Insider No. 69: The Quest for Cow-Free Milk

First, Beyond Meat and Impossible Foods redefined meat. Now, ice cream is getting a plant-based makeover. The result? The dessert aisle could be the fast track to an animal-free food system.

Dairy’s Downfall

  • Traditional milk sales plummeted by $1.1B in 2018.
  • Consumption of dairy milk has declined 40% since 1975.
  • Nearly 65% of the world’s population is lactose intolerant.

The big picture: Whether its dietary restrictions, health concerns, animal welfare, or environmental factors, industrialized dairy farming has fallen out of favor.

While plant-based milk alternatives made from soy, nuts, hemp, coconut, oats—you name it—hoped to curb our reliance on cows, none of these options actually taste like cow’s milk. Similarly, there’s never been a plant-based, vegan ice cream that tastes like the real thing.

That is, until now.


According to market research firm Mintel, non-dairy milk sales grew 61% between 2012 and 2017. All in, the dairy alternatives market was valued at $13B in 2018. By 2026, that number is expected to reach $35B.

The alt-milk arms race reached a tipping point in 2014. That’s when WhiteWave Foods acquired So Delicious, makers of plant-based beverages and creamers. Then, Danone purchased WhiteWave Foods for $10B in 2016 — and the French food giant has doubled down on non-dairy products in recent years.

Since then, established brands and upstarts have followed suit. A relative newcomer, Califia Farms has raised $340M to reimagine plant-based beverages. Greek yogurt maker Chobani is going plant-based. Even Dean Foods, the largest dairy company in the US, saw the writing on the wall — acquiring flaxseed milk maker Good Karma in 2018.

These days, almond milk is the category leader. Soy, rice, and coconut milks are also popular, but this trio saw sales decline during the 52 weeks ending October 1, 2019. Meanwhile, newcomers like oat, flax, and quinoa milk are gaining ground. From April 2018 to April of 2019, sales of oat milk jumped 222%.

Innovative Ice Cream

Like alt-milk, non-dairy ice cream is everywhere. As consumers seek out healthier options and non-vegans test the plant-based waters, we’ve entered the golden age of dairy-free ice cream.

A sign of the times, artisanal ice cream maker Van Leeuwen recently raised a $18.7M private equity investment. Along with conventional ice cream, the company’s vegan varieties have earned a cult-like following.

Initially, Van Leeuwen ‘s non-dairy options relied on ingredients like coconut milk, cashew milk, and cocoa butter to mimic the taste and texture of real ice cream. But that method proved to be expensive and labor-intensive. The company’s latest innovation, an oat-based vegan option, reduced costs and cut production times while remaining allergen-free.

By the numbers:

  • Sales of plant-based ice cream grew 34% from 2017 to 2019.
  • The global plant-based ice cream market is expected to reach $3.4B by 2026.

Of course, Van Leeuwen isn’t alone in their plant-based pursuits. In Seattle, Frankie & Jo’s uses superfoods and adaptogens, as well as beets, kale, and turmeric to reimagine ice cream. Nearby in Portland, chickpea ice cream is gaining fame thanks to Little Chickpea. And San Francisco’s specialty scoop shop Humphry Slocombe is pushing into plant-based.

The list goes on… from NadaMoo!’s coconut base and Cado’s avocado ice cream to brands like Halo Top, Oatly, Ben & Jerry’s, Häagen-Daz, and Breyers, everyone wants in on this dairy-free cash cow.

Holy Cow

In theory, non-dairy milk and ice cream address many of the issues related to our reliance on cows.

But alt-milk isn’t really milk, it’s a plant-based beverage. And non-dairy ice cream is a subpar imposter. Ultimately, they both pale in comparison to products made from real cows’ milk. On the flipside, thanks to advancements in synthetic biology, it’s now possible to create cows’ milk without the cow.

Enter: Perfect Day — a cellular agriculture startup that has raised $200M to produce animal-free dairy proteins.

Dairy tastes like dairy thanks to two key proteins: casein and whey protein. By designing yeast to produce these proteins—and combining it with plant-based fats and sugars—Perfect Day can make dairy milk. No cows necessary.

After releasing their first animal-free “dairy” ice cream last year—and selling out of 1,000 pints priced at $60 for a three-pack—the company is gearing up for a larger rollout. The plan, however, isn’t a direct-to-consumer play. Instead, Perfect Day hopes to become the animal-free protein provider to companies everywhere.

Zooming out: New data shows US retail sales of plant-based foods grew 11.4% in the past year, bringing the total plant-based market value to $5B. And dairy-free dairy is driving the movement, with cheese sales climbing 18%, creamers up 34%, and yogurt up 39%. Meanwhile, plant-based meat sales were up 18% last year, a category worth more than $939M.

Takeaway: In making the switch to Beyond Meat or Califia Farms, consumers are expected to sacrifice taste, texture, or a sense of comfort that comes with the conventional choice. In the future, though, cellular agriculture companies like Perfect Day will help create non-animal products that are indistinguishable from the real thing — reinventing the entire food system in the process.

And if that’s the case, ice cream might be the on-ramp to animal-free eating.

🚲 SoulCycle vs. Peloton

After teasing its at-home bike and digital platform last summer, SoulCycle made things official.

Need to know:

  • SoulCycle’s at-home bike is available for pre-order on March 13 for $2,500. The price includes five in-studio SoulCycle classes.
  • The at-home bike is launching alongside Variis, Equinox Media’s digital platform offering on-demand content from Equinox, SoulCycle, Pure Yoga, Precision Run, Myodetox, and HeadStrong.
  • Beginning March 13, 2020, early access to the Variis app will be granted to Equinox members as part of a phased market rollout, included with their membership.

Why it matters: To date, countless connected fitness companies have piggybacked on Peloton. But going forward, with Flywheel out of the picture, Equinox could leapfrog the entire category.

Convenience and access—the option to work out at home, at the gym/studio, or on the go—are redefining the fitness industry. As this trend continues, the Equinox of ‘X’ represents an omnichannel approach to exercise — providing access to an ecosystem that includes cycling studios, health clubs, hotels, and streaming.

TBD: At-home equipment and subscription content set companies like Peloton apart. Now, it might result in them being left behind.

⚡️ Recovery Tech

Hyperice, a leader in recovery and performance technology, acquired NormaTec, makers of a compression recovery system.

Terms of the deal were not disclosed, but Hyperice CEO Jim Huether told CNBC the acquisition will help the company “more than double” revenue within 18 months. Hyperice said its gross revenue exceeded $100M in 2019.

Behind the scenes: Hyperice founder Anthony Katz, said the companies share a common mission—to enhance performance, reduce risk of injury, and extend career longevity—and had previously collaborated, helping accelerate the acquisition.

Be on the lookout for wellness pods, a physical experience offering a full suite of Hyperice and NormaTec devices, that could pop up in corporate wellness, physical therapy, or fitness facilities. The company intends to implement “thousands of wellness pods throughout the world by the end of 2020.”

Go Deeper: Hyperice CEO Jim Huether previously appeared on the Fitt Insider podcast, where he spoke about the company’s focus on technology and innovation, how Hyperice saw the opportunity in recovery way back in 2010, and how he expects the recovery industry to evolve beyond sports, saying “the addressable market is every human being.”

📰 News & Notes

💰 Money Moves

  • Mind Medicine, a psychedelics-based medicine startup, closed a $24.2M funding round, planning to go public next week.
  • TFLiving, a platform providing fitness and amenities services to residential and commercial communities, closed a $4.8M seed funding round.
  • Cell-based seafood company BlueNalu secured $20M in Series A funding.
  • Sparta Science, a data and machine learning company using software to optimize health and performance, closed a $16M Series B round.
  • Sparkling water maker Spindrift secured $29.8M in new funding.
  • Greek yogurt brand Ellenos received an $18M investment from Equilibra Partners Management, the family office of KIND founder and executive chairman Daniel Lubetzky.
  • Powerful Foods, maker of high-protein foods and beverages, secured $5M in funding from MMG Equity Partners.
  • Nourish3d, a startup 3D printing gummy vitamins, raised £2M in seed funding.
  • Healthy snack maker That’s It Nutrition received a follow-on investment from T-street Capital.
  • allplants, a plant-based meal delivery company based in London, raised a €3.9M funding round.
  • Snoop Dogg invested in vegan snack brand Outstanding Foods.
  • Prospect Hill Growth Partners invested in Fitness Ventures, one of the fastest-growing franchisees in the Crunch Fitness system.
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