The Path To Your Own Building

We have a packed newsletter for you. Filled with funding and acquisition highlights, plus a feature on what to consider when leasing, or even purchasing a manufacturing facility. Finally, we wrap it up with some content recommendations.

Enjoy!

REAL ESTATE HIGHLIGHTS

Omeat has emerged from stealth mode and is preparing to enter the cultivated meat market. The company is currently building a pilot plant in Los Angeles and expanding its staff to prepare for commercialization. Concurrently, Omeat is working with the Food and Drug Administration and the US Department of Agriculture to gain regulatory approval. Upside Foods and GOOD Meat, the cultivated meat arm of Eat Just Inc., both received approval on June 21 from the USDA to start selling cultivated meat in the United States. This is significant because Omeat’s cultivated meat R&D facility — as well as the pilot plant Omeat is currently building near Los Angeles — looks and functions similar to Upside Foods and GOOD Meat. (source: FoodDive)

NOTABLE FUNDINGS

Neat Meat Burger Co. has raised $18 million in Series B funding to expand its Neat Burger plant-based restaurant concept in the United States and international markets. Established in 2019, Neat Burger offers an entirely plant-based menu focused on premium ingredients served in compostable or biodegradable packaging. (source: FoodBusinessNews)

MyForest Foods Co, a New York-based startup making meat alternatives from mushroom mycelium, has raised $15 million in Series A-2 funding and hired Greg Shewchuk as CEO as it ramps up distribution of its first product: MyBacon. Spun out in 2020 from parent company Ecovative, which makes mycelium-based packaging, MyForest hopes to revive the alt meat category’s flagging fortunes with fungi-based whole cuts made using a solid-state fermentation process. (source: AFN)

Upcycled food company Renewal Mill has closed the first part of its Series A funding round, led by Beyond Impact Advisors with participation by ICA Fund. Founded in 2016, Renewal Mill transforms the leftover pulp from the production of soy, oat, or almond milk into “climate-friendly” flours, baking mixes, and cookies. Capital will be used to expand retail distribution, introduce new products and identify new opportunities to build a more sustainable food system, according to the company. (source: FoodBusinessNews)

ACQUISITIONS

Bobbie, an organic infant formula company, has acquired Nature’s One, a 26-year-old pediatric nutrition company, in a move that gives Bobbie end-to-end control over formula manufacturing through a new facility and triples the size of Bobbie’s operations. (source: TechCrunch)

Unilever entered into an agreement to buy frozen Greek yogurt brand Yasso for an undisclosed amount. The deal is slated to close in the third quarter. The purchase of Yasso, known for its low calorie frozen treats, brings another premium brand to Unilever’s Ice Cream Business Group, which is aiming to increase high quality brands and offerings. Last September, Yasso announced it had crossed $200 million in retail sales, making it the fastest growing scaled brand across ice cream and novelties. (source: FoodDive)

Haus, an aperitif company that tried to find a buyer last year after investor funding dried up, now has one. The Naked Market, founded by Harrison Fugman and Alex Kost, has acquired certain assets of the low-ABV (alcohol by volume) beverage company from CPG Holding Co. and is relaunching a few of Haus’ customer favorites, including Citrus Flower, Pomegranate Rosemary, and Grapefruit Jalapeño. (source: TechCrunch)

PARTNERSHIPS

Plant-based deli meats company Prime Roots and UK-based mycoprotein product manufacturer Quorn are joining forces after establishing a recent partnership. Both companies focus on the fungi protein space, and partnering together will enable them to expand the market with more plant-based products. Quorn is entering the partnership after its parent company, Monde Nissin Corp., faced recent setbacks in its US expansion strategy. (source: FoodBusinessNews)

A MANUFACTURING FACILITY - YOUR NEXT STEP?

After helping a handful of F&B companies find a manufacturing facility and currently working with several more, I thought I’d share some insight on how and why an F&B company typically works its way to its own manufacturing facility and what to look for in a facility when the time comes.

But First, Co-packing

The CEO/Founder has an idea for a new food or beverage. They find a co-packer who produces it for them.

The founder tests the product by bringing it to market. If it does well, the founder increases production.

At this time, they may also seek funding or more funding.

And, now with a successful product, they have a bit of a commodity on their hands: a brand.

It’d be great to capitalize on this brand-new brand by building out a complimentary product line.

It would be easier - and seemingly cheaper - to both increase current production and create new products by having your own manufacturing facility.

This is typically where I come in.

Your Manufacturing Facility, A Place to Call Home

While the products of my F&B clients may vary dramatically, the fundamentals of the manufacturing facility search remain the same.

We often look for second-generation food facilities to retrofit because they are already FDA and/or USDA-approved and because they will be cheaper than a new build. However, because there aren’t a ton of manufacturing facilities on the market with said approvals and because, by the very nature of a manufacturing facility, they are usually not small, the annual rental costs can still be substantial. And when you throw in the cost to truly retrofit a building, it can simply be too much for a business, especially a startup, to undertake.

At this point, some clients choose to continue to use a co-packer while others expand their geographical preferences for their facility.

When this happens, my friend, Frank Aranda, who has helped pretty much every type of food company with their manufacturing space needs, recommends, “Find a building with existing utilities that will support your goals, even if it isn’t food-ready. In some cases, a smaller building or complex can allow growth in steps that may help manage risk and cash flow.“

Another alternative Frank suggests is looking into Enterprise Zones and, if you’re a startup, potentially taking advantage of city programs designed to help your type of business.

The Manufacturing Facility Cheat Sheet

In addition to what does and doesn’t work for your needs with the existing infrastructure in a retrofit (NOTE: as mentioned above, it can be costly to move and remove things so be sure to know what costs will be covered before you sign that lease), there are certain features you’re going to want to know about.

Obviously, this list will be tweaked depending on your product, but this is a good overall checklist for when you begin your search:

• the height and temperature of cooler and freezer systems

• the location and size of floor drains

• the volume and type of clarifier or separation system that handles wastewater

• the quantity, pressure, and pipe size of incoming water supply

• wash-down walls

• know your power requirements and know the power in the building. You’ll need at least 1,000 amps for an F&B operation (maybe more if you require a freezer or cooler space)

Conclusion

Leasing or purchasing a food manufacturing facility is a lot more nuanced than the typical commercial real estate transaction. If you’re looking to make a real estate change, it’s important to work with someone who is aware of what is out there (and what will be out there) while also understanding the intricacies of your F&B business. If you need someone, I know a guy.

One thing I always recommend to avoid confusion in these transactions: make sure it’s in the lease!

WHAT I’M CONSUMING (AND ENJOYING!)

📖 Looking for a way to separate yourself from the competition? This article provides solid insight into why your company’s “story” is so important, How stories are selling the new crop of fancy foods. TL;DR: “It’s important to know where your food comes from and why you should pay more for these ingredients,” De Laurentiis said.

🤖🥤AI energy drink? I’m not sure if this is gimmicky or the way of the future, but ICYMI: Every aspect of the energy drink, HELL ENERGY, has been crafted by advanced AI systems from the design, recipe, tasting and taste evaluation, predictive intelligence, security measures, and marketing elements, the company says. (source: Beverage Industry)

Thanks for reading.

If you have any feedback or suggestions, we’d love to hear them.

Also, we’d like to try a new thing… if you’d like your office and/or manufacturing space or business profiled, let me know. It’s always fun to explore and share the many different components of the food & beverage industry.

And, as always, I’m here to help with your real estate needs. Feel free to pop on my calendar: https://calendly.com/erik-crea

Erik Stiebel
Founder and Vice President
CA DRE License #02080746
(c) +1 424.241.4795
[email protected]