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BFD Expert Voices - Retail Deals

BFD Expert Voices

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, Kimberly writes.  

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 Kimberly, 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.” 

1 big thing: Remilk sees alt-dairy products as CPG cash cow

Illustration of a milk carton with a Missing Cow ad on the side.

Mayawell, a maker of agave-based prebiotic sodas, will look to raise between $5 million and $7.5 million from institutional investors next year, CEO Oliver Shuttlesworth tells Richard.

Why it's the BFD: The functional beverage category was valued at $109 billion in 2020 and is expected to grow at a CAGR of 6% between 2022 and 2032, according to Future Market Insights, with startups such as Olipop and Koia successfully raising rounds this year.

Details:  "We are in a good spot to raise a proper price round at a valuation everyone is comfortable with," Shuttlesworth says.

Funds raised will be incorporated into Mayawell's Series A, which the company plans to open next year. 

Shuttleworth cautions that he doesn't want to part with too much of the company at too low a valuation.

As it eyes fundraising next year, he says, in the interim it plans to fund the business via inventory financing, which would provide cash to the company on a revolving basis.

By the numbers: Shuttlesworth declined to disclose specific figures but said Mayawell generates revenue in the seven-figure range and grew 350% year-over-year in 2020 and 2021 — with plans to do the same this year.

Of note: Mayawell supports indigenous communities as a way to commoditize the agave crop with the sale of its products.

It also supports reforestation and helps to generate work for artisans who craft products from woven agave fibers.

Catch up fast: The company raised a $2 million seed round led by Mexico-based distillery Casa Armando Guillermo Prieto to expand distribution.

The investor got its start distributing Coca-Cola in Mexico, Shuttlesworth notes.

Currently the beverage startup's products are available in Texas, California and Florida, he says.

Flashback: The company's product was inspired by pulque, an ancient Aztec fermented beverage made from agave once reserved only for select individuals, Shuttlesworth says.

As Shuttlesworth researched the idea during his travels in Mexico, in 2018 he was introduced to Vincente Reyes, a pioneer in the mezcal industry.

After getting to know each other, the two went into business together and began developing a formulation.

State of play: Rivals in the space include Olipop and Poppi, the latter having named former Sparkling Ice leader Chris Hall as its CEO this year.

Shuttlesworth says that while the two companies play to soda drinkers, Mayawell is instead courting kombucha drinkers.

The kombucha market generates some $1.2 billion in sales, he notes, but sales are declining and consumers and retailers are looking for new brands to replace aging products.

2. The BFD: Mayawell targets capital raise

Sliced watermelon interspersed with white and green aluminums cans containing a prebiotic carbonated beverage from Mayawell.

Best Buy reported Q2 earnings today, revealing sales dropped by more than 12% as inflation squeezes shoppers. 

Best Buy reaffirmed full-year guidance after cutting the forecast late last month, citing an expected weaker demand for consumer electronics.

Best Buy expects same-store sales to decrease about 11% for the 12-month period ended in January.

The company’s stock was up 3.5% in late morning trading. 

3. Retail therapy

• Second Avenue Capital Partners provided a $17.5m secured credit facility for Alex and Ani, creators of charm bracelets and affordable meaning-based jewelry. 

• Aleph Farms, an Israeli cultivated meat startup, raised $40m from L Catterton, Strauss Group, VisVires New Protein, CPT Capital, Synthesis Capital, Food Tank and Christensen Global.  www.aleph-farms.com

• Society Brands, an ecommerce aggregator, announced the acquisition of consumer electronics accessories company Power Theory. https://axios.link/3AYwaVk

4. Retail transactions

• Tommy Hilfiger named Nadia Azria chief merchandising officer of Tommy Hilfiger Global, effective Nov. 1. Most recently, Azria held an executive role at Nike. https://axios.link/3CDcEyZ  

• Massmart COO Jonathan Molapo will take over as company CEO, replacing Walmart veteran Mitchell Slape. https://axios.link/3AUlVBs 

• Chico's appointed Leana Less as senior vice president of marketing. Less previously served in executive roles at Aveda and Coca-Cola. https://axios.link/3RhGjBO

5. It's Personnel

Welcome back and happy Tuesday, Retail readers!

🥇Situational awareness: Fanatics is expanding its relationship with the Olympics after signing a merchandising deal with LA28 and Team USA. 

🍑 What we're snacking on: Richard worked up a batch of farmers market peaches to store in the freezer, so he can taste a bit of summer during the winter. 

August 30, 2022

1 big thing: Remilk sees alt-dairy products as CPG cash cow