Issue No. 254: Faking It

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Consumers still aren’t sold on imitation meat.

The Replacements

Promising to be healthier for people and the planet, plant-based meat scaled up in recent years — attracting $5B+ in funding from 2019–2021.

Touting celebrity backers and fast-food partnerships, Beyond Meat and Impossible Foods raced to replace beef burgers. In 2019, Beyond Meat went public valued at $1.46B.

But, in 2022, the category cooled and venture funding fell to $585M, its lowest since 2018.

  • In the past year, Impossible and Beyond laid off staff as sales slowed.
  • Plant-based brands like Tattooed Chef, Nowadays, and Hooray Foods shuttered.
  • Despite food service sales growing 7.8% YoY in ’21, retail sales declined 33%.

Complicating matters, consumer sentiment soured as skepticism over health claims and marketing hype intensified. Opting to remain omnivorous, only 4% of Americans are vegetarian and 1% vegan as of this summer.

Selling Cells

Lab-grown meat hopes to leapfrog plant-based options.

Cultivated meat—grown from cultured animal cells—received FDA approval in June, and companies are scaling up.

  • In 2022, Wildtype raised $100M from celebrity investors for cell-based seafood.
  • This summer, cultivated pork startups Uncommon (fka Higher Steaks) and Meatable raised $30M and $35M, respectively.
  • In June, Omeat emerged from stealth with $40M, incorporating live cattle in lieu of expensive and controversial fetal bovine serum.

At the forefront, brands like Believer Meats, Upside Foods, and Eat Just’s GOOD Meat raised a combined $1.2B+ and are slowly rolling out in the US.

TBD. Still, lack of transparency is fueling concerns over public perception and commercial viability. Plus, analysts say cell-based will require trillions of dollars to supplant animal meat. And, scientists still aren’t sure it’s better for the environment.

Shroom boom. Elsewhere, fermented protein investments surged 65% in Q2 2023 with Meati, Prime Roots, and MyForest Foods scoring fresh funds. Fungi-based meat, made from mushrooms, is billed as an affordable alternative, but brands are still searching for product-market fit — with Meati recently laying off 10% of staff.

Regenerative Remodel

Fending off imposters, Big Meat is still a massive $1.4T global industry.

And, while debates over health implications (like meat’s link to cancer), environmental impact, and ethical considerations rage on — the real problem may not be meat but industrial farming.

Another approach, from White Oak Pastures to Force of Nature to ButcherBox, regeneratively raised options are becoming more accessible. Similarly, Big Food giants General Mills, Nestlé, and PepsiCo are pledging support for sustainable farming.

Adding momentum, the federal government allocated $19.5B to climate-friendly farming — but it’s proving difficult to quantify the benefits. So, despite embracing regenerative agriculture, 64% of corporate efforts lack definitive goals.

Short of an outcomes-based approach, price parity remains a problem and, facing inflation, most consumers will stick to cost-efficient conventional meat.

Punchline: Aided by plants, science, eco-friendly farms, or all the above, sustainable protein production is key to solving many of the problems we face. But it’s becoming increasingly clear change won’t come cheap or without a fight.

🎙 On the Podcast

Jesse Itzler, NYT bestselling author, co-owner of the Atlanta Hawks, and serial entrepreneur, discusses fitness and community as catalysts for growth.

Jesse’s success crosses industries, with past exits including ZICO Coconut Water, Alphabet City Sports Records, and Marquis Jet. Now, he’s leveraging his love of endurance sports to scale two new ventures, lifestyle brand All Day Running Co. and event company 29029.

We also cover: reflections on founding five companies, sharing experiences with others, and the motivation behind his new businesses.

Listen to today’s episode here.

👀 Fitness brands enter mixed reality

Billed as the next big thing, VR fitness has yet to take off. But, the rise of mixed reality (MR) has reignited the hype cycle.

Gearing up. In June, Apple debuted its $3.5K Vision Pro goggles. And last month, Meta announced its new, cheaper Quest 3 headset, priced at $499.

Enabling “passthrough” transition between real-life and virtual worlds, the latest devices unlock MR-powered workouts — and fitness brands are gearing up.

  • Xponential Fitness is teaming with Meta and Litesport to bring Club Pilates, PureBarre, and StretchLab studios and “live” trainers to Quest 3, beginning Nov. 2.
  • FitXR is partnering with dance fitness provider Zumba to launch MR and VR classes this November.
  • Les Mills recreated its BODYCOMBAT cardio-boxing class for MR, incorporating bigger, safer ranges of motion.

After pivoting from boxing to VR, Litesport CEO Jeff Morin believes MR’s ability to deliver “conversational fitness” will be a game-changer:

“Beyond streaming, by blending real trainers with smart AI, your workout will adjust in real-time based on what your body’s doing, becoming super personal and motivating.” 
For others, like XPOF, advancements in hands-free tech, form tracking, and social features will enable concepts like cycling or rowing.

Default mode. Enhancing owned ecosystems, Meta’s fitness app Supernatural is gaining “Full Body Synthesis,” using AI to improve movement tracking. And Apple will likely soon make Fitness+ compatible with Vision Pro.

Punchline: Greater accessibility and functionality will be key to the adoption of VR fitness. For Apple, that means dropping price; for Meta, it’s making MR exercise effective; and for fitness brands, it’s about getting in the game.

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🤝 barre3 acquires The Barre Code

Omnichannel fitness brand barre3 acquired Midwest studio operator The Barre Code, reaching 185 locations.

Inside the deal. The Barre Code sites will be rebranded to barre3, receiving studio upgrades, instructor training, new programming, and more.

Bringing together two female-owned and operated companies aligned in “mission and mindset,” barre3 co-founder and CEO Sadie Lincoln believes the brands are “stronger together.”

All the right moves. Riding demand for low-impact workouts, barre is well-positioned for growth among holistic exercisers.

  • Bridging mental and physical health, mindful movement is a $29B market.
  • In 2022, barre was the fifth-most-booked class type, according to Mindbody.
  • From stretching to Pilates to strength+, more than a third of exercisers prefer low-intensity/impact training exclusively.

And with 57% of exercisers letting their body choose which modality feels right, barre’s ability to blend in aspects like cardio and strength training gives it broad appeal.

Expanding through consolidation, barre3 will now go head-to-head with some of the industry’s biggest names. Leading the category, Xponential Fitness acquired Pure Barre in 2018, accelerating international growth to 650+ locations. Meanwhile, Self Esteem Brands scooped up The Bar Method’s 100+ studios in 2019 and will soon begin selling franchises overseas.

Looking ahead: Adding new studios and leveraging its digital platform, barre3 looks to grow its community and business. But, as evidenced by other acquisitions in the space—including this rollup—time will tell if barre concepts can stand on their own.

📰 News & Notes

  • Vuori explores 2024 public offering.
  • Researchers decode the gut-muscle axis.
  • Fitt Jobs: Find your next career in health & fitness.
  • Best Buy adds Dexcom’s prescription CGMs to its offerings.
  • Oura, Google’s Pixel Watch 2 add stress management features.
  • January AI lends Nestlé its digital twin technology for product R&D.
  • WellTheory enters B2B with enterprise solution for autoimmune care.
  • Instacart and Alignment Health partner for food-as-medicine programs.
  • Startup Q&A: Wild Health CEO Dr. Matthew Dawson on precision healthcare.
  • United offers in-flight wellness from Therabody, who debuted new massage tech.

💰 Money Moves

  • Boutique franchise barre3 acquired The Barre Code, operator of 40 US barre studios.
  • Digital personal training platform CoPilot raised $6.5M in a Series A-1 round led by Jackson Square Ventures.
  • VMG Partners is funding expansion of Undefeated Tribe, a Southwest-based Crunch franchisee.
  • Main Street Health, a healthcare company serving rural communities, added $315M to expand into 26 states.
  • Mental health startup Headway closed a $125M Series C at a $1B valuation.
  • Women’s healthcare network Diana Health secured $34M in a Series B round led by Norwest Venture Partners.
  • Premium golf brand Swag Golf scored $10M from investors including Verance Capital, the San Francisco 49ers, snowboarder Shaun White, and NBA’er Zach LaVine.
  • Connections Health Solutions, an urgent care-focused behavioral health company, closed a $28M funding round led by Town Hall Ventures.
  • Italian sportswear maker and Castelli parent MVC GROUP acquired 70% of triathlon gear brand Zoot.
  • Los Angeles Golf Club, the first team in Tiger Woods’ new tech-infused league, added undisclosed investments from golfer Michelle Wie West and soccer star Alex Morgan.
  • ISSA, a personal training education and credentialing company, acquired functional medicine school Empowered Education.
  • Value-based specialty care provider Commons Clinic secured $19.5M in Series A funding.

Today’s newsletter was brought to you by Anthony Vennare, Joe Vennare, Ryan Deer, and Jasmina Breen. 

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