Case Study

Making plant-based dairy indistinguishable from conventional dairy

Eurie Kim, Partner

Consumers are more mindful of the health and environmental impact of the food they eat. We’re increasingly looking for clean, plant-based foods to replace meat and dairy, which together use 83% of farmland and produce 60% of agriculture’s carbon footprint, while supplying only 18% of calories and 37% of protein consumed. 

While vastly improved over the past decade, existing plant-based dairy options continue to simply replace milk with other ingredients like soy, almond, oat, and rice, and as a result have remained subpar alternatives that have largely been unable to convert the 65% of Americans with lactose sensitivity and 58% of Americans consuming milk and dairy as a protein source. 

No company, in our eyes, had a novel or defensible approach to matching the taste, texture, and experience of real dairy at a comparable price.

Until we met with Eclipse, a plant-based dairy company with a patent-pending process to create plant-based milk indistinguishable from conventional dairy, with all the form factor flexibility milk offers. The founders, Aylon Steinhart and Thomas Bowman, are a complementary and special team redefining and elevating the industry standard with the belief you shouldn’t have to compromise taste when eating plant-based foods. Together they captured our imagination and taste buds. Starting with ice cream, the Eclipse team has ambitions to create a category-defining brand across all dairy products with their plant-based solution.

Shelves full of alternatives but no substitutes

While alternative dairy has become popular in recent years, market penetration is only 10%, but consumer mindshare continues to grow; plant based dairy has grown 11% YoY at a time where the conventional dairy market is down 25%

The popularization of non-dairy alternatives to date has followed a wave of fads shifting from soy to almond to oats, with cashew, coconut, and rice gaining notoriety in between. This is best illustrated in the rapid rise of Oatly, a Swedish company founded in 1994, which reached $200M in sales in 2019 and expects to reach $400M sales in 2020. Though the arc of alternative dairy has led to incrementally better products, a step change substitute has not emerged to capture the broader mass market consumer and drive a tipping point in adoption.

Plant-based meat paved the way

The momentum of modern plant-based meat, namely from Beyond and Impossible, has primed consumers for welcoming Eclipse’s dairy substitute. Beyond and Impossible developed products with comparable taste and nutritional value, along with a repeatable playbook for accelerated brand building and distribution through food institutions such as Burger King, Starbucks, and Dunkin Donuts. 

They also have shown the ability to create defensible enterprise value through proprietary processes and brand equity in a category that has traditionally traded at lower multiples and exits; Beyond Meat traded at 37X its revenue-to-multiple at IPO; RXBar traded at 5X its revenue-to-multiple at acquisition, and Oatly 5X its revenue-to-multiple during its latest round. Eclipse’s go-to-market and dairy base platform, which can be used across dairy categories, has a chartered path to follow.

Clean label and capital efficient model 

Leading with expertise — Aylon at a leading plant-based food institute and Thomas in culinary arts and commercial product development at JUST —  the team leveraged their knowledge to create a patent-pending process for plant-based milk that indistinguishably replicates the molecular composition of dairy milk and can be used as a base across the category. 

The team’s early ability to quickly iterate formulations based on partner and consumer feedback allowed them to impressively bring their first product to market in less than one year. Additionally, knowing what matters to today’s consumer, Aylon and Thomas had an eye toward creating affordable products with a clean label — Eclipse’s milk base can be made without additives, such as gums, and uses commodity raw ingredients, providing a price and production advantage over competitive dairy alternatives. In an emerging plant-based and cell-based market, where many approaches take years and tens of millions of dollars before they’re ready for market, the team’s thoughtful, capital efficient, and proprietary approach stood out to us and speaks to the team’s unique advantage

And a beloved brand is already growing

The company publicly launched in the fall of 2019 with ice cream, an item that brings joy to consumers, and a strategic starting point from which to build a relationship with the consumer. 

For launch, the team partnered with highly regarded regional ice cream shops Humphry Slocombe and OddFellows and generated outsized press buzz on CNN, Forbes, San Francisco Chronicle, Mic, and inbound interest from over 1,000 partners, including large tech offices and multinational food service and CPG brands. 

The proof is in the ice cream. 

Unique people. Unique approaches.

We’re a diverse team of visionaries and veterans who looked at the VC industry and said: “We can do more.” Together, we’re redefining what VC can be — for consumers who deserve better.

We’re a diverse team of visionaries and veterans who looked at the VC industry and said: “We can do more.” Together, we’re redefining what VC can be — for consumers who deserve better.