Coffee… minus the beans? Atomo raises $40m to build out ‘planet-friendly’ beanless coffee business
The latest cash injection - from S2G Ventures, AgFunder, and Horizons Ventures – will support manufacturing scale up, distribution, and ongoing R&D work at the firm, which is also working on a ground product for launch in 2023.
While Atomo’s original pitch – of a smoother, less bitter brew - homed in on the fact that many people love the smell of coffee, but have to add creamer and sugar to mask the bitter taste; the latest branding (it's third iteration) focuses more on the ‘planet-friendly’ credentials of beanless coffee amid a flurry of reports highlighting the threat that climate change poses to conventional coffee production.
Featuring the tagline ‘tastes great, does good’ on the front of pack, the back of the label highlights Atomo’s use of upcycled ingredients such as date pits, and explains that its beanless coffee uses significantly less water and generates far fewer carbon emissions than regular coffee production, and means ‘no deforestation.’
'We are a mission based company with sustainability at our core, but for us to be successful, we have to win on taste'
That said, no one is going to buy beanless coffee – made from date seed extract, chicory root extract, grape extract, inulin, natural flavors, and caffeine – unless it tastes as good as, or better than, the real thing, Atomo Coffee head of growth Ed Hoehn told FoodNavigator-USA.
“We are a mission based company with sustainability at our core, but for us to be successful, we have to win on taste.
“In a recent blind taste study conducted by National Food Labs, Atomo’s cold brew outranked competitive conventional cold brew products on preference 2:1, and people had no idea they weren't drinking coffee [from coffee beans].”
“The demand for coffee is increasing year over year with climate change significantly impacting the farming regions, which in turn will impact the consumer through price and availability. Breakthrough technologies pioneered by Atomo, are going to be a part of the solution for future generations to be able continue enjoying their favorite brews.” Rob Leclerc, founding partner, AgFunder
'In our ultra-smooth product, we reduced the acidity, which triggers a sensation of sweetness even though there's no added sugar'
Investors, similarly, were focused on whether Atomo could deliver on taste first and foremost, and then wanted to “understand our ability to scale, and I think we're demonstrating that,” he added.
“We manufacture in the United States using ingredients sourced in the United States, and our new facility in Indio, California is close by where we’re sourcing the date seeds, which would normally just be waste.
“After we grind the date pits we soak them and roast them and what comes out smells and tastes like coffee. We then brew and create a concentrate which is then utilized by co-packers to make our RTD products.”
He added: “Our classic black product was engineered to go toe to toe with a traditional black coffee cold brew RTD product on acidity and other notes. In our ultra-smooth product, we reduced the acidity, which triggers a sensation of sweetness even though there's no added sugar.”
The go to market strategy
The first two SKUs, both in 8oz cans, are launching direct to consumer so Atomo can get some feedback and understand which shoppers and geographies to target as it “starts to build a ground game,” said Hoehn, who said the investment capital will also be spent on expanding the team from around 35 people today to closer to 70-75 in the near future, with new roles in production, sales and marketing, and R&D.
“We're going to be doing a lot of experiential sampling events in those higher-yield markets and then look at the retail density of store locations and identify partners we would like to work with.”
Retailers, he noted, are increasingly looking for products with climate-friendly positioning and in some cases exploring merchandising options to build dedicated sets of sustainably sourced products.
'If we deliver on taste, we can then continue to educate around our core mission'
But are consumers even aware of the problems in the coffee supply chain that firms such as Atomo and Voyage Foods are attempting to tackle, and could a fundamental lack of interest mean 'beanless' coffee may have pretty limited consumer appeal?
According to Hoehn: “There are consumers making purchase decisions based on health, wellness and sustainability and I think we will do very well with that crowd. And there are also people for whom these things are not the number one focus, but if the taste is on par or better, they will make these little switches.
“If we deliver on taste, we can then continue to educate around our core mission.”