The Outlook for Alternative Dairy is Bright. Here’s Why
Unovis Asset Management: Inside Alternative Dairy; Vegan Cheese, Please; Portfolio News and more.
Is dairy farming cruel to cows?
The New York Times tackled that question in December, examining what really goes on in the $620 billion U.S. dairy industry and whether the animals are paying too high of a price for America’s insatiable appetite for dairy products. What they discovered was pretty grim: Dairy cows repeatedly impregnated by artificial insemination, their calves taken away at birth, with females spending their lives confined to small pens, their horn buds destroyed at just eight weeks old. Their male calves are immediately shipped off to cattle ranches and veal farms.
Despite all that, dairy remains one of the largest segments of industrial agriculture. Sales of organic and conventional fluid milk topped 43 billion pounds in 2019 and, get this, the average American ate about 40 pounds of cheese that year as well. There is a reason that dairy accounts for 1% of U.S. GDP.
This is the challenge -- and the opportunity -- facing alternative dairy producers.
The good news is that sales of traditional dairy products have been trending down for decades. Milk is no longer the universal drink it once was, slipping to a 9% share of all eating occasions from nearly 20% in the 1980s. At the same time, non-dairy alternatives are surging, on track to reach $38 billion in just the next three years. Covid didn’t even slow down this shift, with sales of alternative milks jumping 9% last year.
At Unovis, we are on a mission to disrupt conventional animal agriculture in order to improve the welfare and wellness of all living beings. The cruelty and harm caused by the industrial dairy industry certainly qualifies. But we are also working to address the antiquated and inefficient food system in order to scale the nutritious, sustainable foods we will need to feed the growing global population.
This ethos guides all of our activities in this space, along with our investments in portfolio companies including Oatly, Imagindairy, Miyoko's Creamery, NUMU and others. We see alternative dairy as one of the brightest stars in the plant-based and cellular ag constellation, simultaneously supplanting an outdated and destructive industry while creating healthier, greener alternatives that are rapidly entering the mainstream. Here’s a quick look at what we’re seeing in the space right now and what our alternative dairy portfolio companies have been up to.
(Speaking of, did you catch Oatly’s ‘Wow, No Cow’ commercial during the Super Bowl last weekend? Thanks to CEO Toni Petersson’s oddly catchy jingle more than 100M people learned about alternative dairy, many for the first time. Watch the ad here.)
Vegan Cheese, Please!
About 70 percent of the world population suffers from lactose malabsorption (lactose intolerance). 100 percent of the global population should be able to enjoy pizza without suffering. February 9 is National Pizza Day - everyone can celebrate with a little planning and a little less stomach pain.
Vegan cheese has evolved, thank heavens.
Over the past 10 years, plant-based cheeses have transformed from a waxy, greasy substance with little similarity to dairy cheese to a palatable appetizer addition, effectively mimicking the popular qualities of a dairy based Italian mozzarella, a Wisconsin cheddar or a Dutch Gouda.
Enhanced cheese production techniques, flavor combinations and human creativity have resulted in delicious alternatives. Simply put, the vegan cheese options today are far superior and more plentiful than the options offered 15 to 20 years ago.
With the dramatic expansion of vegan options, consumers are beginning to expect restaurants, take-out delivery, fast-casual chains, and grocery stores to offer plant-based alternatives. Recently, this expectation has spilled over into channels boosted by lifestyle changes caused by the pandemic. One channel of particular note: pizza delivery. As a result, consumers are now demanding vegan cheese pizza options.
What does this mean for the market? Who is making waves in vegan cheese? Read the full analysis from Senior Associate, Juliana Green.
Unovis + the Foodicons Challenge
A new food system needs a new visual way to represent and talk about concepts like no-till farming, plant-forward diets, and alternative proteins. That’s the goal of the Foodicons Challenge, an international design competition sponsored by Adobe, The Lexicon, Noun Project, AIGA and The Cumulus Association. Launched in December and set to be unveiled at the 2021 UN Food Systems Summit this month, designers are working together to develop a shared, open source visual language of more than 500 core concepts to help food system professionals communicate while making the whole system more transparent. Unovis is proud to support this important project.
Meet Sarah Beague
We are pleased to welcome Sarah to the team this year as an intern Investment Analyst. Sarah is passionate about the intersection between food, the environment, and social justice. She has seven years of experience in various financial service roles including credit ratings, corporate banking, manager research and selection as well as emerging markets investing across New York, Zurich, and Hong Kong. Sarah is currently a first-year MBA Candidate at the University of California, Berkeley Haas School of Business. She also holds a Master of Accounting from the University of Southern California and a Bachelor of Science in Accounting from Syracuse University. Learn More
Unovis + The CLEEN Project
The CLEEN Project (Clean Economy Employment Now) is the nation’s first co-operative idea database designed specifically for federal leaders and focused on providing actionable ideas to combat climate change, Build Back Better, and advance climate justice. It was created through a collective of more than 200 contributors and 70 Advisory Board members from the private sector, federal and state government, environmental justice organizations, and leading climate-focused think tanks who share a desire to help catalyze job creation and a 21st century clean and just economy.
Unovis was asked to submit a proposal addressing climate change, environmental justice and equity issues in our food system. Authored by Chris Kerr and Kirsti Gholson, we are excited that our policy proposal for a Meatless Monday/plant-based National School Lunch Program (NSLP) was accepted into the database.
As food justice, racial justice, environmental and animal protection organizations have been stating for years, the U.S. Dietary Guidelines (which direct the NSLP) are seriously compromised by the lobbying power of Big Ag, most notably the dairy industry. Besides the environmental issues, the prominence of dairy as a food group harms a significant number of children who rely on the NSLP because of lactose malabsorption.
A transition to a sustainable, plant-based NSLP could be part of the Biden Administration's commitment for every federal agency to fight climate change as well as address institutional racism. The USDA under Tom Vilsack has a long history of rejecting a healthy-for-all NSLP policy due to his close ties with the dairy industry. Nevertheless, we are encouraged by the new administration's climate action promises and thankful to the CLEEN organizers for the opportunity to be part of this solutionary project.
Check out the full database here.
Our Alternative Dairy Portfolio Companies
ForA: The first fully functional plant-based butter.
ImaginDairy: Real milk, no cows.
New Atlas: Imagindairy plans to cut out the cow and make milk from yeast
Science X: Producing milk from yeast that looks and tastes like cow's milk
Kite Hill: Award-winning plant-based yogurts and cheeses.
Shape: Peloton's Ally Love Isn't Here for One-Note Wellness Routines
Food Business News: Kite Hill unveils reformulated plant-based yogurt lineup
Miyoko’s Creamery: Artisan vegan cheeses and milks made from plant milks.
LiveKindly: Why Miyoko’s Cheese and Butter Are the Future of Dairy
LiveKindly: Starbucks Vegan Menu Replaces Meat at Seattle Location
Noops: Organic oat milk pudding that's packed with real ingredients and powerful nutrition.
The Beet: Oat Milk, Plant-Based Pudding Snacks Launches Better-for-You Vegan Treat
Food Business News: Plant-based brand aims to reinvigorate pudding category
NUMU: Making vegan mozzarella that offers the taste, texture and cooking performance of natural cheese.
Oatly: Producing alternatives to dairy products using oats.
AgFunderNews: Oatly Planning $1B IPO for This Year
USA Today: In Oatly’s Super Bowl Ad They Showed Us Milk Made for Humans
Vegconomist: Oatly Launches Vegan Cream Cheeses as it Prepares for IPO
AdWeek: Oatly Deviously Sets Its Sights on Oat Milk’s Most Skeptical Demographic: Dads
Podcast, Articles, Events and more
Here’s what we’ve been reading, watching and listening to this month.
Podcasts
Soup-To-Nuts Podcast: Cultivated Meat Inches Closer to Mainstream Consumers
Managing partner Mark Langley spoke with Food Navigator’s podcast about how the investment community is evaluating the space, the development timeline and where more capital is needed now to bring cultivated meat to the masses.
NPR’s Black History Month Podcasts (and beyond February): Throughline and Code Switch
Articles
Bloomberg: Cultured Fish May Go From Lab to U.S. Plates This Year
Business Insider: Beyond Meat and Pepsi partner for plant-based protein snacks and drinks
The Drum: Watch ‘Help Dad’ by Oatly
The New York Times: How Far Does Wildlife Roam? Ask the ‘Internet of Animals’
Bloomberg: Climate Leaders Make a To-Do List for the White House
The Spoon: Next Up for Cellular Agriculture? Scalability and Accessibility
The Buttonwood Tree: Matrix Meats Completes Seed Stage Round
Mark was quoted again along with Melissa Facchina and Curt Albright in this great piece about Matrix Meats' recent fundraising round.
Events
ProVeg Incubator: Our Senior Associate, Kristen Rocca, served on the judging panel for ProVeg’s most recent demo day in January, reviewing pitches from the six plant-based and cultured food startups that participated in the program’s latest cohort.