SAO PAULO – Proteins that mimic the taste of animal meats using only vegetable ingredients are winning over investors, including in Brazil. The latest news in the sector is a new investment in Fazenda Futuro. The food startup (foodtech) The Brazilian company carried out a round that valued the deal at R$2.2 billion – around three times more than the R$715 million valuation achieved in the previous round, carried out in September 2020.
The current C series raised around R$300 million (US$58 million). The investment was led by investment bank BTG and Rage Capital, a European fund that invested as much in giants Airbnb and Epic Games as in foodtechs like Clara Foods. All investors from previous rounds followed the current round. New investors include both co-leader Rage Capital and XP Inc. (parent company of InfoMoney).
“This assessment is a reflection of our execution power, translated into growth. We built an appreciated brand in Brazil and other countries in just over two years. The world knows that Brazil understands meat, and now we can take the lead in plant meats”, says Marcos Leta, founder of Fazenda Futuro, in an interview with From Zero To Top, entrepreneurship brand of InfoMoney.
Fazenda Futuro: the story of the startup that bets on plant meat to overcome slaughterhouses
Fazenda Futuro was created in April 2019. In addition to a hamburger made with plants, the foodtech they have emulations of meatballs, tuna, ground beef, chopped chicken and ham sausage. Some ingredients used are beets, peas, coconut fat, canola oil and soy. The goal is to attract not only vegetarians and vegans, but also consumers of common meat. Futuro farm currently operates in 25 countries, with half of its revenue coming from international markets.
Conquest of international lands
The new investment is mainly going to turn the business around in the United States – the biggest food market plant based of the world. “We need all possible investments to get our brand and make our entry into the American market [go to market]”, says Leta.
THE foodtech Brazilian has been in pre-operation in the country for just over a month, selling in some online stores in the United States. Now, Fazenda Futuro is negotiating with retailers and distributors to sell across the country in early 2022. But the competition will be heavy. According to the consultancy Tracxn, the United States has about 2,800 foodtechs. The top American startups making plant-based food are Beyond Meat, valued at $6.6 billion on the Nasdaq technology exchange, and Impossible Foods, which is seeking a $7 billion valuation in a new private round of investments.
For Leta, a differential of foodtech Brazilian will be the price. “Beyond Meat and Impossible Foods are premium brands, with packages that cost $6 to $8. We have supermarket brands at the other extreme, which cost between $3 and $4.5. We deliver a product with premium quality, but with a price that is between supermarket brands and premium brands due to our national production. This is how it is in Canada, where we are present on the network Whole Foods”, says the founder. This national production translates into ease of obtaining raw material, due to Brazil’s agricultural vocation, and lower production costs due to the current exchange rate between the Brazilian real and the US dollar.
The investment will also be used to strengthen Fazenda Futuro in European countries like England and Holland, through networks like Jumbo and Sainsbury’s. “Countries with the highest consumption volume plant based are Canada, the United States and some countries in Europe. In other regions, we work a lot through local representatives”, says Leta. Fazenda Futuro hopes to end this year with a presence in 30 countries.
Geographic expansion is accompanied by product expansion. THE foodtech has 12 innovations in its wake of development, to be launched between 2021 and 2023. Fazenda Futuro continues to update current products, but also intends to enter the category of products that imitate milk and its derivatives. In this segment, the main competitor is the Chilean The Not Company. The startup earned an valuation of around US$1.5 billion in July this year, becoming the first unicorn in Latin America in the area of foodtech.
Fazenda Futuro will start selling milk and vegetable milk derivatives internationally, and only then will it bring the products to Brazil. International sales represented half of the startup’s revenue throughout 2021. The plan is for them to represent 90% of revenue in 2025.
“In some countries, we realized that there is an opportunity to increase our brand presence by expanding the categories we offer. For now, the large volume of consumption of milk and dairy products plant based is outside Brazil”, says Leta.
Brazil still under consolidation
At foodtechs are still recent in Brazil. While Beyond Meat and Impossible Foods were founded respectively in 2009 and 2011, Fazenda Futuro started in 2019. With its C series, the Brazilian startup wants to bring more muscle to national meat consumption plant based.
“In addition to the commercial effort to continue building our plant-based meat category here, we also have investment in product development, which takes place at our plant in Volta Redonda [Rio de Janeiro]”, says Leta. The factory’s current production capacity supports the projected growth for 2022 and 2023. Fazenda Futuro does not open its growth percentages.
The market to be transformed is large: Brazil is the third largest meat consumer market, behind only the United States and China, according to this year’s Embrapa newsletter. But the desire for transformation is also immense: the country is the fifth market in the world for healthy food, according to the The Good Food Institute, a global organization for innovation in the food industry.
A survey conducted by the GFI in May 2020 showed that 49% of Brazilians reduced their meat consumption in the previous 12 months, compared to 29% in the previous study by the GFI (2018). Much of the replacement made by these consumers is made with common vegetables (47%), but vegetable meats have a relevant share (12%).
Fazenda Futuro wants to add yeast to this slice of the alternative protein cake – and this yeast translates into investment. According to Leta, the round of around R$300 million will provide cash to Fazenda Futuro until 2024. Foodtech is not studying an initial public offering of shares, as did competitor Beyond Meat. “We don’t have the IPO on the horizon for now. The focus is on executing our growth plan”, says Leta.
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