Meat-substitute manufacturer The Better Meat Co. CEO Paul Shapiro says the West Sacramento-based company is now trying to raise a “few tens of millions of dollars” in debt and/or equity for expansion, but the current investment climate is tough.
The company has nearly doubled its production of protein over last year, but it still faces a problem — it sells out as fast as it makes it.
“When do we need to expand? Yesterday,” Shapiro said. “But it is a difficult investment market, especially for alternative meat products.”
He added that the publicly traded alternative meat companies have not done well in the stock market or the retail market in recent years. Some alternative meat products that had previously sold as premium items are appearing in bargain bins.
The El Segundo-based Beyond Meat Co. (Nasdaq: BYND), which makes plant-based meat substitutes, has seen its annual revenue decline for three years in a row, and it hasn’t made a profit in any of those years.
Plant-based food company Impossible Foods Inc., which is based in Redwood City, had been considering an initial public offering, but at the end of 2022 it cut about 100 employees. In April, the company’s CEO told Reuters Impossible Foods was considering an IPO or sale in the next three years.
Better Meat is a 2018 startup that's developed methods to turn vegetable and fungi products into nutritious meat substitutes or meat enhancement products. Better Meat doesn’t sell products under its own brand. Rather it is a business-to-business supplier to branded product makers, including Hormel Foods Corp. (NYSE: HRL) and Perdue Farms. The Better Meat Co.’s vegetable blend is the "Plus" in Perdue's Chicken Plus formulations for tots, tenders and dinosaur-shaped dino nuggets.
Better Meat uses products like pea protein and mycelium, the root-like structure of fungus, to create meat substitutes and meat extenders.
Better Meat now makes its fungi products in a 9,000-liter fermentation vessel. Through ongoing research and development work, the company can now produce 68% more of its patented Rhiza mycoprotein than it did last year in the same vessel.
Shapiro said the company could easily increase capacity by 200% and still find a market for Rhiza, which is a shelf-stable powder product. The company can easily ship its product anywhere. He said the company would like to do its expansion in the Sacramento area, but if someplace else works out better economically, that might be where the expansion goes. Better Meat’s feedstocks, which are vegetable proteins, are mostly produced in the Midwest.
Neutral-tasting Rhiza is allergen-free and can have the texture of animal meat. It also has more protein than eggs, more fiber than oats, more potassium than bananas and more iron than beef, according to the company.
Better Meat now has 22 full-time employees, all of whom work at the company’s production location and offices in West Sacramento. Shapiro declined to disclose Better Meat's revenue.
Since its launch, Better Meat has raised $9.6 million in funding including debt and equity. The employees are also equity owners in the company, Shapiro said.
