Eat Beyond Global CEO: ‘getting to market quicker is vitally important’

Eat Beyond Global Holdings (CNQ: EATS) is an investment issuer focused on the global plant-based and alternative food sector. On July 19, 2021, the company announced the appointment of Michael Aucoin as CEO. Invezz had the opportunity to catch up with Aucoin to better understand his vision and outlook for the alternative food space.

Aucoin’s vision and strategy

As CEO, Aucoin told Invezz he will focus on identifying investment opportunities in companies operating within the plant-based protein category. The category is prime to displace traditional animal protein amid growing consumer enthusiasm. Aucoin will also build on the company’s existing team of highly qualified advisors to help scale portfolio companies.

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Eat Beyond’s advisors are expected to “roll up their sleeves and spend material time” with the portfolio companies, he said. Entrepreneurs will be able to take advantage of Eat Beyond’s expertise in distribution, operations, manufacturing, as well as other key areas of business so their food companies can focus more on “what they’re really great at.” He said:

For me, the real key is going to be acceleration given how fast consumer dynamics shift and how much innovation is out there. Getting to market quicker is vitally important.

‘Growing broad investment enthusiasm’ 

Food inflation remains a real concern for businesses and consumers alike. Most recently, Texas Roadhouse Inc (NASDAQ: TXRH) revised its internal food cost inflation estimates from 4% to 7%.  By contrast, Aucoin said he expects plant-based food products to move in the opposite direction, as portfolio companies achieve economies of scale.

This bodes well for companies in the alternative food space and Eat Global’s ability to generate a return on investment. Target companies are commanding a “pretty significant” multiple although this is justified based on anticipated future growth.

Meanwhile, consumers are “becoming more comfortable” eating alternative food products, while companies are selling better testing items.

I think there’s increasing broad investment enthusiasm for space. We’re seeing the multiples edging up with that.

Case in point: Nabati Foods

There are many standout companies in Eat Beyond’s portfolio, one of which is Nabati Foods, a company that created an alternative product to eggs. The Nabati Plant Eggz has only 90 calories, no cholesterol, and six grams of protein.

Prior to Eat Beyond’s involvement, Nabati Foods was working out of a small production facility with limited distribution. Eat Beyond recognized Nabati Foods’ “very high quality” product that is backed by an “exceptional entrepreneur”. As an equity investor and now business partner, Eat Beyond leveraged its expertise in sales, manufacturing, and financing with the end results being Nabati Foods’ current run-rate 40 times greater than what it was just eight months ago.

Management expects to derive the bulk of its return on investment during this type of initial acceleration, CEO Aucoin said.  Eat Beyond will either sell part of its stake to another strategic investor or help the portfolio company go public. After that, it will allocate its new funds towards a new strategic investment.

Beyond Nabati Foods, the majority of Eat Beyond’s portfolio companies are based in North America.  Although the market might be underdeveloped compared to other countries such as the United Kingdom or Germany, there are a lot of “good ideas” coming out of Canadian and US food companies.