Seafood analog makers increase distribution, raise more money
Companies making seafood alternatives continue to attract investment from venture capital firms convinced the future of food begins in the science lab.
Until recently, start-up companies looking to enter the market for meat substitutes have mainly focused on imitating beef, pork, and chicken. However, a perceived gap in the market for vegetarian alternatives to seafood has led to a boom in startups looking to gain market share.
Gathered Foods, which sells seafood analogs under the Good Catch brand, announced in July it has raised USD 10 million (EUR 8.9 million) through a convertible note offered only to existing investors who hold “pro-rata rights.” A convertible note is a bond that can be converted to a specified number of shares of stock. Pro-rata rights allow existing owners priority to participate in any future offerings, so as to maintain their percentage ownership in the company. The offering was co-led by New Crop Capital and Stray Dog Capital. This is on top of a USD 8.7 million (EUR 7.8 million) Series A offering in August 2018. Series A is an early stage of fundraising, usually offered to venture capital firms
The convertible note is part of a larger round that will likely close within the next month and include a strategic, “game changing,” new investor, Good Catch CEO Chris Kerr told investors in July.
Good Catch, based in Newtown, Pennsylvania, U.S.A., offers imitation seafood products made from beans: about 40 percent pea, with the rest soy, chickpea, lentil, fava, and navy. The special ingredient that differentiates the products from a run-of-the-mill soy burger is sea algae oil, which contains omega-3 fatty acids.
Good Catch markets its products under the slogan, “Seafood without sacrifice,” and claims its consumers “can make delicious meals that are good for you and good for the planet.”
“At Good Catch, we’re culinary rebels with a cause,” according to its website. “We strive to help preserve the ocean’s natural resources while providing plant-based protein options that have the rich flavors and flaky textures of fine seafood.”
The company’s imitation tuna packets come in three flavors: Mediterranean, Oil & Herbs, and Naked in Water. The company has also developed other bean-based products as analogs for crab cakes, fish sliders, and burgers.
Good Catch will use the newly-raised capital to scale up production and for working capital. To increase production, the company is building a USD 20 million (EUR 17.8 million) plant in Ohio for production using high-moisture extrusion technology.
High-moisture extrusion of soy or pea isolates produces fibrous strands of protein that resemble the texture of meat products. An example of the type of equipment used in high-moisture extrusion cooking (HMEC) to produce high-moisture meat analogues (HMMA) is that made by Coperion, of Stuttgart, Germany.
While investing in a factory may be a risky step to take, Good Catch wants to get ahead of competitors in the fast-moving field, Kerr said in a press release. Kerr said the company’s exclusivity agreement with retailer Whole Foods Market recently ended, and Kerr said there are another roughly 2,500 retailers ready to come online. Any excess capacity at the Ohio facility could be used for contract production for other companies, some of which also have investments from the same venture funds backing Good Catch, Kerr said.
“What’s happening with Good Catch is that it keeps growing out of these stages,” Kerr said. “Every company in this space has been constrained by production and I just thought ‘we can’t wait another five, seven, nine years.’”
The brand is ramping up plans for global expansion, with hopes to begin sales in the United Kingdom by early next year. Australia and Brazil are also promising markets, Kerr said. Kerr said he’s not worried about competition in the sector, either from other seafood analog makers or from the traditional meat industry.
“This idea that somehow new entrants are going to suppliant a trillion dollars of the agribusiness just doesn’t exist. We can go from zero to 100 million in revenues and we’re still less than a rounding error,” Kerr said. “We have so much work to do that the idea that there isn’t space for a lot of players would be short sighted.”
Meanwhile, New York City, New York, U.S.A.-based Ocean Hugger Foods, completed its third early-stage venture capital funding round in January 2019, bringing in USD 2.88 million (EUR 2.57 million). The company also received an additional investment in March 2019 from Kale United AB, a Swedish firm focused on investing in plant-based businesses.
“We are thrilled to have Kale United as a mission-aligned investor,” Oean Hugger Foods CEO CEO David Benzaquen said in a press release. “We are deepening relationships with plant-based leaders around the world, and the KU knowledge of the Scandinavian market will be valuable to us as we look to eventually expand there in the future.”
In the release, Kale United founder Måns Ullerstam said Ocean Hugger’s main product, “Ahimi,” which is made from tomato, soy sauce, water, sugar and sesame oil, and which is meant to resemble ahi tuna, is poised for success in European markets.
“It is a fascinating time for food technology,” Ullerstam said. “Sustainable plant-based alternatives to fish proteins are set to be a central part of the growth of the dynamic vegan food sector in 2019, representing the next generation of game-changing plant-based companies addressing one of our planets most pressing sustainability and ethics challenges.
Ahimi is promoted as a vegetarian alternative to tuna for sushi and poke dishes. The product was formerly called “tomato sushi.” Other imitation seafood products being developed by the company are “Unami,” eggplant intended to resemble eel, and “Sakimi” – carrot intended to resemble salmon.
Like Good Catch, Ocean Hugger got its break with a distribution deal with Whole Foods markets. Sales of Ahimi were later expanded to include Veestro, a home-delivery meal-plan service; Blue Sushi Sake Grill; Dot Foods; and Yuzu Sushi in Canada. Ahimi has been featured in the poke bowl at 16 New Seasons Market locations since June; and the company debuted both Ahimi and Unami in London at the Japan Food Show organized by Japanese foods importer Harro Foods at the 2019 Hyper Japan Festival from 12 to 14 July, 2019.
On 4 May, 2018, Ocean Hugger announced that two products utilizing the product, Ahimi California Roll for USD 8.99 (EUR 8.02) and an Ahimi Sushi Combo for USD 11.99 (EUR 10.70), would be available at locations in at least 10 U.S. states.
Photo courtesy of Ocean Hugger Foods