11 Feb Plant-based food maker Alpha Foods raises $28M to expand
- Alpha Foods, a maker of frozen plant-based meals such as vegan pot pies and meatless burritos, raised $28 million in a funding round led by venture capital fund AccelFoods, according to a release sent to Food Dive. Other investors included New Crop Capital, Green Monday and Blue Horizon.
- The plant-based meal company plans to use the funding for launching new products, expanding its distribution domestically and internationally, securing top talent and boosting its marketing and sales support.
- Cole Orobetz, co-founder and president of Alpha Foods, told Food Dive in an email that “the demand from customers, retailers and food service operators for plant-based is very strong and we felt that the time was right to raise a round that could really solidify our resource base.”
As more consumers crave plant-based alternatives, Alpha Foods is well-positioned in the space. Since its founding in 2015, the company has expanded its portfolio from four offerings to more than 25 vegan and non-GMO products available in more than 9,000 stores around the U.S.
The company’s rapid growth and demand for plant-based foods overall was likely a big reason why Alpha managed to quadruple its previous funding round with this latest one. Last March, Alpha raised $7 million to expand its retail reach. At that time, the company’s products were sold in roughly 6,000 to 7,000 stores. Orobetz told Food Dive he expects to continue the same pace of growth while entering new international markets.
Alpha Foods’ leadership likely helped it to attract additional funding and quickly grow its business. It was co-founded by Loren Wallis, who is the founder of plant-based dairy brand Good Karma Foods acquired by Dean Foods two years ago, and Cole Orobetz, a former venture capital investor in the food sector. That experience has probably served the company well in convincing investors and key talent to back the brand.
AccelFoods co-led the company’s last investment round, so it must have been happy with the results for it to participate again less than a year later. According to the release, Alpha saw “eight-figure revenue” following the investment last March. AccelFoods Managing Partner Jordan Gaspar told Food Dive in an email that Alpha Foods is a good investment because flexitarians make up almost 40% of meat alternative buyers and the brand targets those consumers.
“Our model seeks to back winning challenger brands with sizable second investments once we have the ability to develop trust in both our partnership as well as the staying-power and consumer adoption of the brand,” Gaspar said. “Alpha met numerous investment metrics to warrant our largest commitment to date.”
Studies have shown in recent years that consumers are looking for convenient, healthier and affordable foods. If Alpha can meet that demand with easy frozen meals that also have a strong nutritional profile, then AccelFoods’ investments in the company should continue to pay off. In addition to plants, Alpha also is strongly positioned because of its focus in frozen foods, which have experienced a revival in recent years — volume in 2018 was up for the first time in five years.
Alpha markets itself as a company offering all-American, comfort food products such as burritos, pot pies, chik’n nuggets and tamales in plant-based form. As consumers increasingly look for both plant-based and convenient foods, offering alternative comfort foods could help the brand stand out.
The rapidly expanding plant-based frozen meal space has attracted the attention of other CPG companies, too. Sweet Earth, which is owned by Nestlé, offers nearly 50 products in more than 10,000 stores, including frozen meals, burritos and breakfast sandwiches. Daiya also sells plant-based desserts, pizzas, breakfast burritos, sauces and dressings, with plans to grow even further. And more grocery store brands have been launching their own plant-based meals. Aldi’s frozen vegan line Earth Grown makes chickenless tenders and kale veggie burgers, while Kroger recently launched its own plant-based collection.
This investment for Alpha comes as the plant-based space has seen a surge in funding as sales in the segment skyrocket. In 2018, $673 million was invested into plant-based meat, egg and dairy companies, according to The Good Food Institute. With U.S. retail sales of plant-based foods growing 11% in 2019 to $4.5 billion, food companies eager for growth are actively tapping into the space.
Even though Alpha is not alone in securing more money, it will be using this latest funding to help it expand and stand out on shelves. As the plant-based space becomes even more competitive, upstarts such as Alpha will need any advantages they can get to stand out — and money they raise will be one key way for them to do just that.