The Next Wave in Plant-Based Alternatives

December 8, 2020

By: Andrew Schoen with support from Cynthia Schoen (Schoen Editing Services), Jess Ou (NEA), and Jordan Shapiro (NEA).

The rise of plant-based protein signifies one of the most important consumer trends in decades. Plant-based protein products are not new; the first commercially available vegan meats were developed in 1933. However, the current wave of plant-based products targets a new audience: flexitarians (flexible vegetarians). Unlike vegetarians or vegans, flexitarians prefer to reduce their consumption of meat rather than eliminate it.

Increasing public awareness of the health and environmental impacts of consuming animal protein underlies the meteoric growth of the flexitarian movement in the U.S. As a result, plant-based proteins have reached the mainstream.

According to ADM’s Protein Perception & Awareness Study, 44% of U.S. consumers now identify as flexitarian (vs. ~5% identifying as vegetarian). The Good Food Institute reports that retail U.S. sales of plant-based protein grew at an annualized rate of 38% from 2017–2019. For comparison, the food industry averaged just 4% annualized growth over the same period. Plant-based protein is winning market share at a rapid clip.

Amplified by this trend, several companies solely focused on plant-based food recently attained multi-billion-dollar enterprise valuations. Beyond Meat, whose products include plant-based burger patties and sausages, went public in May 2019 and is currently valued at >$8 billion. Impossible Foods, which competes in the same categories, recently achieved a private market valuation of $5 billion.

While plant-based alternatives have stormed the red meat market, the seafood category hasn’t yet experienced the same innovation. Modern consumers are increasingly aware of the significant health and environmental downsides of mass-market seafood (the kind you typically find in the grocery store). In our due diligence for this opportunity, we took a deep dive into the seafood industry.

In particular, the seafood supply chain for shrimp is severely broken on almost every dimension, more so than any other supply chain we’ve investigated. It abounds with severe health, social, and environmental problems. While the issues we encountered could be the subjects of multiple dedicated posts, we will do our best to summarize them here:

  • High Carbon Footprint: Even more than the high carbon footprint associated with importing shrimp (which is substantial), shrimp cultivation contributes to the accumulation of atmospheric CO2 via the destruction of key carbon sinks. Shrimp farming is the single largest cause of mangrove forest destruction globally. Mangroves are vital for wildlife and coastal fisheries, provide critical habitat for multitudes of ecologically important species, filter pollutants and trap sediment runoff, and protect coastlines by serving as storm buffers. Pound for pound, mangroves can sequester four times more carbon than rainforests. Mangroves account for approximately 15% of all oceanic carbon sequestration and draw down more greenhouse gasses per hectare than any other type of forest. Approximately 40% of mangrove forests globally have been lost since 1980. Shrimp farming is the greatest single culprit of this devastation.

Shrimp is the #1 most consumed seafood in the U.S. at 1.5 billion pounds annually. A vast majority of shrimp consumed in the U.S. originates from farms in other countries — 92%, according to the National Oceanic and Atmospheric Administration (NOAA). Most shrimp aquaculture occurs in China, followed by Thailand, Indonesia, India, Vietnam, Brazil, Ecuador, and Bangladesh. While importing farmed shrimp led to more accessible pricing for U.S. consumers, the impact to the health of the consumer, deleterious environmental impacts, and the poor working conditions for those in the trade outweigh the benefits of cheaper shrimp pricing by many orders of magnitude.

Our research pointed us to a firm conclusion: modern consumers deserve a responsible, humane, healthy, sustainable, and tasty shrimp alternative. Enter New Wave Foods.

New Wave Foods’ thesis is that shrimp is the best initial alternative seafood product to launch. New Wave Foods aims to provide consumers with an uncompromising alternative: a delicious product that is healthy for consumers, good for the environment, and is a 1:1 swap for shrimp in any recipe! Their plant-based seafood platform — starting with shrimp and shellfish — embodies the key tenets of plant-based products: :

  • Sustainable: Responsibly sourced with complete traceability

We were first introduced to New Wave Foods via the Cornell Venture Capital Club (an organization I founded while an undergrad), as part of a 70-page report I commissioned on key innovations towards addressing the climate crisis. When we first met the team at New Wave Foods, we were extremely impressed with their thoughtfully developed intellectual property, drive, and sense of mission, paired with decades of experience in the food industry. Mary McGovern, New Wave Foods’ CEO, has 25 years of leadership experience in the food industry. She built large brands such as Kraft Foods’ Maxwell House coffee, Ocean Spray cranberry juice drinks, and Kraft’s Post cereals line. In recent years, Mary chose to devote herself to the plant-based food industry. As Managing Director of PlantBased Solutions, a brand consultancy, Mary established the business plans and branding for a number of successful plant-based companies. Now, as CEO of New Wave Foods, Mary is well-equipped to lead the charge in growing the plant-based seafood industry. Mary’s background and experience perfectly complement her partner and co-founder, Michelle Wolf (recently named to Forbes 30 Under 30 for her efforts at New Wave). Michelle earned her engineering degree at Carnegie Mellon and set to work almost immediately on solving the challenge of creating an environmentally responsible and commercially viable alternative plant-based solution.

We couldn’t be more thrilled to announce NEA’s partnership with the team at New Wave Foods! We’re honored to lead the Company’s recently announced $18M Series A round!

We want to thank Mary McGovern, Michelle Wolf and the whole New Wave Foods team for their hard work towards this important mission. We want to thank the Cornell Venture Capital Club, which initially brought this opportunity to our attention. Finally, we look forward to enjoying New Wave Shrimp™ in restaurants soon!

--

--

Get the Medium app

A button that says 'Download on the App Store', and if clicked it will lead you to the iOS App store
A button that says 'Get it on, Google Play', and if clicked it will lead you to the Google Play store
Andrew Schoen

Venture Capital Investor at NEA (New Enterprise Associates). Co-Founder of Flicstart. Schwarzman Scholar.