NotCo Raises $70M To Build B2B Business And “Operate Like Coca Cola”

Backed by $70 million in new growth capital, plant-based food and beverage company NotCo is aiming to build a business-to-business food technology platform “that operates like Coca Cola.”

Since launching in 2015, the Chilean company’s funding has totaled nearly $433 million. The latest round, announced in December, was led by existing investor Princeville Capital, with additional participation from Bezos Expeditions, Tiger Global and L Catterton, among others.

According to co-founder and CEO Matias Muchnick, NotCo will continue to operate and make growth decisions with the heightened inflation and currency exchange rates, as well as the geopolitical environment and overall global economic climate, in mind. Against the backdrop of those challenges, he also highlighted the value of having Marcos Galperin, founder and CEO of MercadoLibre, the largest Latin American tech company, on board as an investor.

Galperin will serve as Muchnick’s “potential favorite mentor in the world,” he said, noting he has admired Galperin’s ability to stay at the helm of his company for the past 22 years.

Establishing the B2B platform will be essential to executing that long-term goal, but will also allow NotCo to scale its technology quickly and efficiently, a strategy Muchnik believes is essential for NotCo to “capitalize on its uniqueness,” which he said is rooted in its technology and artificial intelligence platform named Giuseppe. Developing the B2B arm will help take the company “out of the shadows” of what Impossible, Beyond and Oatly are capable of doing, he claimed. In 2022, the company announced a joint venture with the Kraft Heinz company and just launched its first co-branded product, NotKraft Singles, in October.

Muchnick declined to speak to the entirety of NotCo’s relationship with Kraft, citing confidentiality agreements, but he confirmed that all future NotCo partnerships will develop co-branded products. NotCo will have control over how its technology is applied, work on product R&D and everything else it takes to get the item to shelf, but once launched, the partner company will be charged with scaling up manufacturing, distribution and commercializing the new ‘NotProduct.’

“The physical world is a very difficult world – supply chain issues, scalability, manufacturing – all of that really brings a lot of headaches,” said Muchnick. “For us, a licensing agreement brings two things: simplicity of the business and an angle to our business unit and revenue streams at very high gross margins. [We are] focusing on margin contributions and bringing NotCo, in the next two years, to be a profitable company.”

Cobranding products offers value to both parties, Muchnick explained. In the seven years since the company launched, it has capitalized on the work of its own brand and the technology and artificial intelligence capabilities it has built. After the joint venture with Kraft was announced, Muchnick said slews of large food companies began reaching out with requests the company make a “Not” version of their product.

“All of the requests were actually considering the brand on the front of the pack because what they can’t do as a corporation, multinationals cannot connect to a [newer] generation of consumers,” he said. “They have had a hard time doing that. With the element of the branding of NotCo and calling it ‘Not’ they can connect to a consumer that maybe in the past they couldn’t.”

That branding seems to be resonating with Kraft consumers: though currently in just 30 stores, sales of NotKraft singles are 1900% higher than expected, said Muchnick, adding that the partnership has worked incredibly well because both sides have strong self-awareness to their respective roles. Looking to 2023, the joint venture will see NotKraft products enter four new categories.

The company has also partnered with foodservice operators throughout Latin America including Starbucks in Mexico with NotMilk and Burger King in Chile which Muchnick claims sells 32 NotMeat units per store, per day. In December, it was announced that Dunkin’ will roll out two plant-based NotDonuts.

“This is the real chance of making a democratic plant based industry and not just the Ivy League of it, not just the premium product,” said Muchnick. “It makes sense to jump on the shoulders of our distribution partner like Kraft with the commercialization platform that they also already have.”

This approach is already supported by how NotCo functions within its own operations. The company has managed to scale by outsourcing its manufacturing and distribution and currently works with 50 different co-packers around the world, an approach inspired by the Coca-Cola model. By selling its technology the way Coke sells its concentrate, NotCo has been able to position itself to “out compete” all of its “comparables” (Beyond Meat, Impossible Foods and Oatly) in terms of the strength of the business, he explained.

He aims to operate NotCo with half the business dedicated to branded products and the other half from co-branded partnerships in the next five years. Muchnick believes with this approach NotCo is poised to outcompete plant-based leaders across categories, citing the likes of Beyond Meat, Impossible Foods and Oatly. Since the company’s start, he emphasized it has focused on building the business with an efficient profit/loss ratio and high gross margins.

“We always understood that if we don’t operate very efficiently, then we’re not going to make it,” said Muchnick. “For us, it’s about moving the needle towards sustainability as fast as possible because this fucking world needs it, very fast. The only way to do that is with speed and we needed to understand how to do it very efficiently.