Chicago-based food tech company Nature’s Fynd plans to open a facility in the Back of the Yards that will help it scale up production as it launches its meatless breakfast patties and dairy-free cream cheese in stores, including Chicago-area Mariano’s.
It’s one of two Chicago companies using fermentation to turn microbes from the fungi family into animal-free protein sources, as consumer interest in alternative proteins surges.
U.S. sales of meat substitutes leaped 47% to nearly $1.5 billion in 2020 as consumers stocked up and did more cooking at home during the pandemic, according to market research firm Mintel. Industry experts expect that skyrocketing growth to slow but still say sales could rise 15% a year or more.
“There’s a proliferation of products hitting the market, and there’s sustained interest,” said Darren Seifer, food and beverage industry analyst at the NPD Group.
Among those new products are Nature’s Fynd’s meatless breakfast patties and dairy-free cream cheese, which debuted on shelves at Berkeley Bowl stores in California a few weeks ago.
Within the next two weeks, they’ll be available at 44 Chicago-area Mariano’s stores. Nature’s Fynd aims to distribute them nationwide by the middle of next year.
Launching with two very different products was meant to showcase the versatility of the company’s protein, which it calls Fy, said co-founder and CEO Thomas Jonas.
“When a consumer understands what Fy is and that it’s a protein that’s better for you and the planet, the question is how can I bring that into my diet on as many occasions as possible,” Jonas said.
Nature’s Fynd’s new 200,000-square-foot facility is expected to open in the second quarter of next year and will let the company produce three to five times as much protein as its current site near the Union Stockyards. There will also be space for research and development.
Unlike plant-based meat alternatives from companies like Impossible Foods and Beyond Meat, Nature’s Fynd’s products use a protein made from a microbe sourced from the volcanic hot springs in Yellowstone National Park. It undergoes fermentation in stacks of trays, feeding on sugars to create protein while using a fraction of the land, water and energy required to raise animals, Jonas said.
The company raised $350 million in funding earlier this year, led by new investor SoftBank, bringing its total financing to more than $500 million. It has 152 employees at its Chicago headquarters and Bozeman, Montana, research and development center, and expects to add 200 jobs in Chicago by the end of 2023.
While fermentation-based alternative proteins may be less prevalent than plant-based options, interest from investors is growing. Companies using fermentation to make protein attracted $587 million last year — a fraction of the more than $2.1 billion plant-based meat makers attracted, but more than double the sum invested in fermentation-based companies in 2019, according to a report from the Good Food Institute, a nonprofit that advocates for meat alternatives.
Nature’s Fynd isn’t the only Chicago company using fermentation to make alternative proteins. Aqua Cultured Foods is using a similar strategy, though relying on a different microbe, to give customers meat-free options in a category where they’re especially tough to find: seafood.
Aqua Cultured Foods, based in River North, raised $2.1 million last week to accelerate research and development work on whole-muscle cut alternative seafood, including tuna and whitefish fillets it describes as “sushi-quality.”
CEO Anne Palermo declined to say what strain of fungi the company is using but said its fishless fillets will have a comparable amount of protein to a serving of cod. The protein takes the shape of whatever vessel it is grown in, allowing it to replicate a wide range of seafood products with help from plant-based flavorings, Palermo said.
Shrimp, calamari and sushi cuts are the first products Aqua Cultured Foods plans to bring to market.
While plant-based burgers are now widely available, even showing up on fast-food menus, alternative seafood products have been slower to take off.
The number of companies making alternative seafood products has grown from 29 worldwide in 2019 to more than 87, and U.S. sales grew from $10 million in 2019 to $12 million in 2020, but remain a tiny fraction of the $15 billion U.S. seafood market, according to the Good Food Institute.
Consumers buy more beef than fish, so it’s no surprise companies making animal-free proteins started with burgers, Seifer said.
Many people also see fish as a relatively healthy option, which may undermine interest from consumers eating meatless meats because they believe it’s a healthier choice, said Mintel health and nutrition analyst Karen Formanski.
About 56% of U.S. consumers ate plant-based proteins to be healthier, according to a 2020 Mintel report. Only 16% said they chose plant-based protein to reduce their impact on the environment, while 13% were concerned about animal welfare. Young consumers were more likely to be motivated by environmental impact.
Still, there’s interest. Among U.S. adults who eat some plant-based protein, including beans and grains, 60% were interested in eating alternative fish and 53% expressed interest in alternative shellfish, according to a Mintel report from earlier this year.
The lack of widely available alternative seafood options isn’t just a question of demand. It’s also likely easier to convincingly replicate ground beef than whole cuts of meat, like a steak or piece of salmon, Formanski said.
Aqua Cultured Foods is still “optimizing and refining the product,” but Palermo aims to begin testing with chefs next year before scaling up production for retail sales.
“We want to save our oceans and feed the world sustainably, and the best way to do that is to get our product out to people,” she said.