- Nestlé is collaborating with two Canadian plant-based protein companies to more quickly develop meat and dairy alternatives with a favorable environmental footprint. According to a release, the Swiss food giant has entered into a joint agreement with Merit Functional Foods of Winnipeg, Manitoba, and Burcon NutraScience of Vancouver, British Columbia.
- The agreement will leverage Merit's pea and canola protein ingredients and Burcon's plant-based protein extraction and purification technology to contribute to Nestlé’s plant-based food and beverage products. Merit is building a state-of-the-art facility in Winnipeg and plans for it to be finished by the fourth quarter of this year.
- "The partnership with Burcon and Merit will give us access to unique expertise and a new range of high-quality ingredients for plant-based food and beverages," Stefan Palzer, Nestlé's chief technology officer, said in the release.
All three players in this joint development agreement are likely to benefit. Burcon, which has been in business for more than 20 years, has hundreds of patents for processing plant-based proteins sourced from plants including pea, canola, soy, hemp and sunflower seed. Merit, formed last year as a joint venture between Burcon and three food industry executives, will produce Burcon's pea and canola protein ingredients.
As an indicator of confidence in the new joint venture, Merit recently received a significant co-investment from Protein Industries Canada, an industry-led, not-for-profit organization whose mission is to position the country as a global source of high-quality plant protein and plant-based products. The two Canadian protein companies are also likely to gain from Nestlé's longtime expertise in research and development, product launches and large-scale distribution.
As for Nestlé, it will use the results of this partnership as part of its growing portfolio of plant-based protein products — including burger patties, sausages, chicken filets and various prepared dishes. The company also makes pea- and oat-based dairy alternatives; creamers made with almond, coconut or oats; and plant-based coffee mixes, plus a range of non-dairy ice creams.
With all these plant-based products filling out Nestlé's portfolio, it makes sense that the company would want to form a partnership with companies main goal is to work with these ingredients.
"We have the ambition and the perseverance to be a major player in this area," Nestlé's CEO Mark Schneider said during a July 2019 investor call. "Initial results and growth rates are very encouraging, and we see all the elements of a significant long-term trend in the market."
The company is increasingly innovating with plant-based products such as the Awesome Burger and Awesome Grounds from its Sweet Earth brand purchased in 2017. Awesome Grounds, a ground beef-like product made with textured pea protein, is now included in DiGiorno Rising Crust Meatless Supreme and Stouffer’s Meatless Lasagna items.
Working with Merit and Burcon to develop the best plant-based ingredients that are also more environmentally friendly could be a smart move since consumers increasingly want sustainable products and many CPG companies have been criticized for not doing enough.
To make room for this plant-based growth, the company has been divesting other segments. In 2018, Nestlé sold its U.S. chocolate business, including the Butterfinger and Baby Ruth brands, to Ferrero in a $2.8 billion deal. This past December, Nestlé announced it would sell its U.S. ice cream business — with the Edy's, Haagen-Dazs, Outshine and Drumstick brands — to its 2016 joint venture with PAI Partners called Froneri in a deal valued at $4 billion. Such moves free up capital to invest in other ventures, no doubt including plant-based ones.
The future looks bright for plant-based foods and beverages, so Nestlé, Burcon and Merit could see a host of benefits by collaborating to produce the needed protein ingredients and quickly moving to market with the results. According to investment firm UBS, the growth of plant-based protein and meat alternatives is projected to increase from $4.6 billion in 2018 to $85 billion in 2030.