Remilk sees alt-dairy products as CPG cash cow

Remilk, a startup taking the cow out of dairy production, is ramping up production of its genetically-engineered milk — which it claims is more nutritious, sustainable and cost-effective than its farm-raised rival.

Why it matters: Alternative proteins — made from plants like soy, pea or mushrooms, or completely cultivated in a lab — have drawn VC dollars thanks to investors hungry to check the ESG box and preempt consumer trends that favor healthy and eco-conscious grub.

• Among the industry’s biggest funding rounds in the second quarter was Upside Foods, which raised a $400 million Series C in April.

Catch up fast: Tel Aviv-based Remilk garnered $120 million in its Series B in January.

• Hanaco Ventures led, and Precision Capital, Rage Capital, CPT Capital, and Intercap were among the investors that joined.
• Remilk will use the funds to build its own facility in Denmark by 2024, enabling it to ramp up production of commercial batches of its alternative dairy protein.

What's next: “We’re not over when it comes to financing,” CEO Aviv Wolff tells Axios, adding that the company will explore additional financing opportunities on both the equity and debt sides.

• He would like to raise a figure in the range of “three digit of million dollars” by the first half of next year, but added, “there is no active round at the moment.”
• “The goal of additional capital, even in this challenging time, is to expand production capacity even further because of the growing demand that is knocking on our doors,” Wolff says.

How it works: Remilk uses technology, biology and common bio-manufacturing processes to make milk proteins essentially identical to those from a cow.

• “We actually copy the specific gene that encodes the production of the key functional ingredients in milk,” Wolff says.
• “It's like taking the recipe from the cow on how to make milk,” Wolff says.
• Remilk also creates dairy-like products including mozzarella, cream cheese, yogurt, ice cream and chocolate. (And unlike its beefy counterpart, Remilk doesn’t use lactose, cholesterol or growth hormones in its product, Wolff says.)

State of play: The company has signed a few contract agreements and expects its products to roll out on shelves in Israel and the U.S. in the coming months.

• Remilk is producing its protein in more than five production facilities around the world, Wolff says, adding that production is “already at an industrial scale.”
• As production ramps up, Wolff expects the company's milk to hit cost parity with the animal-based product it would replace.
• “Eventually, we expect to be as much as five times cheaper than traditional dairy, while offering [virtually] the same product,” Wolff says.

Of note: “The only thing that will allow us to really transform the market is if we can price our products at or below the traditional offering,” Wolff says.

• He says Remilk will be able to do that through high-scale, high-volume production facilities that “allows the economy of scale to reduce production costs significantly.”
• “Precision fermentation is extremely scalable,” he says, because it requires a few ingredients in a stainless steel tank.
• Not having a cow (think, maintenance, care, etc.) in the equation also cuts costs, he adds.

The bottom line: “We are working with CPGs,” he says, and “they are happy to transform their portfolio, but they require two things: quality parity and cost parity.”