Cleveland Avenue, Better Foods partnership to expand global alternative food market

To strengthen its position in the global alternative food market, Shinsegae Food opened Better Foods, a U.S. subsidiary specializing in alternative foods, in 2022. Considering alternative food as one of its main growth drivers, the creation of...

Lee Mingu, managing partner of Cleveland Avenue Technology Investments, speaks during an interview. [SHINSEGAE FOOD]

To strengthen its position in the global alternative food market, Shinsegae Food opened Better Foods, a U.S. subsidiary specializing in alternative foods, in 2022. Considering alternative food as one of its main growth drivers, the creation of Better Foods represents Shinsegae's expansion into the U.S. market and will serve as the company's foundation for sales and marketing operations in the region.

To support its expansion in the U.S. market, Shinsegae Food announced in January 2024 that Better Foods secured investment from Cleveland Avenue. Founded by Don Thompson, the former President & CEO of McDonald’s Corporation, Cleveland Avenue is a Chicago-based venture capital firm that invests in lifestyle consumer brands and technology companies that positively disrupt large and growing markets.

In announcing the investment deal, Cleveland Avenue said it focused on Better Food's R&D capabilities and growth potential in the global market. Since opening its doors in 2022, Better Foods has been looking for business partners to expand production and sales, while growing its alternative food offerings to include alternative meat, alternative milk and alternative cheese through its proprietary research technology.

The Korea JoongAng Daily sat down with Lee Mingu, managing partner of Cleveland Avenue Technology Investments at Cleveland Avenue to understand Better Foods’ potential in the alternative food market and how big the market can grow based on changing consumer trends.

“Coupled with consumer needs, public policies, environmental pressures and advances in food technology around the world, the global alternative food industry is preparing for strong growth,” Lee said. “The rise in demand for protein is due to an increase in the global population and average income. Alternative proteins, including plant-based proteins, can help meet this demand."

The following are edited excerpts of the interview.

Q : What is the trend that Cleveland Avenue sees in the global Food & Beverage (F&B) sector?

A : Cleveland Avenue operates at the intersection of opportunity, perspective and insight. We’re more than just a passive investor. We accelerate growth for entrepreneurs and their businesses. As investors in the F&B industry, we have closely monitored a growing consumer demand for alternative protein foods, such as meat and milk alternatives, as consumers adopt vegetarian, vegan or flexitarian diets.

We also found that in addition to personal health and ethical reasons, there is a growing connection between plant-based diets and broader environmental impact and sustainability. Animal-based proteins require significantly more land, water and energy than plant-based alternatives and are a key contributor to global greenhouse gas emissions.

As a result, innovative products that are cost-conscious, sustainable and satisfy consumer taste profiles have the opportunity for tremendous growth in the global market.

Q : What are the growth potentials of the plant-based alternative food market?

A : The global alternative foods industry is poised for strong growth as we see the convergence of consumer desires with public policy, environmental pressures and worldwide food technology advancements. The growth in global population and average income are driving demand for protein. Alternative proteins can help meet this demand sustainably. Health-conscious consumers are reducing meat consumption and identifying as flexitarian, vegetarian or vegan. This will continue to drive demand for plant-based alternatives. As production scales, alternative proteins will reach price parity with conventional foods.

Sustainability concerns around traditional agriculture are being widely recognized. Alternative proteins have a fraction of the land, water and energy footprint. Countries are incentivizing alternative proteins as part of climate goals. Governments, investors and big food companies are deploying significant resources to drive innovation and scale production of alternative protein. This includes R&D [research and development], subsidies and infrastructure investments.

Finally, rapid progress in food science and manufacturing techniques is improving the taste, texture and nutrition of plant-based and cultured meat products, making them more appealing to mainstream consumers.

Q : What are the aspects that Cleveland Avenue considers when making investments in companies?

A : Cleveland Avenue invests in companies that positively disrupt large and growing markets with the specific goal of building and extending each brand. We actively support our portfolio companies by providing them with operational resources and leveraging our extensive network to help them execute and scale.

Q : What led to the decision to invest in Shinsegae Food’s Better Foods?

A : Investing in Better Foods represents a meaningful opportunity to expand Cleveland Avenue’s global footprint alongside a market leader in consumer culture. We highly evaluated Better Foods’ R&D capabilities and future growth potential in the alternative foods market. We were also encouraged by Shinsegae Food, the parent company of Better Foods, showing steady growth in its market leadership by using alternative foods in various businesses such as food manufacturing, bakery, school meals and restaurants.

This investment also demonstrates Cleveland Avenue’s commitment to shaping the future of alternative foods, and we look forward to partnering with Better Foods to drive innovation and foster collaboration for its global expansion.

Q : What experiences does Cleveland Avenue have related to the alternative food sector?

A : Cleveland Avenue is a global leader in food, beverage and food technology as well as lifestyle investing with a robust portfolio of industry-leading alternative food and sustainability-focused companies. We are excited about our partnership with Better Foods and look forward to collaborating with them as they scale.

BY JEONG SEONWU [jeong.seonwu@joongang.co.kr]