Deal focus: V2Food tackles alternative protein’s price problem

Like most alternative protein makers, Australia’s V2Food is targeting meat eaters, not vegetarians. That’s a tough sell that’s been made easier with meatier-tasting ingredients and increasing ubiquity in shops and restaurants. But price competitiveness is a nagging issue.

“Meat is the most expensive grocery item in your shopping trolley, and people already find it too expensive. So how can we change people’s behavior if we’re more expensive than meat?” says Nick Hazell, CEO and founder of V2.

“When we designed our business model, supply chain, and technology, the key was how can we be available at a price which normal people can afford, because you won’t move meat eaters into this category unless it delivers on taste but is also affordable. That’s a crucial differentiator between us and others in the market.”

V2 has recently launched its alternative beef offering in 600 Woolworths supermarkets Australia-wide, insisting that its products be priced the same as meat. This policy is also followed with the Rebel Whopper, a vegetarian hamburger using V2 foodstuff sold at local Burger King affiliate Hungry Jacks. V2 observes that its competitors typically charge 2-3 times the price of meat.

This positioning and marketing traction – achieved since only January last year – attracted Sequoia Capital China and Temasek Holdings into a A$77 million ($55 million Series B round that brings total funding to date to A$113 million. The speed of this progress is largely thanks to a partnership with Australian science agency CSIRO, which helped V2 company develop its core technology.

Much of the strategy going forward focuses on international expansion and, by extension, Australian agricultural branding. Hazel notes that in order to make manufactured foods attractive and aspirational, there needs to be a story around provenance, quality, and safety. An export business leveraging this theme has already been established in Japan, Korea, Thailand, and Singapore.

The region’s biggest prize is another story, however. As a result of the cultural friction that has come with deteriorating relations between Beijing and Canberra, V2 will be dialing back its Aussie branding in China. The plan is to set up a local structure and become a pillar of government plans to reduce domestic meat consumption 50% by 2030 for environmental and public health reasons.

To this end, V2 prioritized Chinese networking in the Series B, which also included China Renaissance, ABC World Asia, Horizons Ventures, and Shanghai-based food and agriculture technology provider Esenagro. Meanwhile, there are plans to launch new products more in tune with Chinese diets; V2 has spent the past seven months tweaking existing CSIRO research to develop meat-free pork.

“If we can position ourselves as a part of the solution to the problem that has been identified in that country, then perhaps that’s a good way forward,” says Hazell. “But to be honest, it’s a risk. We have to be careful from a business perspective and make sure that we don’t have all our eggs in one basket.”

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• Topics
• Australasia
• Consumer
• Early-stage
• Cleantech
• Australia
• Sequoia Capital
• Temasek Holdings
• Horizons Ventures
• China Renaissance
• China
• Food