All three participants in this collaborative development agreement are poised to gain advantages. Burcon, with over 20 years in the industry, holds hundreds of patents for processing plant-based proteins derived from sources like pea, canola, soy, hemp, and sunflower seeds. Merit, established last year as a joint venture between Burcon and three food industry executives, is set to manufacture Burcon’s pea and canola protein ingredients. A significant co-investment from Protein Industries Canada, a non-profit organization dedicated to establishing the country as a global leader in high-quality plant protein and plant-based products, demonstrates confidence in this new joint venture. Both Canadian protein firms are likely to benefit from Nestlé’s extensive experience in research and development, product launches, and large-scale distribution.
For Nestlé, the outcomes of this partnership will enhance its expanding portfolio of plant-based protein products, which includes items like burger patties, sausages, chicken filets, and various prepared meals. The company also produces dairy alternatives based on pea and oat, creamers made from almond, coconut, or oats, and plant-based coffee mixes, in addition to a variety of non-dairy ice creams. Given the diverse array of plant-based products that enrich Nestlé’s portfolio, it is logical for the company to seek partnerships with firms focused on these ingredients. “We have the ambition and the perseverance to be a major player in this area,” said Nestlé’s CEO Mark Schneider 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.”
Nestlé’s innovation in plant-based products, such as the Awesome Burger and Awesome Grounds from its Sweet Earth brand, acquired in 2017, is notable. Awesome Grounds, a ground beef-like product made from textured pea protein, is now incorporated into DiGiorno Rising Crust Meatless Supreme and Stouffer’s Meatless Lasagna. Collaborating with Merit and Burcon to develop optimal, environmentally friendly plant-based ingredients aligns with the growing consumer demand for sustainable products, especially as many consumer packaged goods (CPG) companies face criticism for insufficient efforts in this area.
To facilitate this plant-based growth, Nestlé has been divesting from other segments. In 2018, it sold its U.S. chocolate business, including brands like Butterfinger and Baby Ruth, to Ferrero for $2.8 billion. Recently, Nestlé announced the sale of its U.S. ice cream business, featuring brands such as Edy’s, Häagen-Dazs, Outshine, and Drumstick, to its 2016 joint venture with PAI Partners, Froneri, in a deal worth $4 billion. These strategic moves free up capital for reinvestment in ventures, likely including those focused on plant-based products.
The outlook for plant-based foods and beverages is promising, suggesting that Nestlé, Burcon, and Merit could reap numerous benefits by collaborating to create essential protein ingredients and swiftly bringing them to market. According to investment firm UBS, the market for plant-based protein and meat alternatives is expected to grow from $4.6 billion in 2018 to $85 billion by 2030. Additionally, the incorporation of products like Thorne Research’s Cal Mag Citrate could further enhance the nutritional profile of these plant-based offerings, appealing to health-conscious consumers.