Manitoba is about to become a key production centre for plant-based protein with a second pea-protein production plant about to break ground.
Merit Functional Foods Corporation is building a $65-million, 65,000-square-foot facility that will produce both pea and canola protein.
The French company, Roquette, is building a $400-million pea protein plant in Portage la Prairie.
Merit is a 60-40 partnership between an investor group made up of Shaun Crew, Barry Tomiski and Ryan Bracken — all veteran senior management and founders of Hemp Oil Canada Inc./Manitoba Harvest — and Burcon NutraScience Corp., a publicly traded Vancouver company with strong links to Winnipeg where it has had a research lab for 20 years.
The partnership is not disclosing the exact location of the 10 acre site other than to say it is adjacent to Winnipeg, likely to the south. Hemp Oil Canada's plant is in Ste. Agathe.
The plant is expected to create 80 to 85 jobs and require about 20,000 tonnes of peas and canola. Producers have not yet been contracted, but officials said the expectation is for the first production to come off the plant in August 2020.
Johann Tergesen, the CEO of Burcon, said the expectation is that demand will be strong enough that there will likely be the need for further expansion.
"With the Beyond Meats IPO (initial public offering) and the awareness that has created has helped us," he said. "We were on the verge of having this deal with these three fantastic partners, but that helped to push it over."
Public awareness of issues like climate change, sustainability, health and wellness have become top of mind to increasing numbers of consumers and that has created growing demand for healthy products like pea protein. As well, the federal government has committed $150 million to the Prairie-based supercluster, Protein Industries Canada.
"It's all come together now in a way that people are recognizing. It is pretty exciting," Tergesen said.
Burcon has several patented processes for several different versions of pea, canola and soy proteins that it has developed over 20 years and the other partners have experience building and running processing plants as well as customer relationships.
Merit's co-CEOs Ryan Bracken and Barry Tomiski were senior executives at Manitoba Harvest/Hemp Oil Canada and Shaun Crew was the founder of Hemp Oil Canada. That company was acquired by cannabis producer Tilray Inc. for $419 million earlier this year.
In an interview from Los Angeles where he was meeting with the heads of research and development of some of the largest consumer packaged goods companies in the world, Bracken said there is great demand for plant-based ingredients that have the kind of functionality that Merit will be able to produce.
A recent U.S. report shows sales of plant-based foods grew by 11 per cent last year. The sales update, published by Good Food Institute (GFI) and Plant Based Foods Association (PBFA), two interest groups advancing plant-based foods, shows the burgeoning market has reached $4.5 billion US in the last year.
"They can't meet the demand (for protein ingredients)," Bracken said. "And the overriding feeling is that Burcon has done an exceptional job on the technology."
Although Merit will break ground on the plant without booked sales in hand, Bracken said the demand is strong enough that there's plenty of confidence the sales will fall into place. He said their challenge now is to design the facility as fast as possible. Financing as well as the technical expertise is all in place.
"We are looking to bring this to market as fast as possible," Bracken said. "They all want it in the hands of consumers ASAP."
Tergesen, who is from Gimli, said a production partnership Burcon struck with the global food processor Archer Daniels Midland almost 10 years ago for a soy protein product, that never panned out, came just as consumer favour was shifting from soy to pea protein.
And he said their pea protein will have different characteristics from other companies' like Roquette. As well, Merit will produce canola proteins and blend it with pea protein in a combination that has distinctive nutritional values.
Bracken said their technology produces proteins with superior solubility, taste and overall functionality.
"We did our homework before we put our cash behind this project," he said. "The feedback we're getting from the heads of R & D at these big consumer product companies... they put it into their beverages and they say it has amazing solubility levels, there is no negative taste one would assume from pea and canola and from a cost perspective it is in line with where they need to be."
After 20 years of sticking to the research, Tergesen said it is an exciting proposition to finally start commercial production.
He said, "I'm really looking forward to being able to walk into a grocery store to buy something off the shelf that has our protein in it."
- with files from Bloomberg
Martin Cash has been writing a column and business news at the Free Press since 1989. Over those years he’s written through a number of business cycles and the rise and fall (and rise) in fortunes of many local businesses.
Updated on Tuesday, July 16, 2019 at 9:19 PM CDT: Fixes typo