Daiya Foods CEO on selling to Otsuka: ‘The entire senior leadership team is staying on… our job is just beginning’

Daiya Foods sells to Otsuka in CAD $405m (US$323m) deal

Daiya Foods has carved out an enviable slice of the fast-growing plant-based foods market since its 2008 launch, but did not attract the valuation it was looking for when it first explored a sale in 2014/15. Fast forward to 2017, however, and its value proposition was undeniable, says its CEO.

Speaking to FoodNavigator-USA after announcing a deal to sell the company to Japanese firm Otsuka Pharmaceutical Co for CAD $405m (US$325m), Daiya Foods CEO Terry Tierney said: “Last year we did CAD$80m in net sales and this year we’ll do well over $100m, and we’re highly profitable.

“Not so long ago we were really just a dairy-free cheese company, but today we operate across seven different product platforms [cheeze, pizza, cheezecake, cheezy mac, yogurt, dressings, sauce] with 47 SKUs and we recognize that the opportunity in front of us is so much bigger than we ever dreamed it would be.”

Daiya had put out some feelers in 2014/15, he confirmed, “but we felt at the time that we stood a better chance of carving out our short term future by going it alone than partnering with a company.”

Just two years later, however, the landscape is very different, with plant-based foods and beverages attracting an enormous amount of interest both at a consumer level and investor level, he said.

"It’s become clear from the recent growth of the company - that’s been nothing short of extraordinary - that we now have a much much bigger opportunity to play a leadership role in the plant-based food movement.

“And in order for us to really fulfill our destiny, we needed all the right resources available to us – not just money, but intellectual capital, wisdom, experience, and the ability to expand the brand across the globe.”

Values and vision… and a global footprint

This time around, he said, “We spoke to a select few extremely high quality and well respected companies, but we were attracted to some of the work that Otsuka was doing in some categories and we loved their global footprint.

“And then once we started talking, the piece that really resonated was all about values and vision. We came to a meeting of minds that was all about wellness for the world. 

 “Otsuka is a CAD $16bn company with 45,000 employees spread out across the globe with many manufacturing facilities and distribution centers across the globe and we’ll be able to take advantage of those to expand the Daiya brand around the globe.”

Otsuka Pharmaceutical Co (a wholly owned subsidiary of Tokyo-based Otsuka Holdings Co) is a global holistic healthcare company selling pharmaceuticals nutraceuticals and dietary supplements (such as the Nature Made brand in the US and Canada). It also supplies SoyJoy nutrition bars, functional waters, infant nutrition products and medical foods.

This positive news adds to the mounting evidence that plant-based food companies are no longer niche, but are expanding rapidly by reaching everyday consumers. With innovative companies like Daiya Foods leading the way, it’s encouraging to see the food industry’s shift toward a plant-based future that’s better for the planet, animals, and our health.”

Michele Simon, executive director, Plant Based Foods Association (of which Daiya Foods is a member)

The entire senior leadership team is staying on

While Daiya is already in several overseas markets including Australia and New Zealand, Mexico, and parts of the EU, he added, “Our footprint is small compared to what it could be in the next few years with Otsuka. This is the perfect combination of opportunity and resources, a beautiful marriage between these companies.”

Under the deal - which will proceed by way of Plan of Arrangement under British Columbia law - Daiya will continue to operate from its HQ in Vancouver, Canada under the Tierney’s leadership, but will be able to tap into Otsuka’s expertise in consumer brands, R&D and manufacturing, and global markets, he said.

The entire senior leadership team is staying on including the founders Greg [Blake] and Andre [Kroecher]. Our job is just beginning and we are out to spread the plant-based message and the brand across the globe.”

There is still lots of room to grow in North America

Daiya Foods - which was founded by Blake and Kroecher in 2008 as a dairy-free cheese business - now sells dairy-free pizza, ‘cheezecake’, ‘cheezy mac’, yogurts, sauces and dressings in 25,000+ stores, and is generating strong double-digit growth in accounts from Safeway to Whole Foods because consumers are actively seeking out dairy alternatives, claimed Tierney, who said the quality of dairy-free products had improved dramatically in recent years.

“We’ve got good distribution in the natural channel and we’re continuing to develop our distribution in the conventional channel, but there is still lots of room to grow within North America…We’re really just beginning to understand the potential of the technology and the brand and we can extend the brand into additional categories where our value proposition resonates with the consumer.”

In a video posted on Daiya's facebook page, founders Greg Blake and Andrew Kroecher said: "Daiya should be and can be a global player in the plant-based lifestyle, but we realized we'd need a partner in order to achieve that goal. Daiya will remain an independent subsidiary with the same management team and our over 200 employees will remain here in Vancouver."

Is Daiya planning a move into plant-based beverages?

Asked if Daiya is planning a move into the plant based milk segment – the largest segment in the category - he said: “It’s a very big category we’re interested in looking at all categories to bring the Daiya brand and its value proposition to consumers across all dayparts. 

“I don’t think we’ve even seen full maturation of plant based milk inside the total milk category. Household penetration for plant-based milk is around 28% and market share is 10%, and we think it will gain more share and penetration over the next 10 years.”

Asked about how the positioning of the Daiya brand has evolved over the years, he said: “Plant-based is an easier value proposition for consumers to get their hearts and minds around [than ‘dairy alternatives’ for example], because when you talk about being free from things, consumers can associate that with a sacrifice or a trade-off.

“And if you’re going to succeed in the plant-based category, you have to offer products that offer no compromise solutions, and that’s what has separated us from the competition.”

While some new entrants to the market producing cultured nut-type products make a virtue of their shorter ingredients lists and ‘traditional’ techniques, Daiya Foods – which makes vegan cheese using plant-based oils, starches, gums and flavors - notes that everyone is occupying slightly different spaces in the category.

Kite Hill, for example, has focused on producing softer cheeses, while Daiya began by trying to replicate the taste, texture and melting profile of “comforting” cheeses such as cheddar and mozzarella that you’d use in a grilled cheese sandwich or on a pizza.

WHERE IS THE PLANT-BASED FOOD MOVEMENT HEADING?

Interested in plant-based foods? Join Miyoko's Kitchen, CircleUp, The Good Food Institute and Good Karma Foods at FOOD VISION USA in Chicago this November, when we'll explore what's cooking in the plant-based arena...

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Comments (1)

Rhonda - 30 Jul 2017 | 10:56

ARA Vegan

Mr Tierney, you are a sell out and as a ethical ARA vegan, I will not only never use your shitty products, I will shout boycott from the rooftops. Your new parent company does testing on innocent beings who dont want to be exploited for cosmetics, vitamins or any other health suppliments. You have shown your ass and now watch your sales decline.

30-Jul-2017 at 22:56 GMT

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