CEO Of Plant-Based Food Company ALOHA Adopts 'Bernie Sanders Approach' To Attract Investors
ALOHA has been a shining star in the US plant-based food sector as the brand has quickly expanded from its original protein powder line and snack bars to ready-to-drink protein beverage in just a couple of years, grabbing attention from both health and wellness, and mainstream consumers.
With the highlights of its keto-friendly, low sugar and organic propositions, one would assume that, similar to many other vegan food start-ups, ALOHA was first created out of personal needs and later backed by a VC firm dedicated to the better-for-you space or fostered under a large CPG company’s incubator program.
But neither has so far been the plant-based protein food company’s growth strategy, according to CEO Brad Charron who had previously spent decades building some of the internationally renowned CPG brands, including PepsiCo, Procter & Gamble and Under Armour.
“There is an old financial term that goes ‘all money is great,’ but I think when you are trying to create a business, a brand is not enough,” he said.
“You need someone that believes in your mission, and make sure your investors understand what business you are in, and most importantly, what business you are not in.”
Aligning brand value with investors
In ALOHA’s case, “democratizing plant-based foods” is the core value the brand shares with its investors, according to Charron.
“That’s all we do. It’s not like, plant-based is a trend, so I want to get into this business,” he said, adding that “our investors have been with the company for a long time. They’ve seen the company struggle, and they are seeing the company grow. They are happy with the spirit and the progress we are making day in and day out.”
ALOHA currently does not have high-profile PE investors behind it, nor does it have a partnership with any major CPG companies.
“We’re not part of any big entities, and this is really like the Bernie Sanders approach – a lot of small investments from many people,” he said.
“Some of them are brand people who founded their own companies; they are titans in Silicon Valley; they are wealthy European families; and people who just love great food – they are all in for the right reasons, which is how ALOHA was founded to begin with.”
However, Charron speaks highly of many CPG companies’ own investment engines and incubator programs, such as General Mills’ 301 Inc. and PepsiCo’s Nutrition Greenhouse, and he will not rule out the possibility of working with them.
“I would be foolish not to [partner with a CPG company] … because I’ve been part of this food community for a large part of my career. If they can help me move faster, scale better, improve my [brand] awareness and gain shelf space, I would be open to work with them. That could be Unilever, Mondelēz or PepsiCo,” he said.
“But I wouldn’t sacrifice the right things I do for my consumers, and I wouldn’t get involved with people who just want to see financial results as opposed to building a next-generation consumer brand.”
But for most entrepreneurs who lack consumer products experience, seeking resources from big food manufacturers seems rather a necessity than a choice.
“My advice is to remember that you are in someone else’s neighbourhood. It’s great to learn from the best practices … and I know well some of the Frito-Lay folks who want entrepreneurs to succeed,” Charron said.
“But it’s really entrepreneurs’ brands, their decisions, products and reputation. They have to own visions themselves.”
Plant-based movement shows no signs of abating
The fast growth of ALOHA speaks to the fact that the plant-based movement will continue to gain momentum for the considerable future.
While the trend drives more options in the grocery aisle for vegan lifestyle believers, it also challenges the more established food segments, including meat and dairy.
Alternative meat start-up Beyond Meat’s recent IPO included over 11 million shares priced at $25 per share, totalling its value at over $240m. Its shares traded well above the $70 range towards the end of May, underscoring strong investor interest in the plant-based space.
The company’s private competitor Impossible Foods also raised $300m in its latest round of funding, bringing the its total value to more than $750m. CFO David Lee was quoted saying earlier that Impossible Foods believes in self-reliance, but it is not in a hurry to go public.
However, “being ready to go public is a priority for the company because we need to be operating at the highest level of rigor,” he said. “We are not in a rush, nor are we announcing an IPO filing.”
Lee added: “I think [Beyond Meat] IPO indicates that retail investors along with retail consumers are ready for something better than the meat they’ve been eating for decades.”
Barclays Capital believes that alternative meats are a long-term trend and plant-based protein will continue to grow in terms of market value.
Food analyst at the investment bank, Andrew Lazar, wrote in a client note: “While we see some parallels to electric vehicle companies’ disruption of the car industry, we believe that the ultimate market opportunity for plant-based and perhaps lab-based protein is potentially even larger given the mainstream appeal of affordable food products relative to the current high-end, niche audience targeted by electric vehicle manufacturers.
“With that said, we believe taste and price will ultimately dictate whether or not alternative meat gains widespread acceptance.”
He added: “With consumers becoming increasingly aware of the environmental, animal welfare, and health and wellness impacts from the consumption of traditional meat, we believe there is enough evidence indicating that alternative meats are not merely a fad.”
However, “there are risk factors to consider, such as alternative meat products being less healthy than claimed as a result of high salt levels or potential regulatory requirements that restrict marketing,” Lazar noted.
Barclays estimates the alternative meat market to reach $140bn over the next 10 years, with alternative meat players capturing 10% of the total $1.4tn global meat industry.