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February 22, 2022

Kraft Heinz forms venture with alt-protein firm NotCo

The US food giant said the companies plan to use AI to launch co-branded products.

By Dean Best

Kraft Heinz is to team up with plant-based foods group NotCo to launch products using artificial intelligence.

NotCo, based in Chile, says it uses an AI programme – dubbed Giuseppe – to analyse plants to “come up with unique combinations that replicate animal-based products almost to perfection”.

The company, which has attracted more than US$350m in investment, sells plant-based meat and dairy products in markets including Chile, Mexico and the US. NotCo’s inaugural product was a plant-based alternative to mayonnaise, Not Mayo, which is made from garbanzo beans.

Kraft Heinz said today (22 February) the two businesses are to form The Kraft Heinz Not Company, a venture to develop co-branded, plant-based products.

Asked which products the venture will initially launch, a Kraft Heinz spokesperson said: “The joint venture kicks off immediately with the goal of getting something to market in 2022. The joint venture will have a global focus. We expect to share more details on markets and roll-out plans in the months ahead.”

The new venture will be based in Chicago and have R&D facilities in San Francisco. In a statement, Kraft Heinz said the venture “will focus on plant-based innovation across numerous Kraft Heinz product categories”.

Kraft Heinz CEO Miguel Patricio added: “The joint venture with TheNotCompany is a critical step in the transformation of our product portfolio and a tremendous addition to our brand design-to-value capabilities. It helps deliver on our vision to offer more clean, green, and delicious products for consumers. We believe the technology that NotCo brings is revolutionising the creation of delicious plant-based foods with simpler ingredients.”

The most recent tranche of funding NotCo announced was unveiled in July. At the time, the company said it had raised US$235m in a Series D round of funding.

Investment firm Tiger Global led the round. Existing backers, including Bezos Expeditions, Jeff Bezos’ investment house, private-equity firm L Catterton and New York fund Enlightened Hospitality Investments took part. Formula One racing driver – and vegan – Lewis Hamilton and tennis star Roger Federer also joined the round.

Matias Muchnick, CEO and co-founder and NotCo, described the establishment of the venture with Kraft Heinz as “an exciting milestone for the plant-based industry and shows the power of technology’s role in driving mainstream adoption”.

Kraft Heinz, meanwhile, today updated its “long-term” targets on a series of financial metrics.

The ketchup and baked-beans maker is aiming to achieve a 2-3% rise in organic sales each year, up from a previous target of 1-2% growth.

Kraft Heinz is also targeting a 4-6% increase in annual adjusted EBITDA, compared to its most recent goal of 2-3% growth each year.

In the 12 months to 25 December 2021, Kraft Heinz’s sales rose 1.8% on an organic basis. Its adjusted EBITDA was down 4.5%.

Speaking at today’s Consumer Analyst Group of New York conference, Kraft Heinz CFO Andre Maciel said: “In 2022 we expect to deliver adjusted EBITDA for our ongoing business that is consistent with our long term growth algorithm previously communicated. This is despite the unprecedented inflation and the supply chain stress we never could have envisioned two years ago.”

Maciel said the step-up in growth Kraft Heinz is aiming to see from sales is set to come on the back of “consistent double-digit net sales growth in emerging markets and further share gains in foodservice around the world”.

Kraft Heinz, meanwhile, has developed a new initiative, dubbed Agile@Scale, to boost efficiency, make the business more agile and, through which, the company will team up with other companies in areas such as digital technology.

Maciel said: “I am confident that we will continue to operate at industry-leading levels of efficiency. We will also continue to focus on growing EBITDA dollars. As we do, we expect that these were resulting sustaining our industry-leading margins.”

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