By Gil Shalev, Ph.D. – CEO and Founder of Equinom
Disappointing earnings calls for key players in the plant-based food industry have added to the onslaught of bad news around inflation and supply chain breakdowns in recent weeks. Long time industry heroes Beyond-Meat and Oatly find themselves in the spotlight and under the microscope as shares of these two big names in alt meat and dairy have shed more than half their value and are now trading below IPO levels. Their profit misses are raising concerns from investors and predictably sparking debate on the viability of the plant-based food sector at large.
As an ingredient innovation partner for the food industry, I’ve been following the unfolding discussion closely. Struggling plant-based food manufacturers point to high input costs and increased competitive pressures while industry watchdogs wonder if the category is simply not satisfying consumer needs enough to fuel continued growth. In my opinion, both explanations are valid and, believe it or not, entirely avoidable. More importantly, the solutions are right under our noses – or more accurately, right under our feet.
First, I want to reiterate that the achievements of plant-based food companies including Beyond Meat and Oatly deserve tremendous respect and praise. At this point, we are all very familiar with the negative impact of over-reliance on traditional meat and dairy production on both human and planetary health. Many thanks and credit go to these innovative companies for creating that awareness AND for providing palatable alternatives that have sparked a mass scale movement to flexitarian eating.
That being said, the industry has clearly hit serious headwinds and needs to simultaneously reduce product costs and increase product quality to continue to grow. While those goals may sound diametrically opposed, that is refreshingly not the case. We’re speaking about food, after all, and any chef will tell you that the key lies at the source – the ingredients. Indeed, in response to analyst questions on their recent earnings call, Beyond Meat CFO, Phil Hardin, reassured investors that they’re working to source cheaper pea protein isolates (a primary ingredient and COGS driver in their alt meat.) But there’s an elephant in the room, and to see it requires an additional step back in the supply chain. That’s because the source here is the peas themselves.
There are many thousands of varieties of food crops known to humanity. But for decades, our meat-centric food system commoditized a small number of staples (such as corn, soybeans, and sorghum) and optimized them to efficiently feed livestock – with high yields and high carbs. Fast forward to today. Consumers in impressive numbers have embraced the need to eat less meat and more plants. However, the crops behind plant-based foods are the same commodities either intended to feed cows, pigs, and chickens – or to feed many people as cheaply as possible.
While seed companies have sophisticated precision breeding technologies, their tools are calibrated for farming traits (disease resistance, high yield etc.) – not food traits such as taste, texture, appearance, and nutrition. As a result, these commodity crops require extensive processing to be transformed into today’s plant-based burgers, nuggets, milk, ice cream and more. Ingredient processors met this challenge with tremendous ingenuity and skill. However, this advanced processing hikes production costs and constrains supply, which further exacerbates costs.
But there is good news. The solution is here, right beneath our feet, and already years in the making at Equinom, the company I founded to address this key obstacle to the widespread adoption of sustainable plant-based eating. At Equinom, we are on a mission to cultivate plant-based ingredients that are truly better for people and our planet. Beyond having the passionate team, great ideas, and deep technology to address the elephant in the room, we actually have the solution in the field (quite literally).
With our Manna™ technology platform and vast seed vault, we restore biodiversity to our existing food supply by cultivating plant protein ingredients made from higher quality, non-GMO crops that are naturally bred specifically for food applications – without gene editing or modification. Food-quality crops need only minimal processing for use in food – thereby unlocking supply bottlenecks and slashing ingredient production costs. Our technology uses AI and machine learning to identify and precision breed crops optimized for agronomic traits like yield and disease resistance AND for ideal functionality for food like taste, texture, appearance, and nutrition. With superior crops at their core, our ingredients create shared value throughout the supply chain and enable food companies to make plant-based food more delicious, nutritious, sustainable, and accessible for everyone.
By developing high-quality, plant-based proteins – starting from the source, we can work seamlessly with the existing supply chain to establish an improved food system that:
- Eliminates need for costly, solvent-based processing: By naturally cultivating crops (with no gene editing or modification) that are bred specifically to deliver ideal functionality for food, such as high protein and mild flavor, the nutrition can be extracted with minimal effort at affordable, local milling facilities. Minimal processing of nutrient-dense source crops optimized for food yields superior, non-GMO ingredients for plant-based foods that are tasty, nutritious, and sustainable. The result is more accessible, affordable and resource efficient ingredients for ingredient processors and food manufacturers.
- Ensures a reliable supply of affordable plant-based proteins: Today, there are fewer than a dozen solvent-based isolate processing facilities around the world. At a construction cost of up to $500M each (the published cost of the latest Roquette pea isolate facility), adding more facilities simply cannot happen quickly enough to meet demand. This scarcity creates a supply bottleneck, which further drives up the cost of plant-based proteins – and is counter-productive in terms of carbon emissions and water usage as well. For reference, pea protein extracted using wet fractionation (solvent-based processing) costs approximately 2.5 times what it costs to produce pea protein extracted using dry fractionation (milling). By using high quality source crops that eliminate the need for heavy processing, we can substantially reduce costs of ingredients that make up a significant portion (approximately 30-40% of the bill of materials) in many plant-based meat applications. At such high inclusion rates, savings here will directly impact the financial viability of these products for food manufacturers and the affordability of end products for consumers – thereby expanding growth.
- Saves significantly on time: At Equinom, we’re ahead of the game. Our technology enables us to breed successful new crop lines in roughly half the typical time, which is 10-14 years. In more good news, we started working on Yellow Pea varieties five years ago, which means we are ready to launch our minimally processed, commercially scalable, food-grade pea protein in 2023. We also have other plant proteins in development made from proprietary non-GMO soybeans, chickpeas, fava beans and more.
I believe we can create a plant-based ingredient supply that requires no compromises – that can affordably and sustainably nourish people and heal the planet for decades to come. At Equinom, we’re here, we’re ready, and we have the agricultural know-how, culinary expertise, and technology to make it happen. But partnerships are key. We recognize that no one company, country or entity can overhaul our food supply alone. We need to act together. This is why we’re encouraging industry leaders across the existing supply chain – from growers and grain handlers to ingredient processors and food companies – to join us in this mission.
Together, we can and must address the high cost and environmental concerns, and the taste and health demands of today’s consumers. We’re encouraged by how many partners have already stepped forward to work with us. We’re excited to reignite optimism, not only from the perspective of the category and the market, but for consumers who deserve better. The future of food is already here, we just need to act together to unlock it.
To learn more, visit www.equi-nom.com. For food or ingredient companies interested in trialing Equinom Pea Protein or other plant-based ingredients, please email email@example.com. For media inquiries, please email Equinom@demonstratePR.com or firstname.lastname@example.org
Gil Shalev is the visionary, entrepreneur, and driving force behind Equinom. As founder and CEO, Gil is responsible for accelerating the global vision of the company, inspired by his belief in and understanding of the power of nature. Gil holds a Ph.D. in plant genetics from Hebrew University in Jerusalem.