Danone partners with upstart to create food derived from the pongamia tree

Dive Brief:

  • Danone is partnering with Terviva to develop new food products that utilize oil and protein taken from beans harvested from pongamia trees, the companies said in a statement. The financial details of the agreement were not disclosed.
  • Terviva also announced it raised $54 million to commercialize its new sustainable culinary oil and plant protein. Terviva expects to close an additional $24 million in equity and debt capital this quarter.
  • The fundraising and partnership announcement comes as food manufacturers respond to a growing consumer preference for sustainably grown products. Businesses of all sizes are paying more attention to things like regenerative farming practices that improve soil health, water quality and biodiversity, while also helping the livelihood of farmers who grow the crops.

Dive Insight:

CPG manufacturers are looking outside their own walls for ways to improve the sustainability of their products as that attribute becomes a bigger concern for consumers. While companies like Danone may have a deep understanding of how to incorporate commodities such as corn, soybeans and wheat, the move to tap into new ingredients often requires the expertise of a smaller upstart who has worked more closely with them.

Terviva’s collaboration with Danone will allow the French yogurt, plant-based food and water giant to expedite development of offerings that utilize pongamia oil and plant protein. Terviva creates its golden, buttery cooking oil and highly soluble plant protein from the beans of the regenerative pongamia tree, which is a flowering tree native to Australia and India that is also commonly grown in Florida.

The company claims the oil is more sustainable than other oilseed crops commonly used today, such as palm and soy. In addition, pongamia trees require little to no fertilizer or pesticides.

According to a 2018 study from Nielsen, almost half of U.S. consumers said they were likely to change what they buy to align with environmental standards. A survey conducted by Crestline Custom Promotional Products a year later showed more than 68% of American consumers want to support companies that share their social, political and environmental values. 

Terviva works with farmers to plant pongamia trees on idle agricultural land that is often difficult to farm due to poor soil or water stress. An orchard of pongamia trees captures 115 metric tons of carbon per acre during the course of 30 years, ranking pongamia among the the most sustainable sources of edible oil and plant protein, the company said. 

Food companies such as Nestlé, PepsiCo and Coca-Cola have moved aggressively to make sustainability an intricate part of their business. PepsiCo announced last month it aims to expand its regenerative farming programs to 7 million acres by 2030 — equal to roughly all the land it uses to grow potatoes, oats and other commodities for its products.

For Danone, this latest partnership takes its sustainably pledge one step further.

After the company’s North American operations were certified a B Corp in 2018, it has continued to boost its social and environmental accountability. It has invested in regenerative farming and worked to support watersheds. The Wall Street Journal said Danone ranks second among 55 publicly traded meat, poultry and dairy companies world-wide for its management of environmental, social and governance issues, including disclosures and programs.

The use of pongamia oil and proteins could play a big role for Danone when it comes to the ingredient mix of its plant-based portfolio. Consumers are incorporating more plant-based foods into their diets, and that will undoubtedly benefit companies like Danone. But other large CPGs and countless upstarts are doing the same thing, so one way for Danone to stand out is focusing on the ingredients that go into its products.

Terviva will open a facility in the U.S. in 2022 to produce pongamia-based foods. The company plans to have commercial quantities of pongamia oil available by mid-2022 with highly soluble protein isolates a year later, according to Food Navigator. Danone no doubt is planning for the future and looking to this sustainable ingredient as a potential option for its portfolio that includes plant-based brands like Silk and So Delicious.

Terviva, which is raising nearly $80 million to help it commercialize its culinary oil and plant protein, immediately gains a partner who could one day become a major customer. If pongamia oil catches on, other companies could follow suit and Terviva could witness even more demand for its sustainable offering.

The funding round for Terviva includes investments from Ron Edwards, the co-founder of SoBe and Blue Buffalo Pet Food; Mark Tercek, the former CEO of The Nature Conservancy; and Bryan Meehan, the executive chair of Blue Bottle Coffee.

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