“Sustainable, Synthetic, SynMylk” Slogan
“We build a better and delicious world with engineered microorganisms.” Vision Statement
Milestones
SynMylks’ first milestone is to microbially produce the fatty acids and milk proteins that are needed for the traditional dairy taste. They are not available on the market yet, without coming from animal source. Combining them with the already available minerals, water and lactose, makes it possible to create SynMylk, a milk that is sustainable and animal(-cruelty) free, because there is no livestock needed. But there is more to the company. After reaching the first 3-year goal of producing and extracting the components in their pure forms they can be sold B2B (business to business) via the SynMylk division ‘SynB2B’. They form our minimum viable product, as they are available sooner because the dairy products need further development in texture, etc.. Industries/Stakeholders using our products are the dietary supplement industry with protein powders that contain whey and casein. Vegan protein powder alternatives are usually based on soy protein, which`s taste, and bioavailability can not keep up with the classic, dairy-based whey. Further whey is widely used in food production, cosmetics, agriculture (food for animals and fertilizer), biotechnology and even in construction industry as a nitrogen carrier. Fatty acids are used as biosurfactants in cosmetic and hygiene industry as well as in the food industry. Our 5-year goal is to distribute our first dairy products in retail and wholesale. For us it is important to first have few, but perfect, products before we take this step, as the first impression is especially crucial to consumers for groceries.
“Skill before scale” An important company value
Business model
Multiple revenue-streamsOur modular system is based on having all components present in their purest form before adding them together as needed to tailor our products to the specific market and demand. Further we will start two additional divisions, firstly ‘SynPlas’ which produces bioplastic made from our caseins, and secondly ‘SynFuel’ which produces fatty acid-derived advanced biofuels. Besides their retail they can be used in our own product lifecycle, for example producing our own sustainable milk packaging (Fig. 10), making SynMylk more sustainable and the company more independent.
Market analysis
A broadening and heterogenous market and increasing food demand
With this business model (Fig. 4) we can enter various markets, dairy being the largest of it. This year’s global dairy market value projection is 442 billion USD and has an expected CAGR (compound annual growth rate) of 4.7 % to 20231. The revenue in the milk products segment for 2019 is expected to amount to 674.866 million USD with a per capita revenue of 91.57 USD1. Also, the global milk products volume is rising continuously and is expected to reach 340,769.37 million kilograms and 46.2 kg per capita1. It is a very heterogenous market, as in 2018 the leading dairy corporation 'Dairy Farmers of America' only had a 3.5 %2 market share. Nestlé, FrieslandCampina and Danone had a combined market share of 4.2 %2.
The global demand for dairy is expected to increase by 2.5 % p.a. to 2020, driven by the ongoing urbanization, rising incomes in emerging markets and population growth which is forecasted to reach 9.7 billion in 2050 3. 66 % of the world’s population are expected to live in urban areas by 2050 4.
With this changing way of life comes a shift in consumer behavior, opening new markets like the alternative dairy market, led by increasing veganism and intolerances or allergies. The market value is expected to reach 28.7 billion USD by 2025 at a fast 16.7 % CAGR 5. In comparison, 2017s' value was at estimated 10.7 billion USD 5.
Tailor to multiple markets
With our SynMylk dairy products we can tailor to multiple markets and demands, as the products taste the same as their traditional competitors but are vegan and have the option to be lactose and allergenic-free free or high-protein, low-fat, etc. by default, through our special modular system and the CraftMylk Collection.
Consumer analysis
Willing to pay more for sustainable alternativesFor this we researched, conducted a survey and held many conversations with citizens and professionals . Our modular system allows us to add more nutritional value and variety to our products. For example, a “designer milk” with more protein fits to trends like the ongoing high-protein trend. The Deloitte 2015 American pantry study shows that 55 % of customers are willing to pay up to 10 % more, and 23 % of customers up to 20 %, for a healthier version of a product. Taking up the last point it is very important for SynMylk to not discard its core values of sustainability and transparency for a lower price. As with time and scientific advance our production costs may be less than traditional production of milk, the first years of our company rely on the rising willingness of consumers to pay more for products from companies dedicated to environmental benefits. To understand this and our potential market impact, it is essential to analyze the different values of age groups. Of the now grown up millennials (age 20-34) about 75 % are willing to pay more for sustainable products. It is similar to the 72 % in the age group of the under 20-year old’s – known as Gen Z – willing to pay more6. The evaluation of our survey shows similar results, as the majority would consume milk made by GMOs if it is environmentally friendly.
Further the increasing protein demand is beneficial for our microbial produced milk proteins. By 2050 the global protein demand, will increase by 80 % over today's levels7.
Finances
Big players forced to expand their portfolio.The more informed, health and environmentally conscious consumers force the industries big players to act and invest in future technologies. Traditional grocers, venture capital, established CPG brands (consumer packaged goods) and private equity funds all are ready to invest in future products and technologies and broaden their portfolio, as consumer goods companies are the third largest sector globally by market cap (PWC, global top 100 companies report). For example did the fermentation-based, animal-free, dairy company ‘Perfect Day’ (and future competitor) founded 2014 in Berkeley, receive 24.7 million USD series A and 34.75 million USD series B funding from Horizons Ventures, Continental Grain, Iconiq Capital, Lion Ventures, Verus International, and others. Their first fundings were two seed-fundings of total 2.6 million USD (crunchbase.com). The company ‘Motif Ingredients’, developing proteins for meat and dairy production, also a competitor, raised about 90 million USD (techcrunch.com).
Our 10-year goal is to have a 1 % market share (107 millions USD) of the alternative dairy market, as there are less players. Seed fundings from Business Angels and FFFs (friends, family, ‘fools’) would be the first applicable funding for SynMylk. For that we stand in contact to ThyssenKrupp and Synbio.tech a division of Systemic VC, which are interested in supporting our project after iGEM. Further our university has a 'friends and sponsors' programme which sponsors five digit sums and we want to participate in the many StartUp funding competitions in our area that additionally are great for networking. Likewise our professors are active in the field of biotechnology. Our first PI is a chairman in the biotechnology startup ‘Numaferm’ which produces peptides in a new advanced production method. They raised about 71.4 thousand USD, relating to crunchbase.com. Additionally, the building our team works in is sponsored by and named after Prof. Detlev Riesner, one of our university councils who is a co-founder of Europe's biggest biotech company, Qiagen, with a turnover of 1.502 billion USD.
They all are the nearest possible sponsors and investors for seed, early and late stage (Fig. 6). Further it is possible to implement crowdfunding as an effective tool, when advertized in the right way (see 'Marketing' below). For a market entry in foreign markets we would approach a joint-venture with our competitor 'LegenDairyFoods', as we have a good relationship and think that we first need to establish synthetic milk in the market, before we ‘battle’ each other. Because we have the same approach, it makes scale up easier and more affordable, as we share the expensive bio-reactors and human resources. For the current research and product development phases, we can use the small-scale 20L bio-reactors in our building and the facilities of the German Institute of Food Technology.
SWOT-Analysis
“Something traditional dairy never could be”
But why should they invest in us and why are we better than our competitors? Our SWOT analysis (strengths, weaknesses, opportunities, threats) underlines our strengths that come from our main differentiation point: using microorganisms instead of livestock. It is a whole new approach to the dairy and raw materials industry, that brings multiple perks with it. As already indicated above, industrial dairy herds, including emissions from deforestation and milk processing, are responsible 1.969 million tonnes of CO2-equivalent greenhouse gases(in 2010, ±26percent, FAOSTAT 2010). Further, animals are not treated well in livestock, dairy cows are permanently undergoing pregnancy because they give more milk in that way. That makes our milk vegan, something traditional dairy never could be.
On top of that we project that we will only need a fraction of space needed by the traditional production, as we don't need huge stalls, grazing spaces and agricultural land to produce their food. Actually 26 % of the planets ice-free land is used for livestock grazing and additional 33 % of croplands are used for their food 8. We will only need high fermenters. This additionally contributes to saving expenses in long term as property gets more expensive with time and is needed for the rising population. Further bypassing animal related steps we save a lot of resources that the, previously stated, increasing world population needs. In America for example, do animals consume 95 % of all oats produced and 80 % of corn (Food and Agriculture Organization). The modularity further makes QC (quality control) easy as we have the components in their purest forms. Just 2 weeks prior to the Giant Jamboree there was a massive recall of milk in Germany, as it was contaminated with bacteria 9. This theoretically can’t happen with our methods as the components are fundamentally filtered from the organisms and we will use innovative hyperbaric processing methods from ThyssenKrupp that fully ‘decontaminate’ the product. This processing can happen in-house, therefore saves transports and further emissions and is cost- and waste-efficient due to longer shelf-life.
We also contribute to reducing a future major problem of the earth, Antibiotic resistances. For example, in the USA livestock gets about 70 % of total antibiotics, usually even when animals are not sick 10.
Scandals like the 2008 Chinese milk scandal lead to still existing mistrust in domestic, traditional dairy companies there. With transparency being a key advantage of our modular system and being a major factor in marketing, we can provide trust and awareness and globally bind consumers to our values. Having a loyal and interacting community is specially essential in performance marketing matters.
Less emissions, space-saving, safe, cruelty- and antibiotics-free & vegan
Implementation of technology Talking about our innovative processing, SynMylk has made it its mission to implement new and consumer friendly technologies, contributing to more consumer-trust and bonding. Establishing the ‘internet of things’, that gives every step and device in our process an unique identificator (UID), makes every step traceable for the consumer when combined with blockchain and mobile applications. This leads back to the aware consumer we mentioned above and new technologies lead to a long term growth, because they make processes more efficient and open up new possibilities. For implementing this, we talked with IBM on the Food Innovation Night in early October.
In these pathways (Fig. 8, 9) you can see a simplified traditional pathway of milk compared to the SynMylk pathway. It is emission friendly (highlighted in green), shorter and only has one internal boundary as every step happens in our own production plant. That is another method for cost reduction. Further strengths are in our business plan.
Weaknesses
One of our weaknesses is the time expenditure we need, as scientific results need a lot of time to go through the whole TLR-scale (technology readiness scale). Further it’s the price, as specially in the market entry the products will be more expensive due to research time, salaries and expenses that accumulated over the years (Table 1). Further there is the need to name the general Bioentrepreneurship-related scientific risk, a part of the onion-risk-model. That includes layered up risks like market, timing and competition. The positive market outlook does not necessarily mean that the company will grow steadily. Take the alternative meat company BeyondMeat as an example. Even though their stock had a spectacular peak of 234.900 USD (Nasdaq) on 19/07/26 they now plummeted to 109.990 USD on 19/10/18. However we are convinced that we can minimize a lot of risks, for example the competition with the milk industry. You can find our interview with a farmer and the possible solution here .
Opportunities
Our major opportunities are, as mentioned above, the shift in consumer behavior, the population growth and rising incomes which are expected to increase total milk consumption to a double by 2050, compared to 2000 (FAO, 2006b). Further were the quotas for milk production in the EU removed in April 2016, abolishing limits of scale by law.
Threats
Speaking of the EU, GMO laws are a major threat to SynMylk, but as the synthetic milk does not contain any organisms because they’re filtered, we have a positive outlook on that. Unfortunately the European Food safety Authority (EFSA) can’t provide presubmission advice, as we contacted them. A further threat is from a marketing point-of-view, as there is the ‘DAIRY PRIDE’ act, a bill proposal to prohibit the sale of any food using the market name of a dairy product, if it’s not from a hooved animal. The proposal did not pass congress in 2017 11. Future similar bills from the dairy lobby could therefore be a hurdle.
Combining these company specifics with the macro-economic market situation, like the growth rates and the addressability we elaborated, allows a blend of top-down and bottoms-up approach of company evaluation.
Marketing
Our marketing aims to reach the younger generation, which is more open to new products as mentioned above. Therefore we will use and implement Social Media tools and apps, for example the efficient Facebook Business tool that also extends to Instagram and is tailored to users’ interests, maximazing conversion rates. Additionally a strong online-presence makes it possible to implement a D2C (direct to consumer) pathway, sparing the distribution step in our pathway (Fig. 9), saving emissions and costs of retail. With further education, public engagement and CSR programs (corporate social responsibility) we can establish a strong bond to the youth. We also learned through the survey and Doulix how important Feedback is, therefore we will implement an evaluation tool to optimize customer experience. Additionally our product image, eco-friendliness and cruelty free, is perfect for advertising. You can see this trend for example in green packaging or labels.
Business Plan
Beneath You can find our business plan
- Milk Products - worldwide. (n.d.). Retrieved October 15, 2019, from https://www.statista.com/outlook/40010000/100/milk-products/worldwide
- IFCN. (March 22, 2019). Leading dairy corporations worldwide in 2018, based on market share* [Graph]. In Statista. Retrieved October 20, 2019, from https://www.statista.com/statistics/326373/top-20-dairy-corporations-worldwide-based-on-market-share/
- Prospects for dairy industry- opportunities and threats. Rabobank, 2014
- World Urbanization Prospects 2018 & 2019, UN
- Grand View Research Report “dairy alternatives market”, 2019.
- Nielsen Global Survey of Corporate Social Responsibility and Sustainability
- https://www.irishtimes.com/business/agribusiness-and-food/ireland-well-placed-to-ramp-up-food-supply-as-global-demand-rises-1.2972637, retrieved October 15, 2019
- FAO 2012, “livestock and landscapes”
- https://www.handelsblatt.com/unternehmen/handel-konsumgueter/lebensmittelbranche-grosse-rueckrufaktion-von-belasteter-milch-produkte-dieser-supermarktketten-sind-betroffen/25106688.html?ticket=ST-37610718-vzzICPKGtjCT9RCIu3jj-ap6, retrieved 15.10.2019
- https://www.nrdc.org/media/2018/180731, retrieved 15.10.2019
- https://www.dairyherd.com/article/dairy-pride-act-aims-tackle-mislabeling-non-dairy-products, retrieved 15.10.2019