Matías Muchnick is no stranger to surprises. As an entrepreneur who shifted his finance bona fides to the world of artificial intelligence, testing out hypotheses and seeing what sticks is his bread and butter. But in the dynamic world of plant-based food, even those on the vanguard of revolutionary change may pinch themselves from time to time.
Nine years after Muchnick created NotCo, a start-up launched in Chile with a mission to use technology to move the needle on sustainability, the trajectory is pointing upwards. NotCo’s line of plant-based milk, mayo, chicken, beef, ice cream and dulce de leche spread has paved the way for partnerships with Starbucks, Burger King, Papa Johns, Mars and, most recently, The Kraft Heinz Company, for which NotCo helped devise a plant-based version of its iconic mac and cheese.
So far, NotCo has raised US$430 million and has some 500 employees spread across North and South America, almost half working in science development. “It’s an insane amount of money,” says Muchnick, NotCo’s CEO and co-founder, during a call from New York City, where the company’s corporate headquarters are now located.
“The mission is not only to create products that appeal to the mass market that are better for you and better for the planet,” he says. “It’s to make sure that we’re holding hands with other companies that are trying to do that as well.”
NotCo’s secret weapon has been an artificial intelligence dubbed Giuseppe, after Giuseppe Arcimboldo, an Italian artist known for paintings of human faces using fruits and vegetables. The algorithm mines the molecular and chemical properties of more than 300,000 plants for combinations that can mimic the components of animal-based foods and replace them. Bamboo fibre and pea protein to make burgers. Peach concentrate and corn to copy chicken nuggets. And a cocktail of chickpeas, sunflower oil and lemon juice to create a spread that tastes like mayo.
In the plant-based explosion, it’s difficult to identify what moment the movement is in. In 2022, Euromonitor, a market research company, reported that global retail sales of plant-based meat, seafood, milk, yogurt and cheese had reached $28 billion (all amounts in U.S. dollars). Impressive, but, as the Good Food Institute noted, that amount represents “a tiny fraction of the multi-trillion dollar market for conventional animal products.” While dairy replacement is booming, profits at certain companies have faltered, and plant-based meat has stumbled in North America, amid a backlash over its processed nature and price point. A growing population, and growing incomes, means that global production of meat continues to climb, according to the United Nations Food and Agricultural Organization. In 2023, it was up slightly, 0.8%, from the previous year, despite more awareness of the environmental impact of massive livestock production.
The first two years in NotCo [we were] tasting shitty stuff, to be honest. And telling the algorithm why we didn’t want it.
- Matías Muchnick, CEO and co-founder, NotCo
Indeed, the food industry has become the common denominator for every major environmental hurdle facing humankind, Muchnick says, from deforestation to land use, water scarcity and ocean depletion. “That is a problem that we need to fix. But we cannot charge that problem to the consumer and make shitty products. We need to make incredible products.”
Which brings us back to Giuseppe. Muchnick likes to say it has been around since “before AI was trendy.” The seed of his own interest sprouted in 2010, as a keen finance intern trying to harness the power of AI to create a better-performing mutual fund. Soon after, he launched his first start-up: a Latin American version of the Fitbit, which flopped. But conversations with friends brought him to a broader topic, that had to do with existential survival. The food system, he noted, was broken. Studying at University of California, Berkeley, at a time when capital was rushing over to Crispr, the gene-editing technology, he saw the potential for a food system overhaul.
“Why are we investing more in the aspirin than not getting the headaches?” he asks. He needed partners to disrupt the system, and he found that in Karim Pichara, who along with Pablo Zamora co-founded NotCo. Pichara is an astrophysicist who had developed algorithms for astronomers to understand the composition of a star. They decided to look at food in a similar way. “If we have an understanding of the complexity of food, then we will have the tools to extract value from it,” Muchnick says.
The process involved trolling terabytes of data and overlapping enough information so that Giuseppe could understand what food actually is. Then came the human variable. It’s one thing to be able to identify that blue cheese and cacao beans share 73 molecules of flavour, Muchnick says; it’s another for the machine to understand that despite those similarities, the products have nothing to do with each other. There’s also a great deal of trial and error. Adding a whole strawberry to a mock chicken recipe might jeopardize the texture and colour of it, but extracting a particular molecule could be of use.
“The first two years in NotCo [we were] tasting shitty stuff, to be honest,” Muchnick says. “And telling the algorithm why we didn’t want it.” Once they had the secret sauce, they started rolling out their own line of products in 2017 to prove to the market that what they were proposing could work. Their first product, NotMayo, secured 8% of the market share in Chile’s largest grocer in its first eight months, Muchnick says. Now, their NotBurger holds 6% of the total market share of burgers in Argentina, one of the world’s biggest beef-eating nations, and in Chile, he says.
Mercedes Gómez, a photographer and artist in Buenos Aires, has noticed that change. The 32-year-old has not eaten meat in 13 years. She credits NotCo for creating branding that appeals to a broad audience and paving the way for other plant-based brands in Argentina, and earning them real estate in grocery stores. “They really opened the door,” says Gómez, who shies away from the NotBurger, because “it tastes too much like beef,” but is a fan of NotChicken and always has NotCream Cheese in her fridge. “I know a lot of people that aren’t going to give up beef, but they’re opting for more plant-based [foods] thanks to [NotCo],” she says – in some cases for other reasons.
That’s what prompted 29-year-old Emilia Mac Donagh, an anthropologist who lives in La Plata, southeast of Buenos Aires, to give NotCo products a try. The meat-eater needed to eat less sodium for health reasons and found that NotCo products allowed her to do that. She started with NotMayo, which she says tastes as good as any other mayo. “They allowed me to eat things that I had stopped eating,” she says.
This kind of reaction has translated into financial votes of confidence. In 2021, NotCo secured a financing round of $235 million that pushed its valuation to $1.5 billion, securing “unicorn” status. It recently opened a research and development centre in San Francisco in partnership with Kraft Heinz.
NotCo’s success has also made it a magnet of another kind. In Chile, the country where it launched, it has been the subject of a legal battle with dairy farmers who alleged that the company violated competition rules by using the word “milk” in its products. The first court ruled in favour of the farmers. An appeals court ruled in favour of NotCo. This comes amid a wave of similar disputes. Oatly, the Swedish dairy-alternative start-up, recently won a four-year court fight to be able to use the term “post milk generation” in its advertising in the U.K., while in France, the battle still brews over using terms like “steak,” “fillet” and “ham” to describe plant-based products. Last year, the country’s top court rejected the idea that there is confusion between the terms “steak” and “veggie steak,” but the French government has since issued a decree banning the use of 21 meat-related terms for plant products manufactured in France. Similar bans exist in Italy and several U.S. states. In the case of NotCo, the company armed its defence with a market research study that found that 99% of consumers understood that NotMilk is, well, not dairy milk. The decision has been appealed and is now heading up to Chile’s Supreme Court.
It’s not the only challenge that the plant-based sector is facing. The media, it can be said, is quick to declare the arrival – and the death – of new trends. Such is the case with some segments of the plant-based market, particularly plant burgers, which are seeing a slump after an explosive start a few years ago. The Good Food Institute’s 2022 State of the Industry Report, the most recent available, recorded a 7% increase in overall plant-based revenue in the United States from the previous year, but unit growth was down 8% for plant-based meat.
If we have an understanding of the complexity of food, then we will have the tools to extract value from it.
- Matías Muchnick, CEO and co-founder, NotCo
Muchnick says it’s important to be specific. The sector is growing in Latin America and Europe. In North America, dairy substitutes are also growing.
For NotCo, Muchnick says the key to growth is in collaborations. And he and his team have demonstrated an ability to build them. They partnered with Starbucks in Argentina, for example, to create a version of NotMilk that would foam in cold drinks. Burger King in Chile wanted a NotBurger that had the taste profile of a Whopper.
In a November press release that launched its plant-based mac and cheese, Kraft Heinz noted the challenges facing the plant-based sector as a whole, and mac and cheese in particular. “Less than thirty percent of plant-based mac & cheese buyers are repeating purchase as taste and texture remain their largest pain points,” the release said. That’s why the fifth-largest food and drink company in the world says it reached out to NotCo: it has a “proven track record in creating mouthwatering plant-based foods.”
In other words, NotCo has become the “garage of innovation,” Muchnick says, and is already fielding requests to apply its algorithm to other sectors, including personal care products and pet food.
“We are beyond food, which is pretty crazy,” he says.
Natalie Alcoba is Buenos Aires-based writer and associate editor with Corporate Knights.
Check back here as we roll out our Plant Power package this week, along with the release of the 2024 Spring issue of Corporate Knights.
