Justin Whiteley, left, co-founder and CTO, and Tyler Huggins, co-founder and CEO, both of Emergy Foods, a plant-based protein company based in Boulder, pose for a photo at their new headquarters on Nov. 14, 2019. Emergy’s new location will feature a full production laboratory with kitchen capabilities for manufacturing. Joel Blocker / For BizWest

Plant-based meat company sets up shop in Boulder

BOULDER — If environmentalists, clean food advocates and some investors are to be believed, the plant-based meat market could disrupt the global food supply’s reliance on animal products and buoy the already-strong plant-based milk industry. Two Boulder companies, one well-established and one almost brand-new, think they can grab a slice of the burgeoning industry in the home of perhaps the most famous soy milk brand in America.

Over the summer, the Swiss investment bank UBS projected the plant-based meat market could see compounded annual growth of 28 percent as those products become cheaper to make and more widely available to consumers.

If UBS is right, that market could rise from $5 billion in 2018 to $85 billion by 2030.

Turning fungus into steak

So will steakhouses serve beef steaks and plant-based steaks on the same menu in the near future?

Emergy Inc., led by CEO Tyler Huggins and Justin Whiteley, chief technology officer, believes it can make that idea a reality.

The pair relocated the company to Boulder this summer after moving to Chicago to take a $6 million U.S. Department of Energy grant to research alternative food production methods requiring less resource inputs and less reliance on waste-producing animals.

The company grows its own protein that mimics the grain of animal muscle. Through a fermenting and marinating process, Emergy is producing something that looks like, tastes like and bleeds like a ribeye or a chicken breast, but without any animal products involved.

The two major plant-based meat players, Impossible Foods Inc. and Beyond Meat Inc. (NASDAQ: BYND), currently make only beef and sausage, which traditionally are made by grinding up whole cuts of animal flesh.

Emergy is preparing to launch its first line of products to the market, starting with testing and collaborations with restaurant chefs before entering the foodservice market next year. While the company’s main difficulty right now is finding the financing to scale up, Huggins and Whiteley already have a vision of building a microbrewery-type facility to grow and ferment the product.

But their biggest goal is to build a fermenting system as large as an Anheuser-Busch or Miller Coors brewery.

“At that point, we can produce a significant amount of protein and make an impact on consumer’s lives,” Huggins said. “We can bring our price down to where it’s about the same price as wholesale meat costs.”

The company is planning to launch its Series A funding round next year.

Plant milk made in Colorado

Recreating animal products with only plant ingredients isn’t a cutting-edge concept, as food manufacturers have made milk substitutes with almonds and other nuts for years to cater to the lactose intolerant population.

One of the largest brands, Silk, was started in Boulder in 1978 by Steve Demos. Despite being part of several acquisitions and spin-offs, Silk’s owner WhiteWave Foods Co. is still based in Denver and close to the product’s home.

Good Karma Inc., also based in Boulder, makes flax milk and dairy-free sour cream and yogurts. CEO Doug Radi said the company, which employs 16 and is on pace to reach $30 million in revenue this year, is in the midst of a “perfect storm” for the natural foods industry.

He said millenials and young families are flocking toward plant-based food options for health and environmental benefits and because those brands push transparency in their ingredients, which has led to plant milks taking 13 percent of the overall milk market in the U.S., according to the think tank Good Food Institute.

Currently, UBS estimates alternative proteins account for 1 percent of the overall meat market. Radi said that gives the plant-based meat makers plenty of upside to grow alongside other plant alternative products.

“What you’re going to see is that penetration is going to start to spill over to all the other categories,” he said.

The key to growing that market share, Radi said, is in promoting the plant-based products right next to the animal products, just as how Demos petitioned grocery stores to put his Silk brand almond milk in the dairy aisle in the 90s.

Plant-based alternatives piggyback off Front Range’s natural foods history

If the plant-based foods industry does take off as predicted, there’s a good chance the Front Range will be a destination for budding companies. The trade group Plant-Based Foods Association counts six members in the state, not including Emergy or Silk, and Naturally Boulder already exists as an incubator for new food companies.

There’s plenty of customers in the area as well, as Boulder has the highest per-capita consumption of organic foods in the U.S., according to the Boulder Economic Council.

Good Karma moved to Boulder in 2015 to chase potential employees with experience in building natural food brands, Radi said, and he is now part of a cohort group of other CEOs running similar companies in the area.

Huggins and Whiteley laid roots in Boulder when they met as doctoral candidates at the University of Colorado-Boulder. The duo got some pushback when they decided to leave Chicago and its larger investor community, but Whiteley said Boulder had a larger set of specialized workers who could bridge natural foods and the company’s research goals.

“These are leaders in that category, and also have a background in biotechnology,” he said. “So we’re able to bring in some top talent and people who know how to run fermentation operations.”

The livestock industry pushes back…

If it smells like beef, tastes like beef and has about as much protein as beef, is it really beef?

To ranchers and dairy farmers, the answer is a resounding “no.”

During its January convention, the National Cattlemen’s Beef Association adopted a policy resolution claiming “alternative proteins” were co-opting phrases traditionally applied to animal products and were diluting beef’s brand recognition and confusing consumers.

The Colorado Cattlemen’s Association also took aim at Gov. Jared Polis in August after he suggested the state agriculture department could look at promoting plant-based meat production in the state.

A $4 billion industry, Colorado ranchers had 1.05 million head of cattle at the beginning of the year, making it the fifth largest producer of beef among the states, according to data from the U.S. Department of Agriculture.

The cattle milk industry has been just as aggressive in trying to ward off the makers of almond and oat milk, with one dairy farmer suing almond grower cooperative Blue Diamond Growers in December 2018, alleging the name “almond milk” amounted to false and deceptive advertising.

The courts dismissed that case and an appeal, ruling that reasonable consumers aren’t likely to confuse almond milk with dairy milk in current advertising.

Radi dismissed those arguments, saying consumer sentiment momentum is squarely on the side of plant-based milk.

“They are choosing plant-based options over animal-based options purposely and with intent and that is not going to change,” he said. “So whether I call it flax milk or dairy-free flax based beverage isn’t going to change the trajectory of the consumer. I’m quite confident of that.”

…but take an omnivore approach

But while cattle and dairy farmers have taken a strong position against plants masquerading as meat and milk, the companies they supply are trying to get a cut of the market. Industry giants like Tyson Foods Inc. (NYSE: TSN), Hormel Foods Corp. (NYSE: HRL) and Perdue Farms Inc. have all introduced their own plant-based meat brands in the past several years.

Two years ago, milk giant Dean Foods Co. took a majority stake in Good Karma for an undisclosed sum. However, the diversification play couldn’t stop the dairy industry’s woes from forcing Dean into Chapter 11 bankruptcy in November.

Radi said Dean’s bankruptcy has no effect on Good Karma’s operations or outlook.

Will plants replace meat? Depends on who you ask.

Radi has a bullish outlook on the future of the natural foods industry, saying the current market size for the industry is already twice what it was at this point a decade ago and has customer enthusiasm on its side.

“I think if you look at the numbers and how much growth potential there is, I think it’s very large,” he said. “I’m not even sure any of us can articulate how big it is.”

Huggins, whose parents own a bison ranch in Nebraska, said Emergy isn’t trying to completely replace animal meat. He thinks plant-based meats won’t completely cut out demand for animal meat, but reducing that consumption will prove a benefit to the health of humans and of the planet.

“A win for us is that in five years, we’re in the Midwest, and people see the value in it,” he said. “They see why they would want to do it not only nutritionally, but why it benefits them, the environment, the economy, all of those great things, and they’re serving this in little diners in Nebraska.”

BOULDER — If environmentalists, clean food advocates and some investors are to be believed, the plant-based meat market could disrupt the global food supply’s reliance on animal products and buoy the already-strong plant-based milk industry. Two Boulder companies, one well-established and one almost brand-new, think they can grab a slice of the burgeoning industry in the home of perhaps the most famous soy milk brand in America.

Over the summer, the Swiss investment bank UBS projected the plant-based meat market could see compounded annual growth of 28 percent as those products become cheaper to make and more widely available to consumers.

If UBS is right, that market could rise from $5 billion in 2018 to $85 billion by 2030.

Turning fungus into steak

So will steakhouses serve beef steaks and plant-based steaks on the same menu in the near future?

Emergy Inc., led by CEO Tyler Huggins and Justin Whiteley, chief technology officer, believes it can make that idea a reality.

The pair relocated the company to Boulder this summer after moving to Chicago to take a $6 million U.S. Department of Energy grant to research alternative food production methods requiring less resource inputs and less reliance on waste-producing animals.

The company grows its own protein that mimics the grain of animal muscle. Through a fermenting and marinating process, Emergy is producing something that looks like, tastes like and bleeds like a ribeye or a chicken breast, but without any animal…