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Kite Hill closes $18m funding round led by Gen Mills 301 Inc & CAVU: 'We are growing very aggressively'

By Elaine Watson+

20-May-2016
Last updated on 20-May-2016 at 16:45 GMT2016-05-20T16:45:05Z

Kite Hill gets $18m from Gen Mills 301 Inc, CAVU

Kite Hill - a San Francisco-based brand on a mission to disrupt the dairy case with its cultured nut milk products – has closed an $18m fundraising round led by 301 INC (General Mills’ business development and venturing unit) and CAVU Venture Partners.

Founded by vegan chef Tal Ronnen, cheesemaker Monte Casino and Stanford biochemist Dr Pat Brown, brand owner Lyrical Foods makes almond milk from nuts and water, and then cultures it using proprietary cultures and enzymes to separate it out into solids and liquids, just as traditional cheese makers do.

Its products (almond milk cheeses, cream-cheese-style cheeses, chilled ravioli, and yogurts) are in Whole Foods stores nationwide, and are now rolling out to a wider customer base as Kite Hill ramps up capacity to meet surging demand.

While some observers have expressed doubts over whether the huge piles of cash being thrown at new players in the meat-, dairy- and egg-alternatives space are justified, the size of the prize for the winners in these markets is potentially huge, Lyrical Foods CEO Matthew Sade told FoodNavigator-USA.

The dairy industry is a $350bn opportunity globally, and there aren’t too many of those out there,” added Sade, who is building a whole platform of plant-based products he claims will transform perceptions of plant-based ‘dairy’.

 “And animal based protein is probably close to twice that, so these are massive markets that have not really evolved much in hundreds of years beyond people trying to eke out efficiencies, sometimes to the detriment of public health,” added Sade.

"We are using completely new to the world technology married with age-old cheese-making techniques and equipment you’d find in any artisanal French cheese maker.

“It’s really a huge leap forward and we are growing very aggressively on a trajectory that is very uncommon in the food industry.”

Matthew Sade, CEO Lyrical Foods (d.b.a. Kite Hill)

New to the world technology married with age-old cheese-making techniques

As for all the money being poured into start-ups promising to ‘fix the broken food system,’ he said: “It remains to be seen who will persist in this market, but it’s not going to be every company that is getting funding today.”

He also acknowledged that another big unknown is how products developed by some of these more tech-focused start-ups might be perceived by consumers, who on the one hand are seeking out plant-based foods, but are on the other hand suspicious of technologies such as synthetic biology , and looking for products that are more ‘natural’ and 'minimally processed'.

But he added: “In our case, we have actual products out in the market that have been validated by consumers and the trade. We’re also unusual because we are using completely new to the world technology married with age-old cheese-making techniques and equipment you’d find in any artisanal French cheese maker.

“It’s really a huge leap forward and we are growing very aggressively on a trajectory that is very uncommon in the food industry.”

Kite Hill makes almond milk from nuts and water, and then cultures it using proprietary cultures and enzymes to separate it out into solids and liquids, just as traditional cheese makers do.To date, it has developed four cheese alternatives, two cultured cream cheese style spreads, two varieties of fresh ravioli (spinach & ricotta and mushroom & ricotta), and five cultured yogurts.

We can’t make enough right now

The fact that Kite Hill products sit in Whole Foods’ dairy case rather than in a standalone vegan cheese section reflects the retailer’s confidence that Kite Hill products are every bit as good as top quality dairy cheeses, added Sade.

But just as importantly, it also reflects Kite Hill’s mission to appeal to a broader base of consumers, as well as removing any stigma around ‘vegan cheese’, which can conjure up unpleasant images of gummy blocks of vegetable oil and starch, he said.

“We are in every Whole Foods store nationwide and started rolling out to other chains in March, but we have been contacted by virtually every major retailer in this country to carry our yogurts and the cream cheese, so the demand is there. We’ve also had significant interest from western Europe and Asia; we can’t make enough right now.

“We just need the resources to scale up so that we can fulfill our vision and make our products available to a broader audience, expand our distribution, scale our production process, build our team and raise awareness of our brand, and that’s where partners such as General Mills [301 INC] come in.”

“What sets Kite Hill apart is its ability to innovate and crack the code on developing great-tasting products that appeal to consumers seeking dairy alternatives.”

John Haugen, VP and General Manager, 301 INC

Lots of people were offering us money

He added: “General Mills is the second largest yogurt manufacturer in the world and they know a thing or two about making yogurt, so that is going to be critical in helping us build a global manufacturing footprint.

“There were lots of people that were offering us money, but very few that could bring the incredible wealth and depth of resources that will help us scale our business.”

Kite Hill plain yogurt  (MSRP of $1.79-$1.99 per 5.3oz pot) has 5g sugar, 6g protein and 160 calories and is made with water, almonds, cane sugar, locust bean gum, xanthan gum, agar, and live active cultures, says Matthew Sade, CEO at brand owner Lyrical Foods, who claims it is markedly different in taste and texture from other non-dairy yogurts

“The taste is richer and creamier [than rival offerings from So Delicious and Almond Dream] and doesn’t separate like those other products. We are very much like a true European-style yogurt.”

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