Dan Gluck, a partner at PowerPlant Ventures and a co-founder of Health Warrior, shares what he's most excited about. March 27, 2019 4 min read The ent
Dan Gluck, a partner at PowerPlant Ventures and a co-founder of Health Warrior, shares what he’s most excited about.
March 27, 2019 4 min read
The entrepreneurs creating food companies are no longer satisfied with just making better-for-you products, they want to shake up the industry, according to a venture capitalist who was an early investor in Beyond Meat.
“What we’re seeing now is quality entrepreneurs coming out of the MBA program leaving jobs at Fortune 500 companies to go and start food companies,” said Dan Gluck, a partner at PowerPlant Ventures and a co-founder of the Pepsico-owned Health Warrior. “Why? The food industry is broken. So where there’s problems and crises, that attracts capital and talent.”
The plant-based focused PowerPlant Ventures, founded in 2015, has also invested in other rising stars in the food space, such as Thrive Market, the Kimbal Musk co-founded Square Roots, Just and Ripple. Gluck’s partners are Mark Rampolla, founder of Zico Beverages, and Kevin Boylan and T.K. Pillan, co-founders of Veggie Grill, a vegetarian fast casual eatery with more than 35 locations.
“We’re mission driven, looking for companies that are trying to deliver better nutrition in more sustainable ways,” Gluck said.
Here are Gluck’s five observations and predictions about the food industry.
1. More food will be purchased online.
Ecommerce rates for food items is currently only at 3 percent, compared to 20 percent for other goods, according to statistics from Cowen and Company. Gluck said he believes that within the next five to 10 years, online food purchases will be more in line with other goods. Thrive Market, a subscription-based online grocer, is ahead of the trend, Gluck said.
“Companies like Thrive really bridge that gap in that they can deliver healthy nutritious convenient food at an affordable price to consumers’ doorsteps,” said Gluck, who added that about half of its customer base is located in the Midwest and southeast.
2. Alternative meat still has room to grow.
“There’s a lot of emerging insurgent brands that are coming to market with sophisticated products, great branding and great teams,” Gluck said. “It’s such a tip of the iceberg when you think about the size of the meat industry. [Alternatives have] less than 1 percent of market share today. If you draw some corallaries between the growth of the plant-based milk companies, they went from virtually zero market share to about 13 percent. The alternative meat industry is just beginning.”
3. Plant-based seafood and alternative cheeses are rising.
The investors are also interested in alternative cheeses, such as Miyoko’s. But Gluck said he believes that alternative milks are getting saturated.
“I saw a pistachio milk, which actually tasted phenomenally good,” he said. “But by and large, that category has been played out.”
4. CBD will be huge.
CBD, the non-psychoactive compound from cannabis, has blown up in the past couple of years. It’s found in massage oils, sparkling beverages, desserts, bars, basically everything. It also had a huge presence at Expo West, one of the largest natural foods shows.
“There were over 100 new companies there who were highlighting their CBD focus, from drinks to energy shots to beauty products. We’ve seen it all now,” Gluck said. “We think this is a category that could be just as big as the spirits industry.”
5. Food companies need to commit to either direct-to-consumer or retail.
While Gluck said that all companies need to have an online presence, the companies he’s seen become successful commit to either direct-to-consumer or retail.
“We like to see a company execute on one of those channel strategies perfectly,” he said.
He gave examples from PowerPlant’s portfolio of each. Your Super, which makes smoothie mixes, sells mostly to customers through its website, with just some strategic retail accounts. “They don’t really see the need to go into retail,” Gluck said. “We view the retail component as just upside that we can tap into once the company has this proof of concept and loyal follower base online.”
The other is Vive Organic, which makes wellness shots. “They launched early on in predominantly coffee shops and other natural independent stores, then last year did a national launch at Whole Foods,” Gluck said. “They recently started selling online but it’s not a massive focus area yet.”
This article is from Entrepreneur.com