Portland-born Neutral Foods, the climate-friendly milk startup, has acquired Zeal Creamery, a pasture-fed dairy products brand.
Neutral CEO Marcus Lovell Smith called it a "merger of equals" involving two companies with similar (though undisclosed) valuations. The deal makes him CEO and former Zeal director Mark Weldon chairman of the board. Each brand will retain its individual identity.
"These two companies really have the same north star, which is better dairy for the animals, better dairy for human health and better dairy for the environment," Smith said in an interview.
Nike vet founded Neutral
Neutral Foods was founded in Portland in 2019 by Matt Plitch, a former Nike product innovation director. It's been backed by Bill Gates' Breathrough Energy Ventures and a Mark Cuban investment fund.
The company sells carbon neutral organic milk, a status attained through a combination of emissions-reduction programs in its supply chain and purchased offsets. Its first products, sold at New Seasons Markets in Portland, relied exclusively on offsets. But Smith said "insets," as he called the internal reductions, now make up half the avoided emissions impact.
Smith declined to reveal revenue figures but highlighted rapid growth in Neutral's food service sales, up 500% in the past year and in 1,200 locations. He noted Neutral's placement in some 90 Shake Shack locations. Zeal is in 1,800 grocery locations and sales are up 300% in the past year, Neutral said.
Zeal grew out of New Zealand dairy interests looking to bring practices more common on the island nation to the United States.
Scaling up
Neutral is still small by dairy industry standards, but joining with Zeal brings beneficial added heft, Smith said.
"Dairy is a business of huge scale, and even by putting these two companies together, you have better conversations with retailers, distributors and co-manufacturers because you're beginning to a get a bit of size," he said.
Neutral uses co-manufacturers, so it's remained lean, with about 15 employees and no facilities of its own. Smith is in New Hampshire, where he has a dairy farm. Workers are widely dispersed but the largest concentration remains in the Portland area, Smith said, and many of the farms it works with are in the Pacific Northwest.
