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Israeli startup Yofix Probiotics has secured $3.5 million in a funding round led by the Millennium Food-Tech, Israel’s largest food tech R&D partnership and investment firm. The fresh funds will be used to ramp up Yofix’s manufacturing capacity amid surging demand for plant-based dairy.
Yofix Probiotics has bagged $3.5 million in a new investment round led by Millennium Food-Tech, alongside alt-protein VC Big Idea Ventures (BIV) and The Kitchen FoodTech Hub, an incubator supported by the state’s Israeli Innovation Authority. Yofix is a graduate of the incubator, which is run by Israeli food corporation Strauss-Group, and has since forged a partnership with Strauss Health to produce plant-based yogurts.
Ramping up manufacturing
Yofix will be using the capital to expand its manufacturing capacity. Currently, its facilities are based on Netivot, and the firm produces dairy-free products such as the plant-based yogurt brand Only and a line of vegan yogurt-based porridges under The Real Foodists label.
The startup, which was founded in 2014, runs on a B2B model, providing clients an end-to-end service to develop, produce and sell plant-based dairy substitutes. Yofix’s clients include co-packers, private labels and food corporations, such as the Strauss-Group.
Its formulations are marketed as clean labelled, bearing short ingredient lists and uses a proprietary blend of oats, lentils and sunflower seeds. In addition to being soy-free, the company’s range of plant-based dairy substitutes contains gut-healthy prebiotics and probiotics.
Surging plant-based dairy demand
Plant-based dairy is a fast-growing category in the vegan food industry and has managed to capture not only vegan and vegetarians, but flexitarians who are turning to dairy-free substitutes for health and environmental reasons. Globally, flexitarians or “part-time vegans” are estimated to make up more than 4 in 10 consumers.
While vegan milk remains the dominant category within plant-based dairy, the dairy-free yogurt, butter and cheese segments are eyed with huge growth potential. Sales of vegan yogurt in particular, which Yofix primarily offers, is growing at 7-fold the rate of its conventional counterparts in U.S. retail channels.
With dairy on the decline, even established players like the Bel Group are on board. Bel Group, one of the world’s biggest dairy conglomerates, announced last year that it will launch 100% plant-based versions of all its best-selling cheeses, including Laughing Cow, Babybel and Boursin. It has since launched Nurishh, a line of vegan cheddar, mozzarella and provolone.
Danone has also placed plant-based dairy at the centre of its business plans, with its co-CEO Shane Grant revealing in its latest earnings call that vegan dairy innovation will be central to its growth in the coming months. The group recently acquired Follow Your Heart, adding to its growing list of dairy-free brands including Silk, So Delicious and Alpro.
Israeli alt-protein investment heats up
The Millennium-led investment into Yofix comes as overall funding into Israel’s vibrant alternative protein industry continues to heat up. Last year, Israeli alternative protein investments increased to US$114 million in 2020, representing almost 3-times the figure in 2019 with 154% year-on-year growth.
According to GFI data, this marks an 8-fold increase within just two years, in what is largely seen as a signal of the strong potential investors see in homegrown startups.
Other local food techs that Millennium has backed include SavorEat, the 3D-printed plant-based meat maker, fermentation food colourants firm Phytolon and Aleph Farms, the cell-based startup that has served its cultured steak to prime minister Benjamin Netanyahu.
All images courtesy of Yofix Probiotics.