- Ingredients technology company Nutriati received a $12.7 million investment in a funding round led by Manna Tree and supplemented by Open Prairie. A breakdown of the investors’ commitments was not released, but a press release announcing the funds said Open Prairie is an existing investor.
- Nutriati produces plant-based protein, flour and oil made from non-GMO pulses including beans, peas, lentils and chickpeas. These ingredients are intended for use in plant-based meats; non-dairy cheese, yogurt, ice cream and milk; tortillas; pretzels; gluten-free pasta; pizza crust and bread. The company’s chickpea flour and protein are sold under the Artesa brand.
- "Manna Tree's investment, alongside the recent funding from Open Prairie, will accelerate our growth, enable us to develop more innovative ingredients, increase production and reach new customers,” Michael Todd, CEO of Nutriati, said in the release.
One of the many qualities that consumers search for as they seek out better-for-you products are gluten-free options for culinary staples. Once a niche segment for those with intolerances and celiac disease, U.S. sales of gluten-free products, estimated at $973 million in 2014, could exceed $2 billion by the end of 2019, according to Packaged Facts.
Catering to this demand, however, has not been easy for companies. Many flours made from legumes and pulse crops have tended to taste like their sources — gritty and beany. Nutriati's Artesa flour not only has a lower glycemic index than other wheat or pulse flours, but also a clean, neutral taste and a white color, the company says. The flour is designed for use in baked goods, such as pasta and pie crust, but also binds with oil and water to make it a useful addition to soups, sauces and gravies.
If the Artesa flour can deliver on its claims, there will be a substantial market eager to try it. According to Grand View Research, chickpea flour is the most popular among those that are pulse-based, with a 30% market share in 2017. Pulse flours — made from beans, peas and lentils — are projected to expand at a compound annual growth rate of more than 12% through 2024.
Manna Tree and Open Prairie are betting on this popularity and investing in the expansion of this product. Both private equity firms are deeply entrenched in the food space. Manna Tree says it is a “firm committed to providing consumers with a more transparent food supply chain from production to plate.” Its previous investments include pasture-raised egg company Vital Farms.
Open Prairie is also a veteran investor in the food space, but focuses more on the production and agricultural aspect of the process for its investments. However, as this is the firm’s second investment in Nutriati — the private equity firm’s CEO sits on the ingredient company’s board — it is clearly confident the innovative approach to pulse flour will be well-received and widely applicable.
Although Artesa’s website indicates that the flour company currently works primarily with chefs, the influx of funding from these private equity firms could change that.
Recently, private equity has been showing an interest in food companies. According to The Food Institute, which tracks mergers and acquisitions in the food, beverage, grocery and foodservice industries, 2019 has seen 55 private equity acquisitions so far. One of the most recent involving an ingredients firm came in October when Innophos, a New Jersey-based maker of specialty ingredients for baked goods, sports drinks and cheeses, entered into a deal to sell the company to private equity firm One Rock Capital Partners for $932 million.
Consumer demand for technological solutions and the continuous push for the next product evolution has made consumer packaged goods a haven for startups. In fact, a new product is launched into the marketplace every two minutes, according to Nielsen data.
As a gluten-free flour, Artesa is entering a market with substantial competition. However, with two firms backing it to give it financially solid legs, the company has a fighting chance to expand and capture some of the market share in the red-hot alternative baking space.