by the Government of Singapore. Temasek has also invested in other plant-based companies, including Impossible Foods Inc., a leader in the plant-based meat industry.

Perfect Day

Perfect Day develops plant-based dairy products using bioengineered microflora, which converts plant sugars into dairy proteins with identical molecular structures as traditional cow-based dairy.

Last year, Perfect Day soft launched its flora-based ice-cream product with 1,000 pints for sale on its website, at a price of US$60 for three pints. All 1,000 pints sold out within hours.

PHOTO 1: Perfect Day First Ice-cream Launch

Using its proprietary “flora-made” dairy protein, Perfect Day recently started to focus on partnerships with various manufacturers to produce white-labeled alternative dairy products, which have the same texture and flavour as traditional dairy products, but without the negative health concerns.

PHOTO 2: Smitten N’ICE Cream Developed Through Perfect Day

According to Perfect Day’s recent press release, production capacity for its flora-protein doubled in the past several months. In addition, Perfect Day also successfully completed a review for its Generally Recognized As Safe (“GRAS”) status by the U.S. Food and Drug Administration (“FDA”)

ADM Partnership

In 2018, Perfect Day announced a partnership with Archer Daniels Midland Co. (NYSE: ADM), a U.S. food processor with over 270 plants and 420 crop procurement facilities, to become the first two companies to bring fermentation-based dairy products to the market at scale.

The partnership leverages ADM’s fermentation infrastructure, which enables Perfect Day to offer scaled production of plant-based dairy products for large companies in the traditional dairy industry.

Ryan Pandya, CEO of Perfect Day, said “We are on a journey to bring sustainable, nutritious and delicious dairy to everyone. We are thrilled to partner with ADM, a global leader in fermentation, to accelerate our path to market. With this partnership, we will enable brands to make your favorite foods in a kinder, greener way”.

Other Plant-based Dairy Companies

New Culture, a California-based start-up, focuses on developing animal-free cheese through fermentation, by designing microbes to produce dairy proteins using plant sugars.

Last Year, New Culture raised US$3.5 million in a seed funding round, led by Evolv Ventures, a US$100 million fund backed by Kraft Heinz Co. (NASDAQ: KHC), the third largest food and beverage company in North America.

Califia Farms, a California-based alternative dairy product manufacturer, is one of the most well known retail brands for plant-based dairy products. Califia Farms uses plant-based ingredients such as almonds, coconuts, and oats, to develop dairy alternatives for milk, creamers, and ready-to-drink coffee.

Early this year, Califia Farms announced a US$225 million Series D financing round, led by Temasek Holdings, which is expected to be used towards investing into international expansion plans.

In June, eResearch published an article highlighting Else Nutrition Holdings (TSXV: BABY), a plant-based dairy producer focused on developing baby formula products using almonds, buckwheat, and tapioca, rather than dairy or soy.

• June 2020: “Three Canadian Public Plant-based Protein Companies with Little Revenue but Big Potential”

Alternative Dairy Industry

The alternative dairy industry experienced high growth due to (1) a growing number of studies with health concerns against cow-based dairy products, (2) an increase in prevalence for lactose intolerance, and (3) a growing trend in veganism.

According to the Physicians Committee for Responsible Medicine, milk and other cow-based dairy products are the top sources of saturated fats in U.S. diets, contributing to heart disease, type 2 diabetes, and Alzheimer’s disease.

The alternative dairy industry is expected to significantly disrupt the traditional dairy industry, which is held back by inefficient facilities and supply chains with long production lifecycles, high operational costs, and centralized manufacturing systems.

According to ResearchandMarkets.com, the alternative dairy industry was valued at US$13 billion in 2018 and is expected to increase to US$35.8 billion by 2026, growing at a CAGR of 13.6% from 2019.

//

DIAGRAM 1: Perfect Day – How to Make Animal-Free Dairy Proteins