Agrifoodtech investor Big Idea Ventures has launched Bayou Best Foods, a new company in the plant-based seafood space utilizing IP from alt-shrimp startup New Wave Foods, which ceased operations late last year.
The eighth investment out of BIV’s Generation Food Rural Partners Fund, Bayou Best Foods is led by CPG veteran Kelli Wilson, who has held senior operational and management roles at Conagra, Niman Ranch, Blue Apron, Beyond Meat, Partake Foods and MycoWorks.
The firm—which will use co-packers to manufacture its products with a view to launching in the fourth quarter of 2024—will have an initial focus on plant-based shrimp with plans to extend into adjacent categories, said BIV chief investment officer Tom Mastrobuoni, who was at Tyson Ventures when it invested in New Wave Foods in 2019.
‘Products with a more transparent supply chain and more predictable pricing’
Asked why he felt Bayou Best Foods would succeed when New Wave Foods had failed, Mastrobuoni said he did not think the latter’s collapse should be seen as proof that there is no market for seafood alternatives.
He added: “I don’t think you can blame any one thing [for the company’s collapse]; it was a confluence of events… but I think we’ve learned a ton of lessons, which is why we’re bringing in someone with Kelli’s experience to run Bayou Best Foods. At the end of the day, you’re still running a food company, not a tech company that makes food.”
As for the market opportunity, he said, “Seafood is the core protein globally and this is a way to address real problems in the industry.”
While the average consumer is likely unaware of ethical and environmental issues surrounding shrimp farming, chefs are paying attention, and a small but growing number of consumers is also starting to think more about safety and traceability when it comes to seafood, he said.
“There is an opportunity to provide a product that has a more transparent supply chain with more predictable pricing that is accessible to folks who can’t eat shrimp whether due to allergies or religious reasons.”
He added: “At Bayou Best Foods, we’re primarily focused on foodservice, as the majority of seafood in the US is consumed through this channel, mainly because consumers are afraid of it and don’t really know how to cook it. I know I personally am much more prone to order seafood when I go out to eat. Chefs understand how to work with it.”
‘We’re not using expensive technologies such as twin-screw extrusion’
The IP acquired from New Wave “includes formulations and specific production techniques, but we’ve not acquired any facilities or factories.” said Wilson. “We’re working very closely with BIV partners on innovation and pilot trials and then we will scale up with contract manufacturers.”
She added: “We’re not using expensive technologies such as twin-screw extrusion; we’re using simple blending and heating and forming followed by freezing and packaging for ready-to-heat products. New Wave’s latest iteration was using mung bean protein [combined with seaweed extracts], but we’re looking at other high-quality protein sources.
“What excites me about this is that it is a very straightforward process,” she explained. “We are not trying to go in and build a second factory inside of a factory that doesn’t scale well, which is what so many alternative protein companies are doing today if they don’t have the manufacturing capability in-house.
“I don’t want to be overly aggressive, but I think that we will have something ready to put in front of customers in Q4.”
‘The plant-based category is boring right now’
According to Mastrobuoni: “The plant-based market is sick, but it’s not dead. I was just on the phone with a producer from the Netherlands the other day and they’re doing extremely well. But you have to understand the needs of your customer and your end consumer.
“We’re also going to develop a portfolio of products across different species as we want to build a platform company that can leverage multiple technologies in this space, so we’ll also be looking to license IP being developed in universities we’re working with. Single product companies are interesting science projects but they are not good companies. Companies need differentiated revenue.”
He added: “The plant-based category is boring right now. It’s stale. If revenues are flat or declining, you are not innovating enough to attract consumers to reengage with the category.
“In any category, first you have the pioneers, then you have people that want to do it too, and ultimately you end up with the very few who actually know how to do it and how to make money doing it. So in alternative protein we’re at the stage where we’re going to see consolidation in the marketplace.”
But he added: “This is ours now. Bayou Best Foods isn’t New Wave Foods. This is a well-capitalized company run by professional food industry folks who are going to take a technology that was developed using venture dollars and put additional dollars towards bringing that product to market in a format that will sell.”
‘It’s a grim time for alternative protein investment’
The alt seafood market has yet to take off in the US, with data from the Good Food Institute showing it accounted for just $14 million in US retail sales in measured channels in 2022. It did not provide a breakdown for 2023 in its latest state of the industry report.
That said, new players continue to emerge. The most notable recent entrant is British Columbia-based Konscious Foods, a startup created by Yves Potvin, who built Yves Veggie Cuisine (sold to Hain Celestial in 2001) and Gardein (sold to Pinnacle Foods, now part of Conagra Brands, in 2014) before lauching Konscious Foods, a frozen food brand with a distinct culinary vibe.
Speaking to AgFunderNews in November 2023 after launching Future Ocean Foods, a new trade association for alt-seafood startups, founder and executive director Marissa Bronfman said: “It’s a grim time for alternative protein investment… but if you’re looking at a global opportunity as an investor and you have a fairly long time horizon, I would say look to seafood. A majority of the world is eating seafood, so if you’re looking for a massive total addressable market, seafood is a fantastic way to go.”
While cynics would argue that just because seafood is a massive market doesn’t mean that alt seafood players will capture a meaningful share of it, large seafood players recognize that they can’t carry on as they are forever, claimed Bronfman, citing a laundry list of problems linked to the seafood industry from overfishing to heavy metals, microplastics, fraud, mislabeling, illegal labor practices, and bycatch
“As we prepare for a future population of 10 billion people by 2050, the need for creating and scaling sustainable protein sources has never been more urgent.”
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