Foodservice an underdeveloped channel for plant-based cheese, says new Daiya Foods CEO

By Elaine Watson contact

- Last updated on GMT

Michael Watt: 'As the plant-based space evolves consumers are still telling us that taste matters beyond anything...' (picture: Daiya Foods)
Michael Watt: 'As the plant-based space evolves consumers are still telling us that taste matters beyond anything...' (picture: Daiya Foods)

Related tags: Daiya Foods, plant-based dairy

'Next-generation' plant-based burgers are rapidly gaining traction in fast casual restaurants. But they don't all come with plant-based cheese (yet), highlighting a key area of opportunity for Daiya Foods, one of the early pioneers in dairy-free, says new CEO Michael Watt.

Speaking to FoodNavigator-USA after UNO Pizzeria & Grill rolled out Daiya's 'cutting board' shreds on select pizzas and FAT Brands said it would offer Daiya's Cheddar-style slices with Impossible Burgers at all US Fatburger locations, Watt said: "Foodservice continues to be a significant area of opportunity for us that's under leveraged."

Watt - who has held senior leadership roles at Mars, Wrigley, Campbell’s and Johnson & Johnson, and Baby Gourmet Food - added: "At the moment, a lot of places selling Beyond Burgers and Impossible Burgers are selling them with dairy cheese or with no cheese, so there's a huge opportunity for us there. The industry hasn't embraced the full potential of a​ [100%] plant-based burger or sandwich."

Moving to a new 400,000 sq ft production facility in Burnaby, British Columbia later this year that will quadruple Daiya's capacity and add new capabilities will also open up new opportunities in the club channel for Daiya, which is opening an innovation center and new corporate headquarters in 2020, he said.

"We're having conversations with the club channel to say we've got the best products available and we've also got this new capacity. The new facility is going to unlock so much more potential. It's also going to enable us to customize our offering to the needs of different channels, whether it's club or foodservice."

Cross-pollination with Otsuka

Founded by Greg Blake and Andrew Kroecher in 2008 as a dairy-free cheese business, Daiya now sells everything from dairy-free pizza, ‘cheezecake’ and ‘cheezy mac’ to burritos, frozen desserts and yogurts, and was acquired by Japanese firm Otsuka Pharmaceutical Co in summer 2017.

While Otsuka's resources have enabled the firm to build its new facility, it has also been working with Daiya on R&D, said Watt: "We're cross pollinating ideas and sharing quite significantly around products and packaging. We're also leveraging their relationships ​[with potential customers in overseas markets] where it makes sense for Daiya."

Kids and the plant-based trend


How are parents incorporating plant-based dairy and meat alternatives into their children’s diets? And what are the nutritional implications?

Hear from Michele DeKinder-Smith​​​​​ at Linkage Research & Consulting at the 2019 FoodNavigator-USA FOOD FOR KIDS summit​​​​​ in Chicago. November 18-20.

Checkout the latest speakers​​​​​ and register HERE.

International growth opportunities

While Watt believes there's still "a lot of runway left in North America​," from taking the brand into new categories, pushing further in the foodservice and club channels, to expanding relationships with existing retail partners, there are also significant growth opportunities in parts of the EU, Latin America, Australia and New Zealand, and big urban centers in Asia from Singapore and Kuala Lumpur to major cities in China and Japan, he said.

As for new product development, there is growing pressure to develop plant-based products with cleaner labels and improved nutritional profiles, especially as brands try to reach a broader audience of "plant-based explorers and flexitarians,"​ acknowledged Watt. However, matching the taste and functionality of the products they are seeking to replace is still a #1 priority for most consumers, he said.

"As this space evolves consumers are still telling us that taste matters beyond anything, it's by far the #1 priority. But we won't forget about clean label and nutrition."

The innovation pipeline

Watt would not share an overall revenue growth figure, but said Daiya was growing "at a pace we're really happy with this year,​" and expected accelerated growth as capacity constraints were removed with the transition to the new facility.

He added: "It's not often than you come into a company and every portfolio is in growth and in some cases significant growth."

One star performer has been Daiya's new Cutting Board shreds line (Cheddar-style, mozzarella-style, Pepperjack-style), which "is doing phenomenally,​" said Watt.

"The sliced products are up over 40% in the latest 52 weeks and we think they are another area for us to explosively grow as capacity is freed up."

The Cheezy Mac line is performing well and is now in Target and Walmart, he added, although the firm is keeping an eye on competing plant-based offerings from deep-pocketed conventional brands in the space.

daiya cheddar style shreds
Star performer: The new Cutting Board shreds range

New veggie crust pizza line will feature cauliflower, sweet potato and spinach

Daiya-Foods-veggie crust pizza

The core pizza line is being refreshed for Q1 2020 with new packaging, a reformulated gluten-free crust and new Cutting Board shreds in the topping, while a new 3-SKU veggie crust line is also in the pipeline featuring cauliflower, sweet potato and spinach, said Watt.

Daiya's new coconut-cream based non-dairy dessert bars also have great potential, he added. "There's pent-up demand for this product. Our challenge has been getting them in the right distribution based on the timing of category reviews and with a shelf position so the consumer can find them."

Plant-based yogurt: 'Intense battle for shelf space'

The plant-based yogurt market has been more challenging with heavy competition from large multinationals as well as many small players, creating an "intense battle for shelf space,​" and some volatility in the category, he said.

"We're certainly faring better than a lot of the players bigger than us. The leader in the space a year ago is now experiencing 30-40% declines, so there's been significant movement, and still opportunities for brands to continue to improve taste and texture."


Ingredients, Cheddar style Cutting board shreds​:  Filtered water, tapioca starch, coconut oil, non-GMO expeller pressed: canola and/or safflower oil, vegan natural flavors, sea salt, tricalcium phosphate, potato maltodextrin, potato protein isolate, lactic acid (vegan), konjac gum, xanthan gum, yeast extract, annatto (color), turmeric (color), inactive yeast, potassium chloride. 


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