The rapidly growing plant-based trend is set to further accelerate disruption in the ingredients sector, according to the CEO and founder of Kale United, a Sweden-based investor in plant-based businesses.
"One thing that's really interesting is the ingredients market,” Måns Ullerstam told FoodNavigator. “When this thing starts hitting the behind-the-scenes ingredients, it’s going to be a really good shift that consumer wouldn't even know about.”
He named gelatin and egg whites as two ingredients where plant-based alternatives are already available. Only funding is preventing these ingredients scaling up and following in the footsteps of now mainstream plant-based products.
“There's a lot of gelatin in the ingredients in lot of products,” he continued. “All of that could easily be replaced by a plant-based version and consumers wouldn't care. Another one is egg-whites where there are now plant-based alternatives. This is the kind of shift that the Unilever guys can easily do in their products. As soon as there is a replacement there's no reason not to replace it.
“It's no longer about price point. Some of these ingredients are cheaper. The companies behind them now just need funding to scale up the production of them. It's a huge market just to solve egg white replacements alone."
Kale United describes itself as a global ecosystem for plant-based businesses to flourish. It is currently celebrating smashing through its second funding round and is currently structuring several new deals in the plant-based space, including exploring cell based meat start-ups in the EU.
It recently acquired Sweden's most well established vegan food brand Astrid och Aporna in partnership with VBites CEO Heather Mills and invested in German plant-based food supplier Veganz.
“We saw a gap in the market, a space someone needed to fill,” explained Ullerstam. “This whole vegan plant-based space is growing rapidly, but as an investor it was very hard to invest in this space. So from the investor perspective Kale United is filling that gap. So anyone investing money into Kale United knows that this money will be used to fund a 100% plant-based portfolio."
The company is also building up a portfolio of companies in the plant-based space. Kale then gives these companies help scaling up. “There are two things we try to do for most companies. We provide capital to them and we help them reach the Scandinavian market.”
From start-up to scale-up
A lot of smaller start-ups have an interesting dilemma to solve, he noted. They have developed interesting products that the market wants to buy, but when large clients like corporate food manufacturers or large supermarkets come to them and say 'we want this product', the volumes they want are impossible for these small start-ups to produce.
“A lot of plant-based start-ups end up in a situation where they have a consumer demand to scale but they have no way of scaling: they need access to cash for funding and access to big partnerships. Kale United wants to solve that for the start-ups to provide capital and the right partners. And it could be help with factories, sales organisations, marketing agencies, legal help… anything."
After launched just over a year ago, Ullerstam says Kale United has raised ‘around a million euros’. It has around 350 investors and has invested in 21 companies including Beyond Meat, and Ocean Hugger Foods.
Why the name Kale United? "Kale, for some unknown reason, has been almost a symbol for vegan food. For some reason non-vegan people seem to think vegans only eat kale," he joked. "And United, because it's an ecosystem: we're uniting a lot of companies under portfolio and a lot of investors."
Why plant-based is like a Swiss army knife
The appeal of plant-based among consumers is motivated by many different factors including environment and health. This fact broadens the scope of the companies the Kale invests in.
"That's the beauty of plant-based. It’s like a Swiss army knife of solutions. It solves a lot of the issues. Some plant-based products will have a lot higher health profile, some will have a better carbon footprint profile.”
It also broadens the scope of the types of products they make to include products that mimic meat and new experiences altogether.
"We're so early in this space that at this stage we need all of those. We need the pure replacements that try to mimic the real version but we also need more that go back to basics and offer good quality, healthily plant-based options. We're investing in both. But what excites me most is probably the ones that are not just mimicking the real thing but are creating something new: amazing tasting plant-based options."
‘Everything is aligned’
New product development, he added, is so advanced that plant-based can definitely not be dismissed as a fad.
"It is not a diet trend, with people switching in three years to another diet,” said Ullerstam. “And everything is aligned towards this goal now. 10 years ago there were no vegan alternatives or meat replacements or vegan cheeses. So the product development itself has created products that are good enough; they are starting to compete on taste, price and availability. That has created a lot. It means that if you want to consume these products, there are products to consume."
And what's inspiring the investors? Is it simply a financial opportunity they spot or something deeper? "That's the beauty of the investment proposal. If you want to invest in this space for ethical or sustainable or health reasons, this is probably one of the best spaces around. But if you look more at the financials, this is one of the highest growing markets in the world right now. There is absolutely nothing stopping it. It's escalating and growing more every year. So even if you just look at the money, this makes very good sense to invest in this space. I would say my investors are from both of those categories.”