Heartbest, a Mexican food tech startup focused on plant-based dairy products and an investee of Zurich-based venture capital firm Blue Horizon, has recently launched its own direct-to-consumer e-commerce. Like other competitors in the sector, the company uses proprietary technology to widen the possibilities of plant-based dairy products, but differently from others, Heartbest is also working to develop a community sense, a lifestyle approach to connect people really keen on changing the way they experience food. That’s what the startup‘s co-founder and CEO, Aldo González, told LABS.
He founded Heartbest in 2017, alongside his father, Aniceto González, a food engineer with more than 35 years of experience working for cereal and food multinational companies in Mexico. “About ten years ago, he had a serious medical issue and had to become vegetarian by necessity. He changed his mindset towards how he could do something in this area and change the food system. I’m 26 years old, I come from a financial and administration background, and I grew with a vegetarian lifestyle. Eventually, I became vegan, and I came to understand how hard it is to be vegan in Mexico and Latin America. That’s how we came up with the idea of building a food system that could help people to adapt and choose a lifestyle that is not only good for their bodies but the planet,” explains González, stressing that plant-based products are also sustainable on the shop floor. Heartbest says that, with its technology, it spends 25% less water than traditional dairy manufacturing processes and 8% less than conventional almond milk production.
In the last five years, the plant-based industry finally began to attract big investors worldwide – also prompting giant food companies, such as JBS, Tyson Foods, Unilever, and Nestlé, to make acquisitions and invest in this market.
Blue Horizon Ventures, the VC firm that led Heartbest’s $2 million pre-Series A round last year, is also an investor in several other food tech companies. It is frequently referred to as the second-largest fund worldwide when it comes to food technologies. Heartbest was their first bet in Latin America. “We expect a second-round funding by the end of this year or sooner,” says González. The main reason for all this interest is simple: the larger the world population, the greater the need for more food – and the planet has finite resources.
In 2017, FAO launched a document where it forecasted that the world’s population was expected to grow to almost 10 billion by 2050, boosting agricultural demand by around 50% compared to 2013 status. This forecast was made considering a scenario of modest economic growth. Since then, the agricultural capacity has increased, but the world has also accumulated local and regional financial crises, a slow down in the growth of the largest global powerhouses, besides, well, an unprecedented pandemic. Food waste also plays a significant role in this equation. Not to mention the benefits that a diet with less animal protein and milk derivatives can bring to health, according to numerous researches.
According to González, Mexico has a particularity that makes the country a good laboratory for plant-based food in Latin America: 75% of the population has some degree of lactose intolerance or allergy, according to several studies. “That’s why we started with the plant-based dairy products. Even when people are aware of this [intolerance], it is really hard for them to adapt their lifestyle due to the lack of availability [of alternative products], and technology [to mimic aspects of dairy food],” says González. So Heartbest first step was to develop a tech platform based on alternative fat, capable of replicating fundamental aspects of dairy products, such as texture or even the melting characteristics of cheese.
Currently, Heartbest produces plant-based cheese, milk, spreads, and yogurt from plants like amaranth and quinoa, and it is planning to launch an alternative for butter too (much more tasty and healthier than margarine). The products are available through 900 points of sale nationwide, including supermarket chains such as Soriana, Chedraui, Walmart, and Costco, in addition to their online platforms and Amazon Mexico. Today, Heartbest is capable of producing 120 tons of plant-based cheese, bread, and butter per month. Regarding beverages, the products are made within the company’s factory and then sent to partners for packaging.
What is really driving this industry around the world is the flexitarians: people who consume animal protein and its derivatives, but due to medical conditions or just lifestyle, are choosing to eat less and less without losing sight of the taste, smell, and texture of these foods. The key to Hearbest’s approach is to link this target audience with the wellness market and a strong, sustainable business model that targets less impact in distribution and packaging.
Heartbest’s next steps in Latin America… and the U.S.
Regarding sales and interaction channels, after the launch of its e-commerce, Heartbest’s idea is always to expand first online and then physically. Where to? First Mexico nationwide, then to Latin American neighbors, such as Colombia and Chile, and, in 2022, to the U.S., where plant-based product sales are growing almost twice as fast as overall food sales.
Last year, the sales of Heartbest’s milk through Amazon Mexico grew 677%, but as the company’s own platform evolves, the idea is to reduce the offer through the giant retailer gradually.
The platform was launched in April and is currently serving Mexico City and its surroundings. Little by little, the plan is to expand operations nationwide and also order options (from single purchases to subscription models). “The platform can work as a marketplace, bringing together products, services and events promoted not only by Heartbest but its food and wellness partner brands,” says Luis Mejía, Heartbest’s head of brand marketing.
Also, last year, Heartbest had a 105% growth in sales through partner supermarkets, driven by the pandemic and the fact that some people sought, in some cases for the first time, healthier habits. “The COVID-19 pandemic accelerated a series of trends, and one of them is that we began to understand that our most important asset is our health.
“Once we truly understand how we need to adapt our product to the local taste, then we can scale, and partner with supermarkets and foodservice chains, which are an important measure of how mature a market is,” says González. In Mexico, Heartbest is already testing its products in a partnership with Burger King. The company is also searching for new partners, such as dark kitchen and delivery-focused players.
When it comes to competition, González says he is not worried about other food tech startups. “This is a sector where everybody involved knows that is not only about a hot market, but about necessity. Everyone collaborates. When I talked to several venture capitalists two to three years ago, food tech was not among their top five investment thesis. This year I talked to most of them again, and now the sector is among their top three, if not top one, priorities. We’re leveraging opportunities for everyone,” says González.
He says that the sector as a whole is already specializing and being divided into three verticals (plant-based, cell-based, and fermentation). To innovate and seize the opportunities in all these verticals, Heartbest believes it will need new talents. “For 2021, we’re talking about a 120% growth regarding net revenue from last year. Of course that we’re not talking about growing staff at the same pace; we’ll need new talents to our innovation center and to continue to build our new tech platform.” Throughout 2020, the company grew from 17 to 46 employees.