Climate change is one of the biggest threats that society and businesses will face in the coming 10 to 20 years. Unless both individuals and companies change behaviors, it is inevitable that our planet will exhaust its resources and all of us will suffer severe impacts – putting our existence at risk. Many companies, however, already realized this and are working to revert this path through sustainable business models that not only are profitable, but also socially and environmentally conscious. That is the case of NotCo, a Chilean startup founded four years ago that blends sophisticated algorithms with artificial intelligence to combine plants’ molecules and produce plant-based alternatives to dairy foods that have the same taste, consistency, and texture as their animal-based original. NotCo’s business model has the potential to significantly reduce our need for livestock, which is one of the major factors behind increasing greenhouse gas emissions – and, ultimately, climate change.
Until today, meat and animal products are obtained through a variety of techniques, including organic and free-range farming, intensive livestock production, subsistence agriculture, hunting, and fishing. The environmental impact of meat production depends on the methods employed around the world, but consists mainly of atmosphere pollution due to fossil fuel usage, animal methane release, effluent waste, and water and land consumption. Globally, livestock sector is one of the main causes of climate change, loss of biodiversity, and water pollution. Considering the urgency and the impact of these phenomena on the biosphere, it should be mandatory to reduce and mitigate this trend of meat consumption, which is expected to grow significantly over the next years due to population growth and income increase.
NotCo attempts to address this issue. By combining plant genomics with artificial intelligence, this Chilean startup developed plant-based alternatives to mayo, milk, meat and ice cream that not only forgoes the use of milk and animal protein as a raw material, but also manages to do so at accessible price points (as an example, Not Mayo’s retail price is at par with Kraft Mayo’s). The company’s business model is scalable for three main reasons: (i) adopting solely plant-based materials extends the products’ shelf lives, allowing for greater sales reach even under fairly centralized manufacturing capacity; (ii) eliminating the need for cattle raising increases the productivity of the supply chain’s assets, as grazing areas are replaced for cropping fields; and (iii) applying an unbiased technical approach for selecting raw materials drastically increases the supply chain’s flexibility, hedging against procurement risk in terms of both seasonal and geographical availability. Unsurprisingly, the firm caught the attention of Jeff Bezos. His investment group, Bezos Expeditions, took part in a $30 million funding round for NotCo earlier this year.
New technologies are enabling environmentally conscious entrepreneurs to develop disrupting business models that not only are profitable but also generate lots of benefits to the environment and society. Current industry leaders need to adapt and embrace sustainability or face the fact that new competitors will appear with the capacity to challenge them both in product quality and price.
Marco Marrone | Mateus Gomez | Thiago Torres
great article on eliminating the biggest threat to global warming (livestock) to create a sustainable product. harking back on the success of beyond meat, what they did great is to “commercialise” the product through process of awareness (educating on the superior quality of the meat) & partnership (providing alternative option of meat in established chains). i think this is an easily replicated idea that NotCo should consider in the future.
Really nice article explaining how to tackle a critical problem we are facing.The fact that notable investors are committing resources is also a good starting point. The product seems also sustainable in terms of pricing for the final customer. My main concern is related to their ability to grow and select the right markets: the company is relatively young and its important to identify which product/range of products are the one to prioritize and what is the feedback from the market.
Great description of an emerging business. The livestock industries (dairy and meat) are resource intensive – only about 10% of the energy from plant based foods is converted into calories in meat and dairy throughout the food chain. The shift from animal-based proteins to plant-based proteins fundamental realigns the food chain – of which humans are a part – to become more efficient. In a world with a massively expanding population and limited resources, this is more important now than ever.
The surprising fact for me in this case is the competitive price of those products! We tend to think that sustainable products and process must require lots of investments, consequently impacting heavily on prices.
What I would like to understand better is how and where the company comercializes those products ( I am curious about the consumption in Chile) and what are the future plans in terms of growth.
Great post and inspires some optimism! It’s particularly refreshing to see the multiple, tangible levers that make the company both profitable and sustainable. Does the company have any incentive to share its techniques to get more traditional companies to follow suit, or will it hope that consumer preferences and regulations force others to do so? If the latter, is NotCo’s first mover advantage sufficient to protect it from (in some ways, welcome) competitive entry?
Great article! I hope their products taste just as great!
Jokes apart, my feeling is that it’s a risky business once the company will only discover whether consumers like the product after years of investment in R&D.