NotCo joins the Unicorn Club

This week fast-growing Chilean food tech company, NotCo, announced a $235 million series D round at a $1.5 billion valuation. NotCo’s patented AI technology (code-named Giuseppe) creates plant-based options that taste, feel, cook, and function just like their animal-based counterparts.

The series D funding round was led by Tiger Global and also attracted new funds including DFJ Growth Fund and the social impact foundation, ZOMA Lab. Athletes Lewis Hamilton and Roger Federer and musician and DJ Questlove are also joining, interested in NotCo’s limitless potential to innovate in the plant-based market.

Since its inception five years ago, NotCo has seen explosive growth on the global market, being the only company to disrupt three main animal-based protein categories simultaneously – dairy, eggs, and meat – something no other competitor in the world has achieved so far. The company operates in five countries in both retail and foodservice, and already has five U.S. patents for its proprietary AI technology.

Source: Statista, May 31

“Our patented AI gives us a significant competitive advantage due to the speed and accuracy with which we’re able to develop and bring new products to market,” said NotCo founder and CEO, Matias Muchnick. “The level of enthusiasm we’ve received from our partners is thrilling and humbling. We all share the same vision for Giuseppe’s ability to catapult plant-based foods into mainstream adoption at a rapid pace by focusing on taste, sustainability, and infiltrating multiple categories at once. We are grateful to have the support of Tiger Global as we build a food tech brand with the global reach and capability to reinvent the food industry.”

NotCo has raised more than $350 million to date and the series D will bolster its expansion into new categories in North America, scale the core of its proprietary AI technology, and accelerate plans to launch in Europe and Asia. The round comes just one month after a substantial investment from Enlightened Hospitality Investments (EHI), where Shake Shack founder and QSR trailblazer, Danny Meyer, is a partner; and nine months following an $85 million series C co-led by Future Positive and L Catterton. The series D round included follow-ons from NotCo’s roster of industry-leading investment firms, including Bezos Expeditions, EHI, Future Positive, L Catterton and Kaszek Ventures.

NotCo’s accelerated growth is enabled by Giuseppe, its proprietary, one-of-a-kind, artificial intelligence technology that allows the company to create true plant-based replacements faster, better, and more accurately than anyone else in the industry. Giuseppe’s algorithms analyze thousands of plants in its database to come up with unique combinations that replicate animal-based products almost to perfection.

NotCo launched NotMilk™ in the U.S. seven months ago and is on track to reach 8,000 stores by the end of the year. It is already available nationally in Whole Foods Market, Sprouts, and Wegmans. This staggering success is also unmatched in Latin America, where the company has become the fastest-growing food tech company offering superior tasting plant-based products in Brazil, Argentina, Chile and Colombia, and quickly expanding to Mexico and more. The company sells NotMilk™, NotBurger™, NotMeat™, NotIceCream™ and NotMayo™ in more than 6,000 retailers globally, runs its own direct to consumer ecommerce, and holds successful partnerships with Burger King and Papa John’s. (BusinessWire)

Last mile delivery ready for LATAM liftoff

E-commerce in LatAm has taken off at a compound annual industry growth rate of 16% over the past five years.

Venture capitalists have been investing heavily in last-kilometer delivery over the past five years on a global scale, but Latin America has lagged behind. Over $11 billion has been invested globally in last-click logistics over the past decade, but Latin America only saw about $1 billion over the same period (Source: PitchBook and WIND Ventures research).

Within this, only about $300 million was in Spanish-speaking Latin America — a surprisingly small amount for a region twice the size of the United States.

Brazil-based Loggi accounts for about 60% of last-click VC investment in Latin America, but it only operates in Brazil. That leaves major Spanish countries like Mexico, Colombia, Chile and Argentina without a leading independent last-click logistics company.

In these countries, about 60% of the last-click delivery market is dominated by small, informal companies or independent drivers using their own trucks. This results in inefficiencies due to a lack of technologies such as route optimization as well as a lack of operating scale. These issues are quickly becoming more pronounced as e-commerce in LatAm has taken off at a compound annual industry growth rate of 16% over the past five years.

Retailers are missing an opportunity to give customers what they want. Customers today expect free, reliable same- or next-day delivery — on-time, all the time, and without damage or theft. All of these are challenging in LatAm. Theft, in particular, is a significant problem, because unprofessional drivers often steal products out for delivery and then sell them for a profit. Cost is a problem, too, because free same- and next-day deliveries are simply not available in many places. (TechCrunch)

Source: P&S Intelligence

Morningstar’s LATAM investment themes

In a recent research paper Morningstar discussed Latin America investment opportunities. The publication spoke with leading equity managers about their insights into this often overlooked and underappreciated market. The emphasis throughout the piece was on the booming new economy created by fast-growing tech-enabled companies. Below are some of the highlights.

Pablo Riveroll, manager of the Silver-rated Schroder ISF Latin America fund, says: “Simply put, Latam is value and Asia is growth. But one of the less understood things about Latin America is that the new economy is booming and lots of extremely attractive and fast-growing companies are being created. There is more to Latam than commodities.”

Indeed, Eduardo Figueiredo, manager of the Bronze-rated ASI Latin American Equity fund, agrees there are plenty of under-the-radar opportunities for investors in the region. “There are challenges such as a gap in infrastructure, the slow adoption of tech, and the under-penetration of services across a number of industries. Those characteristics are often highlighted as the negatives of the region, but when you join that need with supply, it’s an interesting combination,” he explains.

In Latin America ecommerce local players still dominate the market, says Riveroll. “It’s not a winner-takes-all-market like you see in other regions, and e-commerce is still fairly fragmented, with two or three leaders”. He invests in MercadoLibre and Brazil-focused Magazine Luiza.

ASI’s Figueiredo likes online homewares retailer Mobly which floated on the Brazilian stock market in February 2021. “The Covid-19 pandemic really highlighted the companies that were slower to adapt and those that were leading changes in their industry, and we have been increasing our exposure to those latter tech-enabled type of businesses,” he says.

The article also focused on financials given the increased adoption of online financial services resulting from Covid-19. Millions of people stuck at home for months on end have found themselves able to save more money than ever before, as well as having more time on their hands to follow the stock market. It’s a powerful combination that has seen the advent of so-called Meme Stocks, which seem to double overnight.

Latin America has not been immune to the trend and the financial sector looks appealing, says Figueiredo. He points to B3 (B3SA3) as one beneficiary: “With interest rates low, the number of individual investing in the stock market has jumped massively. B3 has almost 3.5 million registered investors in Brazil – that has more than doubled in just a few years.”

The stock is a top holding in the Schroder fund too, and Riveroll agrees that the financial sector is one being disrupted by new and tech-savvy businesses. He says: “In many sectors, we are seeing new entrants breaking through, bringing down barrier to entry through technology or more creative business models, bringing prices down and making services more accessible to people. Companies like that are able to grow regardless of economic growth.” (Morningstar)

Note: Includes products of services ordered using the internet via any device, regardless of the method of payment or fulfillment; excludes travel and event tickets, payments such as bill pay, taxes or money transfers, food services and drinking place sales, gambling and other vice goods sales. 

Source: eMarketer, May 2020 

Coffee Prices are Spiking

As Brazil continues to cope with its worst drought in nearly a century frost is now threatening crops and damaging its coffee fields. Brazil is the world’s largest coffee producer and its extreme weather is causing arabica coffee prices to rise. The beans rose 10 percent more on Monday, after jumping nearly 20 percent last week, to their highest in nearly seven years.

Coffee trees are extremely sensitive to frost, which can cause severe damage and even kill trees completely. If a farm needs to replant trees, it would take the new trees about three years to become productive. Preliminary estimates from the Brazilian government’s food supply agency Conab said that last week’s frosts had affected 150,000 to 200,000 hectares (370,658 to 494,210 acres) about 11 percent of the country’s total arabica crop area.

“This marks the first time since 1994 that the country has experienced such a weather event,” coffee trader I & M Smith said in a market update, referring to the July 20 harsh frosts.

Arabica coffee futures prices on ICE rose sharply on Monday, with the September contract climbing to a peak of $4.73/kg, the highest for the front month since October 2014.

“The extent of the damage is still unclear, however, estimates are now between 5.5 million and 9 million 60 kg bags, up from 2 million to 3 million last week,” said Charles Sargeant, soft and agricultural commodity broker at Britannia Global Markets.

Arabica coffee futures have risen by about 35% since the end of June, raising the prospect that major brands may have to raise prices in the coming weeks. (Aljazeera, Reuters)

Source: International Coffee Organization, Coffee Market Report Jun2021

Latina America forecasted to grow 5,8% in 2021, IMF Outlook

The International Monetary Fund lifted previous 2021 growth forecasts for Latin America and the Caribbean to 5.8%, a significant advance over the last estimate from April, boosted particularly because of the good performances of the Brazilian and Mexican economies.

The IMF Global Economic Outlook increased 1,2 percentage points its forecast for the region while maintaining without changes its estimate for the world growth at 6.0%.

Last April the 2021 forecast for Brazil and Mexico was 3.7% and 5% respectively, but now has increased them to 5.3% and 6.3%, given the improved performances of both countries during the first quarter of the year, and in Mexico particularly because of the positive prospects from its neighbor and main trade partner the United States. For Brazil foreign trade is the great booster.

IMF also lifted growth prospects for the region in 2022, with a slight increase of a tenth of percentage point to 3.2%. Mexico’s forecast for next year is 4.2%, up 1.2% from its original estimate, benefitting from the upturn of the US economy. Brazil on the other hand is expected to lose some ground and its GDP is forecasted to grow 1.9%.

The preliminary IMF report concentrates on the region’s two largest economies Brazil and Mexico, with no details, so far, of the other Latin American countries. Overall the outlook underlines that the gap between rich and countries and those of medium and low income will continue to increase because of the different vaccination campaigns and the strong stimuli measures implemented by the most powerful. (MercoPress)

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