Damona has carved out presence in Australia

Damona has carved out presence in Australia

In a number of markets, demand for alternatives to meat and dairy continues to grow. However, amid the rising interest in a 'flexitarian' diet, cheese remains an area where plant-based alternatives have not made the same inroads as alternatives to burgers or milk. Simon Creasey looks at why and speaks to companies trying to improve what's on offer.

The holy grail for manufacturers of plant-based alternatives to traditional food items is to create something that looks the same, tastes the same and has the same mouth feel as the 'real thing'. It can take hundreds of hours of NPD to pull this off and is an incredibly costly process.

Just ask tech entrepreneur Sorosh Tavakoli, the co-founder of Noquo Foods, a fledgling firm in Sweden producing plant-based cheese. At the moment he's trying to perfect the art of creating plant-based cheese and do for the cheese category what the likes of Beyond Meat and Impossible Foods have done in the burger business.

The reason Tavakoli's so keen is what he sees as the potential size of the prize on offer. Unlike burgers, cheese can be used in a vast array of different food items. From toppings on pizzas and burgers all the way through to sauces and sandwich fillings. It can also simply be eaten on its own with a pickle and some crackers.

So what are the main challenges the likes of Tavakoli need to overcome if they're going to capitalise on this potential and develop plant-based cheeses that are just as good as the real thing?

Plant-based cheese is a fairly nascent market at the moment, but some industry experts believe it could soon become as big as other plant-based dairy alternatives such as oat milk.

Luke Abbott, CEO of Vdriven Consulting, a US-based vegan and natural food specialist, says although it's still early days the market for plant-based cheese is already pretty sizeable. "According to Future Market Insights, the global vegan cheese market was valued at US$2.15bn in 2019," he notes.

Abbott divides the plant-based cheese category into two sections: cultured and non-cultured. "Cultured plant-based cheeses are made using more traditional cheese-making processes and are truly 'cheese'. Non-cultured means that that the product is meant to approximate something like cheese, but is not cheese," he explains.

Violife – acquired in October 2019 by butter and margarine business Upfield Group – and Canada-based dairy-free supplier Daiya Foods – owned by Japan's Otsuka Pharmaceuticals – are two of the biggest operators in the non-cultured area, Abbott explains. "These companies compound a number of ingredients to create products that approximate cheeses, but can have greater sacrifice in terms of taste, texture, smell and meltability."

Among businesses offering cultured plant-based cheese, Abbott singles out US brands Miyoko's Kitchen and Parmela Creamery as leading the pack. "Parmela is launching their new generation of cultured and aged cheeses at Natural Expo West in Anaheim this March. I've tasted the new cheeses and believe that they are best-in-class and have eliminated any remaining gaps between traditional cheeses and theirs."

Plant-based cheese brands have already gained traction in territories such as North America, Australia and New Zealand and Europe. In the UK, the market has also been growing pretty rapidly over the last few years, according to Matt Botham, strategic insight director for grocery retail at Kantar Worldpanel. He says plant-based cheeses enjoyed a particular stellar January this year, typically a good month for all plant-based food alternatives thanks to the annual 'Veganuary' event.

"If we look at the four weeks of January 2020 versus the same month last year we've got value sales of plant-based cheeses growing at 41% year-on-year," says Botham.

Botham is quick to point out that it's "still a small part of the market", but he expects it to enjoy strong growth in the next few years. "There are various different ways that growth is going to come," he adds. "Fundamentally you need the product to be there and you've got to have the demand for those products."

Based on data provided by the likes of Kantar Worldpanel and Future Market Insights, it appears the demand is there and slowly but surely the number of products in the category are starting to grow, largely thanks to innovative independent producers rather than the large food groups – for the time being at least.

One company that's been delivering a slew of dairy-free vegan cheeses to the market is Australia-based Damona. According to David Gibson, director at Damona, the company uses similar production methods as used by traditional dairy cheese producers and has built up a range of products that provide consumers with a "unique closeness" to dairy cheeses in terms of texture, taste, the way the cheeses melt and mouthfeel.

"There are fifth- or sixth-generation products that use specialised techniques with plant-based milk and select cultures and enzymes"

"There is definitely a lot of innovation happening in the space nowadays," explains Gibson. "In the early days it tended to be simple nut-based cheese. The industry then started down the track of using starches and coconut oil as a primary ingredient. However, what we see now are what I refer to as your fifth- or sixth-generation products that use specialised techniques with plant-based milk and select cultures and enzymes, which is the case with the Damona products."

Gibson adds there is a growing number of start-ups who are "trying to replicate dairy proteins in laboratory-style environments," in the same way Beyond Meat created its burger alternative.

This description perfectly fits Noquo, which in January 2020 announced it had raised funding of just under EUR3.3m (US$3.6m) from ten new investors (including the CEO of the owner of Quorn Foods) to help ramp up operations.

Noquo co-founder Tavakoli, who has already built up and exited a tech business, was looking around for a new business idea when he came across the plant-based alternative food sector.

Tavakoli says he noticed there was a lot of innovation and activity in numerous different food categories, but one area he felt was being poorly served was plant-based cheeses.

"If you look at the plant-based cheese sector the quality of the alternatives are absolutely terrible," he says. "You couldn't get a cheese eater to agree that they are a real alternative to a dairy-based product."

Gibson agrees the quality of products offered by some producers to date has been sub-standard. "The main barrier has truly been the flood of tasteless and quite unsatisfying options that are only there because they are, unfortunately, cheap and nasty to put it politely. So, as you can imagine, a lot of people who have been exposed to this can be somewhat hesitant to give vegan cheese another go – especially when you find the vegan cheese you bought doesn't melt!? No-one likes that."

It was with these issues in mind that Tavakoli set out on a mission to create a plant-based cheese product that "tastes delicious and is at a price point that's attractive". He says one of the key challenges facing all plant-based cheese producers is cow's milk is still significantly cheaper than plant-based milk, which means plant-based cheeses typically have a premium price point.

There is also the issue that unlike in some other product categories where you essentially have a singular item – a burger, for example – there are lots of different types of cheese made from different animals, so producers are not trying to replicate one flavour and texture profile.

"We think of it as the overall experience," says Tavakoli. "Everything from how it looks, how it feels in your hands, how it smells and then the flavour itself and the mouthfeel. It also has to have functionality. So you want it to melt at a certain temperature and you want it to cool down after it's melted. The main challenges are the texture and the functionality. We're pretty good at spotting fake texture more than we are fake flavours, for example."

Noquo is still at R&D stage and experimenting with different ingredients such as legumes and pulses in addition to different processes such as fermentation.

"Our aim is to launch our first product this year which will be a more feta-like product," Tavakoli says. "We are also doing more earlier stage research on a melting cheese and a sliceable cheese."

He believes the potential opportunity for companies like Noquo is enormous both in retail and in foodservice. "There's a lot to do on the burger side given all these vegan burgers that are out there that need vegan cheese," says Tavakoli. "Pizza is also massive because cheese is absolutely essential to pizza."

At Damona, Gibson predicts a similarly bright future for the plant-based cheese category because he's detected the customer base has shifted and grown in recent years, a trend he expects to continue. "Our customers obviously began with those choosing a vegan diet. However, it has quickly grown to include consumers in the lactose-free/dairy intolerant markets. Additionally, the growing flexitarian diet is seeing more health-conscious shoppers becoming fans."

When asked to speculate as to how big the category might potentially get, Gibson thinks it could easily triple in the next few years, adding: "Over the next ten years who knows? What you could look at is what is the size of the dairy cheese market? Perhaps a third or more of that?

"Consider as well that dairy milk is actually diminishing in supply for many reasons around the world such as droughts, poor farming and land management practices and also simply through unsustainable supply chains. All-in-all, we believe we are in the right space at the right time with the right products and the right vision, and we really look forward to what's to come."

Vdriven Consulting's Abbott shares Gibson's optimism and predicts a similarly bright future for the category. "According to Future Market Insights, the market is projected to rise at a CAGR of 8.6% between 2019 and 2028 and is expected to exceed US$4.5bn. I contend that with innovation from companies like Parmela Creamery – where there is no sacrifice in taste and functionality – that we could see a $10bn market for plant based-based cheese by 2030."

Perhaps, then, the holy grail is finally coming within reach in the plant-based cheese category.