Over the last year many Silicon Valley engineers started skipping meals and instead were drinking Soylent - a meal replacement drink and a substitute for a solid food meal – (that some have described as drinking cake batter.) Other new startups are talking about growing meat in labs or making it from plants. What’s going on?
Over the last 5 years, investors have been pouring serious money into all kinds of food startups – food delivery, food preparation, new snack foods, restaurant ordering tools, etc. According to market research firm CBInsights, food delivery startups alone raised over $5.5 billion in 2015. Farm-to-Table, Meals on Demand and Meal Kits have been the latest food funding craze. But in the last year one segment, “food replacement”, has become hot. At the intersection of food science and technology, food replacement startups are creating substitutes for the basic components of meals as well as replacements for complete meals.
The food replacement category is what sounds like – companies are substituting plants or food grown in a lab to replace meat, fish, eggs, milk - or like Soylent, to package nutritionally complete meals into a drink.
Startups like Beyond Meat or Impossible Foods, (which has raised $183M) are developing meat produced from plants. New Wave Foods is trying to do the same for shrimp - using plants. Other companies like Memphis Meats are skipping the plants and instead are trying to grow meat in the laboratory. And if meat isn’t how you like getting your protein, there are other startups working on using insects to deliver protein. Exo uses crickets in its protein bars, and Entomo Farms and Tiny Farms also offer crickets for human consumption.
Instead of getting your eggs from chickens, Hampton Creek (who’s raised $120M) is making an egg substitute from plants that goes in their mayo, dressing and cookies. Ripple (having raised $46M) is making a milk substitute out of peas. Clara Foods is using genetic modified yeast to produce an egg white subsitute.
Ironically, companies like Soylent offering meal substitutes are following a market that’s over 50 years old. Carnation Instant Breakfast Drink which was launched in 1964, is a powdered breakfast food that you add milk and then drink. K-Mix 2, a high-energy food, was developed by UNICEF in the 1960s as a therapeutic food has been around for almost as long. SlimFast, another meal replacement was first offered in 1977.
Why the new rush into food replacements? For busy young adults the lure of meal substitutes is simple – it’s all about convenience - the level of effort to open a bottle or package is minimal, and the time from thinking you’re hungry to eating is almost zero. The last generation of meal substitutes feel like something your grandparents drank so this new wave is all about modern branding.
Why the rush to replace basic components of meals (meat, fish, eggs, etc.) is a little more complicated. There are a half a billion vegetarians worldwide who want more variety in their diets, so being able to eat a plant based food with the texture and taste of a hamburger or steak would be a novel change. Even those who already eat meat may perceive that a plant-based diet is healthier and they offer an additional market. And others who have allergies to milk, eggs or shrimp can now finally taste a plant-based version. In addition, consumers in many countries are growing increasingly concerned about the environmental cost of raising cattle and chicken and farming shrimp. Plant based substitutes feel like they are easier on the planet.
Finally, food safety is another perceived benefit. Shelf life of plant based products are potentially longer than the originals. In countries where public confidence of the quality of food products is lagging having your milk and eggs derived from plants rather than uninspected or diluted sources seems safer. Having your meat, chicken or shrimp grown in a factory seems better than having it butchered in a slaughterhouse or in a pen in the ocean.
For investors, it’s pretty simple – as long as they believe that there are a large number of customers who want the product – and ultimately larger food companies who will acquire these startups, they’ll continue to pour money into these startups.
The author is a Silicon Valley serial-entrepreneur and academician.