“The most important factor we can bring to this joint venture is agility, the know-how, the quality of the products… that’s what really caught their attention [at Kraft Heinz]," said Muchnick, who co-founded NotCo in Santiago in late 2015.
"We've been operating this company for six years; we're now present in eight different countries operating five different categories of products, getting market share that is significant in every market, so from their perspective, it's a case of how can we elevate what NotCo is bringing with scale, with distribution. with mass market penetration?
“So I think we both bring to the table something very important. They bring the familiarity of their brands. Philadelphia Cream Cheese has market penetration of something like 70% of American households, so putting out a plant-based version of that in the market can really move the needle in terms of market penetration of the plant-based industry as a whole.”
‘We took about 10 months to really navigate the terms’
So when did NotCo start talking to Kraft Heinz about a possible collaboration?
“In the very beginning [it was a case of] let's do something together, we have no idea what it is,” said Muchnick, who said he had known the senior management at Kraft Heinz for some time. “We took about 10 months to really navigate the terms.”
The Kraft Heinz Not Company will operate under the control of Kraft Heinz and will be based in Chicago with R&D facilities in San Francisco. It will be led by Lucho Lopez-May, currently CEO, North America of NotCo, said Muchnick.
He would not say what products or brands the JV will be launching first in which geographies, but said, “What we're definitely saying is that we're going to launch a product this year.”
Can you reverse engineer every animal product with plants?
So is it possible to reverse engineer every animal-based product and rebuild it with plants, or are there some things - from the meaty-flavor in a beef burger or the texture of a steak, to the melt and stretch that casein delivers in Cheddar or Mozzarella cheese - that you just can’t replicate with plants?
“Well, we haven’t reached that point yet,” said Muchnick. “We probably are going to face it if we're trying to do a steak, or more complex matrices of products that are animal-based. We definitely have some challenges in the plant-based industry as we only really started to… apply some new technologies and innovations to the category about 10 years ago.
“So I would say we haven't reached that point yet. I think we will, so we're definitely open also to understand other categories of technologies. So you have artificial intelligence, precision fermentation, cellular agriculture, there's many other things. Are we close to some of them? No, not at all."
Plant-based cheese… not ready for prime time?
So what about cheese, a key part of the Kraft Heinz portfolio, from Lunchables to Kraft Singles to Velveeta? NotCo has thus far commercialized burgers, ground beef, ice cream, mayo, and milk, but not cheese, so what can it bring to the table in this respect?
“Again, I cannot say what we're working on,” said Muchnick, “but definitely cheese and fermented products to us are one of the biggest categories that need a lot of innovation and help as plant-based is so far away from what animal-based is, and that's that's a shame because what we want to do as an industry is change things… and you cannot change if you are disregarding the number one driver of consumption in this category, which is indulgence.”
NotBurger… the US launch
NotCo - which entered the US market in 2020 with plant-based NotMilk - is currently gearing up to enter the ultra-competitive US meat alternatives category with NotBurger, a brand that has rapidly gained traction in Latin America with high-profile partners including Burger King.
While the US plant-based burger market is very crowded, with legacy brands jostling for space with meat giants, big CPG, startups, and foodtech players such as Beyond Meat and Impossible Foods, US buyers have seen the success of NotBurger in Chile, Argentina and Brazil, and they want a piece of the action, claimed Muchnick, who was handing out samples of the burger at Expo West last week.
While every market is different, the fact that the NotBurger had been a hit in other meat-centric markets had opened a lot of doors in the US, said Muchnick, who said another plus point for buyers has been the fact that NotCo is not just a one-trick pony, but has a suite of plant-based products.
“Many QSRs want to partner with NotCo because we were able to put in their stores not only a burger, but also a milkshake, an ice cream, and mayo, so the burger is really like the point of the spear to start bringing the whole portfolio of NotCo into a [given] market.”
He added: “We launched in Chile at the start of the pandemic in 2020, and in the first three weeks we sold 43 units per store per day, four times the sales target. At [conventional] retail, we already have 5% of the total burger market.
“That allowed us to go into Argentina, where we were able to put the product in [leading QSR chain] Mostaza, where 10% of the total burgers consumed in the chain are now NotBurgers. And then we scaled to Brazil, which is also a very meat-forward country, and we did really well, so we said, Why not the US?”
Taste, price, familiarity
At base, he said, plant-based companies needed to win on three points to appeal to consumers that don't currently buy meat alternatives: taste, price, and familiarity.
And NotCo is aiming squarely at the mass market with products that can outperform the competitive set on taste and price, while attempting to build familiarity through a suite of products, from NotMilk to NotBurger, that will introduce Americans to the 'Not...' brand, he said.
"This is also why we created the joint venture with Kraft Heinz. We have the ability to become a platform company for innovation for other brands but still get the recognition for our brands.”
The NotBurger will roll out to US retailers’ frozen aisles in the spring and summer with 4oz single packs at an SRP of $2.79 and 16oz four packs at an SRP of $9.99. (To put this into perspective, Beyond Burger two-packs typically retail at anything from $4.99 to $6.99 while Impossible Burger two-packs sell at around $5.99-$6.19.)
A foodservice-specific formulation will launch shortly thereafter, said Muchnick, who said existing products “are not doing a good enough job right now, as if they were, the category would be way bigger than it is now. So the question is, how do we move the needle and stand out?”
NotBurger: Formulation and nutrition
So, what’s so special about the NotBurger?
All formulations are market specific, with the US NotBurger “having more of a ground beefy taste versus say smoky,” said Muchnick, who uses a base of textured pea protein, coconut oil, sunflower oil, and bamboo fiber, coupled with some slightly more unconventional ingredients identified by NotCo’s artificial intelligence platform ‘Giuseppe’ such as cocoa powder.
At 13g, the NotBurger contains more saturated fat than the Impossible Burger (8g) and the Beyond Burger (5g), and slightly more sodium (440mg vs 370mg for Impossible and 390mg for Beyond), and has a succulent, juicy bite that sets it apart, he claimed
“We have a product that is better than any plant based product in the market because we’re trying to appeal to the mass market. If that comes with a slightly elevated amount of saturated fat versus our competition, that's OK. When I go grab a burger, my number one priority is that it has to taste amazing.”
INGREDIENTS LIST: Water, texturized pea protein, coconut oil, sunflower oil, bamboo fiber, less than 2% of: methylcellulose, pea protein isolate, natural flavor, rice protein isolate, salt, cocoa powder, nutritional yeast, psyllium fiber, potato fiber, red beet juice concentrate, chia protein concentrate, dried spinach powder.
NUTRITION FACTS (113g burger): 270 calories, 15g protein, 21g fat, 13g sat fat, 440mg sodium, 4g fiber, 20% DV for iron