Vegan Cheese Waits For Its Big Moment. These Companies Want to Make It Happen
(Bloomberg) -- Fridges across Europe and the U.S. are filled with almond drinks, oat milk and plant-based meat substitutes. So where’s the imitation cheese? Until it starts to taste more like the real thing, it’s likely to stay out of the kitchen.
The global vegan cheese market was worth $1.9 billion last year, according to Future Market Insights. That’s just a tiny fraction of the dairy-alternatives industry and the $121 billion in real cheese. Much of it is mozzarella or cheddar—used in cooking where the taste and feel can be disguised, rather than enjoyed on its own or accompanied by a nice chardonnay.
A new breed of entrepreneurs is trying to change that by ridding fake cheese of its rubbery reputation and getting in on the boom in plant-based burgers, milk, yogurt and ice cream.
One of them is New Roots, headquartered at the foot of the Swiss Alps—the home of fondue and raclette. Founded only four years ago, the 15-employee company now supplies some 80 tons of imitation camembert, cream cheese and other products annually as millennial consumers embrace vegan diets.
Most faux cheesemakers just add flavors and enhancers to a milk substitute mass to mimic the taste and texture of cheese. But New Roots and France’s Tomm’Pousse are among the first companies pioneering a new way to make plant-based alternatives using traditional cheesemaking methods. Tomm'Pousse mixes cashews and water into a puree, while New Roots makes cashew milk. Both add probiotic cultures for fermentation and both ripen their product like real cheese.
“I wanted to keep the Swiss tradition alive, and not just create an analogous product mixed together from 20 different synthetic ingredients,” says New Roots founder Freddy Hunziker in an interview at the company’s factory in Thun, where the windowsills are lined with another millennial favorite, cactuses in terracotta pots. “And it has really taken off.”
New Roots is just one of hundreds of startups that have popped up in Europe and North America to try to revolutionize the category. In the U.S., Miyoko’s Kitchen supplies some 12,000 stores. Fatburger Corp. has teamed up with Canada’s Daiya Foods Inc. to offer a 100% plant-based cheeseburger, pairing Daiya’s cheddar slices with the Impossible Burger.
European food giants are starting to catch on. Nestle SA has developed alternatives to cheese and bacon, designed to complement its existing plant-based burger patties. French yogurt maker Danone says it plans to expand its vegan cheese offering after entering the category with its acquisition of soy milk producer WhiteWave.
Kraft Heinz Co., whose Singles and Velveeta brands have been struggling, this year led a $3.5 million investment in biotech startup New Culture, which is developing lab-grown vegan cheese by cultivating dairy proteins without the use of animals.
New Culture is taking aim at the biggest challenge for alternative cheeses: There’s no plant-based substitute for the casein proteins in cow’s milk that has the same texture. Efforts to create substitutes with oils, starches and artificial flavorings have mostly fallen flat, holding back the growth of vegan diets.
“Most people are afraid to go vegan,” according to a study by researcher Future Market Insights, because “they cannot live without cheese and fast-food products such as burgers, pizzas, and other foods in which cheese is an essential ingredient.”
Another hurdle is pricing. New Roots’s most expensive camembert alternative sells at 11.50 Swiss francs per 120 grams ($11.55 for 4.2 ounces), or more than three times as much as the regular variety. Prices are high partly because vegan cheesemakers don’t enjoy the government subsidies that many dairy farmers receive. Plant-based offerings are also made on a smaller scale and face less competition than alternative milk or yogurt.
Producers of vegan cheese say it’s friendlier to the environment than the real thing. The world’s 270 million dairy cows are a major source of greenhouse gases. Vegans consider raising them to be cruel.
As demand for alternatives grows, new shops such as La Fauxmagerie in London have opened. Chains like Coop in Switzerland, Planet Organic in the U.K. and British branches of Amazon.com Inc.’s Whole Foods are stocking New Roots’s alternatives.
New Roots has moved to bigger sites three times in the past four years and now produces some 10,000 pieces of imitation cheese a week. The company, previously financed via bank loans, this year won its first outside investor in private equity firm Blue Horizon, which also backs Impossible Foods Inc. and Beyond Meat Inc.
Prices of alternative cheese could come down as multinational companies seek to expand their plant-based portfolios. After Danone completed its $10 billion WhiteWave purchase in 2017, Nestle acquired veggie companies Sweet Earth and Terrafertil. Unilever jumped on the bandwagon with its purchase of the Vegetarian Butcher.
Both New Roots and Tomm’Pousse say they’ve been approached by big food companies with takeover and collaboration offers, which they’ve rebuffed. Expanding to bigger markets like the U.S. might require some support. But for now, both companies are focusing on redeeming fake cheese.
“Food in France is very emotional, especially cheese,” Tomm’Pousse founder Emmanuel Joubert says. “It’s not 100% the same, but the idea is to be as close as possible to dairy cheese.”
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