One of the early rising stars of plant-based meat sector has closed. Sunfed was launched in 2018 by Shama Sukul Lee with its first product, Chicken Free Chicken. Boar Free Bacon followed in 2020 and Bull Free Beef in 2022.
In a video released on Facebook, Lee said the company had run “very lean for far too long with not much resources for growth activities such as distribution and marketing”.
She said after Covid, markets tightened, and priorities shifted, making new capital harder to find while existing VC investors were “no longer interested” in supporting the business.
“Long story short, Sunfed VC investors had written Sunfed off. Essentially a lot of VC investors jumped into the plant-based Gold Rush thinking they could get fast valuation returns similar to what they're used to in the virtual world.
“But manufacturing and FMCG are in the physical world, with a lot more complexity and moving parts. It is generally a longer-term play where you have to build real things,” Lee said.
For Lee, the company’s VC investors did not see the value in Sunfed’s “self-evident competencies and unique products and manufacturing in FMCG”.
That said, Lee said the company’s VC investors “chose not to clear the way for Sunfed, instead held on to their preferential claims, which complicated new capital options.”
In 2018, Sunfed raised $9.4 million from venture capital firm Blackbird Ventures, Quadrant Private Equity founder Chris Hadley, New Zealand Venture Investment Fund and K1W1, the family company of New Zealand businessman Stephen Tindall. By the middle of 2019, Sunfed was launching in Coles in Australia.
A spokesperson from Blackbird told Food & Drink Business, “At Blackbird we are attracted to painful problems and huge ambition. There are few problems bigger than how we’ll feed the next billion people on earth, and we have demonstrated a long history of investing in alternative proteins, from cellular agriculture to plant-based meats.
“Shama and the Sunfed team made enormous efforts in the business over the past decade through a very challenging operating environment.
“While the outcome isn’t what they or we hoped for, we are proud of their achievements in developing and bringing a well-loved product to market and demonstrating that clean label plant-protein is possible.”
Alternative proteins think tank Food Frontier CEO, Simon Eassom told F&DB it was disappointing news.
“Sunfed has been a visionary company producing products that have high nutritional content, particularly their chicken-style products and they have been there from the outset of the growth in the plant-based meat industry.
“Their use of pea protein made their products naturally high in iron. However, their products were priced higher than some other plant-based meats which might have affected sales, particularly in today’s economic time.
“In addition, as a New Zealand based company, they’ve faced the extra challenges of export and distribution costs resulting from trying to reach a bigger market. We are expecting consolidation in the market so unfortunately developments like this aren’t surprising,” Eassom said.
In a 2019 interview with Food & Drink Business, Lee said after an intense period of imposed solitude and self-reflection, she realised there were no good options for people who liked meat and wanted a “meaty experience”, but “didn't want to eat the animal”.
Lee said the alternative protein industry was in its infancy, so she was not just developing a product but also building the machines to make it.
Lee said, “The market is massive. It’s not a meat alternative market, it’s a protein market.”
Since then, Ernst & Young has forecast the global plant-based meat market will reach at least US$57 billion by 2030, and CSIRO has estimated the plant-based products category in Australia could reach $6 billion by then.
Eassom said, “This is a food industry that’s continuing to innovate and adapt to consumer tastes and budgets, plus the availability of more sophisticated ingredients will help manufacturers improve products to meet expectations around taste and texture as well as price.”
But on announcing Sunfed’s closure, Lee said, “It is a fact the plant-based bubble burst and the category has been undergoing a reality check, and rightly so.
“Fuelled by easy VC money, the category became saturated with junk food masked as healthy and people now see through that.
“This also made it more apparent just how different Sunfed is and why customers value it. But the reality remains, Sunfed was not able to complete its phase four (positive cash flow) and with the unfavourable market conditions, I have to make the responsible decision of shutting the company down in a solvent orderly fashion.”
Inventory ran out in Australia in January and is expected to run out in New Zealand in the next two months.
