Eat Just seizes the moment as avian flu disrupts egg market

Recurrent bouts of avian flu, fluctuating feed and energy costs, regulatory changes, and a global pandemic have wreaked havoc in the egg market, prompting a surge of interest in alternatives. And Eat Just—which makes a product called JUST Egg from mung beans—is reaping the benefits, says founder and CEO Josh Tetrick.

Eat Just—which has raised more than $850 million since 2011—first positioned itself as a b2b plant-based egg supplier before losing patience with the lead times of large CPG companies and introducing its own consumer brands (Just Mayo, Just Cookie Dough) based on yellow pea protein in 2013.

By 2019, however, Tetrick was betting the house on its mung-bean-based liquid egg alternative JUST Egg, and had also staked a claim in the emerging cultivated meat industry via a division called GOOD Meat, which has secured regulatory approvals in Singapore and the US, but has not yet landed on a model for profitable production at large scale.

The Just Egg business, however, is booming, Tetrick told AgFunderNews this week. “Per SPINS data, Just Egg is growing five times faster this past month vs the same time the previous year and 91% of our consumers are not vegan or vegetarian. Our frozen Just Egg folded product is the #1 egg patty and the #2 frozen egg product in the US, so that’s competing with quiches, frittatas and other products made with conventional eggs.”

He added: “In the last 30 days, we’ve had everyone from the US military to some of the largest convenience store chains, restaurants, bakeries, and some major fast-food chains reach out to us. We’re growing across the board in retail and in foodservice. We have roughly 56% or so consumers who, when they buy it, buy it again.”

Retail, foodservice, manufacturing

Against this backdrop, reliability is critical, said Tetrick, who noted that retail accounts for about 70% of Just Egg’s business, with “north of 40,000 points of distribution” across most channels except major players in the club channel. The bulk of the rest goes to foodservice, added Tetrick, who said a new, improved version of Just Egg would be launching in June with “improved texture, flavor, and less stick-in-the-pan.

“Our OTIF score [deliveries to customers that are On Time and In Full] has been above 95% over the last 60 days.”

As for the addressable market, Just Egg is an ideal replacement for whole eggs in applications from scrambled egg and omelets to cookies but is less suited to certain baking applications that need the aerating and foaming qualities of egg white, noted Tetrick.

That said, he added, “Large industrial users of eggs are now testing our mung bean protein isolate. It’s a small percentage of our business but the fastest growing. Food manufacturers are just tired of the volatility. It’s not just that egg prices are high, it’s the uncertainty, which makes it difficult to plan when you don’t have a handle on your cost of goods, so they’re really looking at potential substitutes in a much more aggressive way.”

Pricing and margins

In some cases, Just Egg is less expensive than cage-free and pasture-raised eggs although more expensive than battery eggs, said Tetrick, who said margins have improved via more efficient sourcing of mung beans, increased scale, and an improved protein extraction process.

“Over the last handful of years, we’ve more than halved our costs of protein, and that’s mainly from getting lower cost beans and improving the yield of the protein. But we’ve also reduced costs by consolidating carriers, negotiating deals with folks that we’re warehousing the product with, and doing a lot with our co-packing partners to reduce tolling fees.”

Work is also progressing on finding markets for what Tetrick calls “the blend,” or the mix of starch, fat, fiber and protein that’s left after most of the mung bean protein has been extracted at its facility in Minnesota, said Tetrick.

“We’re attempting to commercialize this at scale, but we need to dry it. And right now, most of our spray drying capacity is for drying our protein. So we’re working in our facility to see if we can create additional capacity to dry this blend, which works pretty well as a gluten-free flour.”

On the sourcing front, he said, “We source mung beans from Thailand, East Africa, India, and China, so that’s not a limiting step. The limiting step is really spray drying; if volumes continue to increase in the way they have been, we’ll have to get another dryer.”

Profitability

While he claimed that, “Every case [of Just Egg] that we sell is at a positive margin,” he would not discuss the overall financial situation of the company or when it would likely be profitable.

But he added: “Things are going extremely well overall. We’re selling more at higher and higher margins, with an enormous wind at our back.”

Asked if Eat Just needed to raise additional capital to stay afloat, he said: “Additional capital for us is not about continuing [in business]. It would be about expanding more.”

Eat Just GOOD MEAT chicken satay — Image credit: GOOD Meat

Cultivated meat

On the cultivated meat side of the business, Tetrick said he is not trying to raise money for a large-scale facility right now and is instead focused on process development at the firm’s plant in Alameda, California, and working on new cell lines that will enable more efficient large-scale production.

He added: “We think for cultivated meat to be viable, you’re going to have to build large scale facilities in the $100 million or so dollar amount, not in the hundreds of millions. So our energy is spent thinking through what a system that would enable that looks like.

“We’re still selling at Huber’s Butchery in Singapore and there was utility in that [getting product in front of consumers] but it doesn’t do us a lot of good to continue selling [a loss-making product] at the smallest scale.”