Brief: Japanese dairy giant Megmilk forms JV with Agrocorp to build pea protein facility in Malaysia

• Megmilk Snow Brand Co, one of the largest dairies in Japan, has teamed up with Singapore-based Agrocorp International, one of the world’s leading traders in pulses, to form a joint venture (JV) to manufacture and market plant-based ingredients.
• The companies will invest $21 million in the joint venture (Snow Pte Ltd).
• Agrocorp is contributing 51% and Megmilk 49% to build a factory on a greenfield site in Malaysia producing pea protein, pea starch and pea fiber for plant-based beverages, meats, and cheese.”
• According to Agrocorp, Megmilk is also “interested in either creating their own brand or partnering with an established brand to enter the Japanese market for plant-based consumer products.”

“This is our second major investment in protein extraction after our first facility in Saskatchewan, Canada, and we hope to be able to service the growing demand in Asia for plant-based food,” said Vishal Vijay, director of strategic investments at Agrocorp International.

Why it matters

According to the Good Food Institute—a nonprofit that promotes plant-based, fermentation-based and cultivated meat, eggs, and dairy—investment in alt protein startups in APAC and Australasia rose 43% to $562m in 2022, against a global backdrop of double-digit declines. Plant-based food investments in the region increased by 30% to $372 million, adds the GFI.

“In Singapore, total alternative protein investments doubled from $85 million in 2021 to $170 million in 2022. In China, alt protein investments rose from $24 million in 2021 to $152 million in 2022.

“Not coincidentally, both countries’ governments have publicly thrown their support behind alternative proteins as a key solution to national food security and climate challenges. While GFI APAC’s analysis does not include public-sector investment figures, these latest numbers suggest that public-sector support and private investment often go hand in hand.”

Pea protein production capacity

While pea protein still lags behind soy in the plant-based protein stakes, production capacity has been expanding rapidly in recent years, with PURIS​ ​opening a large plant in Dawson, Minnesota; Ingredion​​ opening a facility in Nebraska; ADM​​​​ opening a plant in North Dakota; Cosucra​​​​ building a plant in Denmark and expanding production in Belgium; and several Chinese manufacturers expanding capacity.

In Canada, PricewaterhouseCoopers (PwC) is currently fielding offers for the assets of Merit Functional Foods, a pea and canola protein processor which went into receivership on March 1 just two years after opening a state-of-the art plant in Winnipeg.

While the proteins “have been formulated into countless products globally,” said Merit co-CEO Ryan Bracken in LinkedIn post in February, Merit “couldn’t quite get to the level of cashflow needed to operate the business profitably, quick enough.”

Burcon works with ‘additional industry participants’ to acquire Merit Functional Foods assets as first bid is rejected by receiver