166 Rafaela Gontijo Lenz – Stop focussing on plant based, the real blue ocean is in regenerative dairy and meat

A conversation with Rafaela Gontijo Lenz, founder and CEO of Nuu Alimentos Brazil, about small and medium CPG brands and how they can turn a company around in a matter of months or years, and the importance of focusing on regen meat and dairy.
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Why are small and medium CPG- Consumer Packaged Goods- companies so important for the regen transition? They touch all the parts of the food web, they source from farmers, they have processing facilities or co-pack, they interact with large distributors and supermarkets and they interact with consumers. In all these relationships they can nudge and disrupt for regeneration, but maybe most importantly they are nimble and can turn a company around in a matter of months or years.

More about this episode on https://investinginregenerativeagriculture.com/rafaela-gontijo-lenz.

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The above references an opinion and is for information and educational purposes only. It is not intended to be investment advice. Seek a duly licensed professional for investment advice.

Transcript

SPEAKER_02: 0:00

Why are small and medium CPG, consumer packaged goods companies, so important for the regen transition? They touch all the parts of the food web. They source from farmers. They have processing facilities or co-packing facilities. They interact with large distributors and supermarkets. And they interact with consumers. And in all of these relationships, they can nudge and disrupt for regeneration. But maybe most importantly, they are nimble and can turn a company around in a matter of months or years, as we learn in the interview today. Plus, why we should focus on regeneratively disrupt and not waste too much time on the very crowded plant-based space. The real innovation is happening and has to happen in animal protein. This is the Investing in Regenerative Agriculture and Food podcast, investing as if the planet mattered, where we talk to the pioneers in the regenerative food and agriculture space to learn more on how to put our money to work to regenerate soil, people, local communities and ecosystems while making an appropriate and fair return. Why my focus on soil and regeneration? Because so many of the pressing issues we face today have their roots in how we treat our land and our sea, grow our food, what we eat, wear and consume. and it's time that we as investors big and small and consumers start paying much more attention to the dirt slash soil underneath our feet to make it easy for fans to support our work we launched our membership community and so many of you have joined us as a member thank you if our work created value for you and if you have the means and only if you have the means consider joining us find out more on gumroad.com slash investing in regen ag that is gumroad.com slash investing in regen ag or find the link below. Welcome to another episode. Today, we dive deep into the food side of things with the founder and CEO of Noob. Welcome, Rafaela.

SPEAKER_01: 2:00

Hi, thanks. Good to be here.

SPEAKER_02: 2:04

So to start with the personal question we always start with, how did you end up focusing so much on soil and regeneration?

SPEAKER_01: 2:11

Actually, I started the company five years ago, but looking on regeneration was only two and a half years ago when my twin girls were born. And it was six months before COVID hit. And I live in Rio and my parents' farm are in Minas Gerais. And when COVID hit, we went back to the farm, me, my husband, my two kids and my dog in the car. And it's a 12-hour drive and while we were driving back to the farm we could see the difference from the you know Atlantic Forest to Brazilian Savannah and how agribusiness impact you know the landscape that I used to see since I was little and when I got in the farm and I had this two kids of six months old and I was running a food company I started questioning myself the impact of the company that I was creating, the future of the kids. And I decided to investigate of the impact of food system. And I remember the first number that I saw was Fowl's report from 2014, saying that if we still do things like we do, we only have 60 harvests left. I know that that's a statement that has a lot of discussion nowadays, but that was the first time that I saw, you know, how broken the food system is and that we need to fix in some way and back then all of my products used dairy ingredients and back then the only solution was to go plant based and I was so like it didn't make any sense for me because cheese bread started you know in the 18th century and it wasn't common for me to think of the recipe as a plant based so I was confused and trying to find a way and I saw kiss the ground and I learned about regenerative agriculture and that's where it all started

SPEAKER_02: 4:19

and let's unpack a bit you mentioned just like that in passing cheese bread which is the foundation of your company for anybody that doesn't know what cheese bread I mean you can make an imagination but describe to us what is cheese bread what is the cheese bread you're selling and what is cheese bread mostly in Brazil

SPEAKER_00: 4:35

yeah have I ever tried cheese bread

SPEAKER_02: 4:38

I haven't

SPEAKER_00: 4:39

no oh my god okay I'm looking

SPEAKER_02: 4:41

for a vision I'm looking for a visual description as we're on audio, obviously. We're recording this on Monday morning, very early for you. So what would a cheese bread look like? How does it

SPEAKER_01: 4:52

smell? How does it taste? For people to connect. I just ate some today in the morning. I just baked some. But a cheese bread is for Brazilians sort of like croissant as in France or like bacon in US. It's the number one bakery consumed in Brazil. And it was created in the 80s. 18th century. Actually, the history behind it, it's so interesting. And I think that a lot about regeneration, we don't talk so much about cultural impact and how cuisine is founded and how it was created and the needs for us to preserve old recipes. And that's why I find cheese bread history so interesting because it was created in the 18th century probably by a woman slave and she we used to eat bread with wet that came from Portugal and the quality was really bad and we would eat we would pick eggs and cheese and milk and some sort of fat in the farm and mix it all with wet and make a bread and at some point some woman decided to leave the wet out of the equation and put the base of indigenous cuisine that is tapioca that's um manioc so she used to switch the

SPEAKER_02: 6:21

grain the imported grain or wheat for for uh for an indigenous substance and and then it became yeah became what it is now

SPEAKER_01: 6:31

yeah and so this is so unique because you know it took what it was here before brazil was colonized by portugal it was um you know Everyone was eating manioc. It's a root that's originally from the rainforest. And that's what gets the flour, the tapioca flour, the yucca flour. And that's what cheese bread is. It's yucca powder, eggs, cheese, milk, butter, salt. It's so simple. It's a clean label. And yeah, it's a huge market in Brazil.

SPEAKER_02: 7:08

And you decided to set up a company. focusing on that and then how different let's say is the cheese bread now compared to five years ago when you started like you said I've been only on a journey for two and a half years I think that's quite a lot honestly I think many many people arrived a lot later and but in that journey of two and a half years what what has changed in in the company a lot of things obviously but in the cheese bread itself like would we if we compared it to would we recognize huge differences if we look next to each other

SPEAKER_01: 7:39

not really the recipe stays the same and that's one of the things that we do at new we open our all of our recipes just because you know if you want to do a recipe in whatever you are you can do it so if you go online you have the ingredients and the ingredients didn't change we used to use smallholder farmers ingredient and just you know raw milk cheese and all this super neat products but what changed was the way that we do it that changed a lot because we used to produce in a co-packer and when I was investigating this impact of the food system you know in the future I saw that a lot of startups and food techs they decentralized the whole operations just because it's more it's easy that way so then they could focus on scaling up and to me when I found you know the impact that that we make producing these products, I saw that we needed to scale deep. And that's when we decided to create our own factory and to look at this metatarsals value chain and see how we can go to smallholder farmers and bring knowledge of regenerative agriculture and agroforestry and just pivot the model to try to bring impact to the whole chain. So that's what changed. The product itself didn't change. And we launched other products also after that.

SPEAKER_02: 9:16

Yeah, let's unpack that in a second. But just for the cheese bread, how big is a normal cheese bread? Is it like the size of a croissant, the size of a bagel? Is it bigger or smaller? And how do you eat it? Is it mostly

SPEAKER_01: 9:27

breakfast? Well, it has a lot of, it's a lot, no, it's different sizes, but it's smaller. It's sort of like, well, you can see me, but people can't see me, but it's that big. Like a coin,

SPEAKER_02: 9:38

a big

SPEAKER_01: 9:38

coin. Yeah, a little bit bigger. And you bake, and it's like a ball, a little ball. They say cheese rolls in the U.S. as well. And you bake it in the morning, so you can do it in your air fryer or in your oven. I mean, you just bake it for 15 minutes, and it's ready. And here, people in Brazil eat, obviously, at breakfast, but we sell to a lot of restaurants that put it in their entrées and hotels. If you go to any hotel in Brazil, you're going to have cheese bread in breakfast So yeah, it's very spread.

SPEAKER_02: 10:15

And when did you decide to launch products alongside that? Was it before or let's say after beginning of pandemic or your regenerative journey

SPEAKER_01: 10:26

started? It was after. So cheese bread, if you go to a supermarket here in Brazil, you're going to have a frozen sector of cheese bread as big as pizza, for instance. So it's really big. It's a... almost 2 billion reais market in Brazil when you look at cheese bread what happened and that's one of the reasons that I found the company was that the cheese bread that was created in the 18th century and that you can find in the farms are not the ones that you're finding obviously in the supermarket because companies ultra industrialize the product and sometimes they don't even have cheese even though they're called cheese bread in Portuguese they're called pão de queijo so it's all like Yeah, it's the same translation. So that was the hint that I had to bring back this recipe to consumers. And then after a while in the supermarket and we're today in the biggest retails in Brazil, we saw that only with one product, we couldn't deliver all change and we wouldn't be so relevant to retails as if we had different products. And then we looked at many Manioc and there is this interesting book from Alex Atala he's I think the biggest chef today in Brazil and he launched this he wrote this book called Manioc and if you're interested in knowing about Manioc it's an amazing book and he goes to indigenous villages in the rainforest and see how many subproducts you can have from Manioc so you can have something to drink you can have something to have sweets on it or just it's so wild and naturally gluten free so we started developing other products with the same base as is in yuca so we launched tapioca sticks that's only three ingredients tapioca, cheese and milk and now we launched five skews of gluten free tapioca pizza and this line was created after we put these three pillars on regenerating SMEs and CPG brands. That's the made at the source, the production, you know, the factory, and product pipeline. Because product pipeline, if you think, if you put regeneration in front of any product launch, you just, you know, there's a wheel that you pull, virtuous wheel, and that's what we did in the last launch.

SPEAKER_02: 13:58

And And this tapioca has obviously been indigenous, has been in Brazil forever. Why is it such an interesting plant? Let's say from, I mean, from the food perspective, there are a million different ways you can consume it. And from a soil perspective, why is it an interesting one that you said, okay, we need this in more products. We need to get closer to this specific plant.

SPEAKER_01: 14:23

I guess that we are now doing, we did a project with Puritaterra to find how we can put manioc and other savanna trees in the same agroforestry and see how this root can increase soil and work in the ecosystem but what we see today that is naturally from Brazil and it's so vast and there's so many people using and producing and obviously it's originally from the rainforest but it's all around Brazil we just want to use what's here, what's local and see, because today every production that we see here from many of it's monoculture, we don't have it implemented in agroforestry systems so we don't know how it's going to be after we're doing the project with Presa Terra and that's what we want to find out what are the inputs that we have compared to wheat for instance we don't have that number today

SPEAKER_02: 15:35

and i mean there are so many different ways to take it but how how has the consumer responded like we we've often heard i mean it's already tricky to to put organic on let me most people don't really know what what's behind the labels and then when you take it to a whole new level which is regenerative what have you done on like packaging on communication or maybe nothing you just go for the taste and

SPEAKER_01: 16:01

and the rest follows what has

SPEAKER_02: 16:04

been that that communication journey or that that conversation journey with your with your consumers on this journey

SPEAKER_01: 16:10

I'm laughing because regeneration it's a it's a tricky word right people just don't know how to pronounce it it's just it's it's not so spread here in Brazil and that's why it was so interesting to find your podcast and this movement going around the world but in Brazil it's not so Consumers don't know. There are people working in food business that know about regeneration, obviously, but the consumers don't know about it. So we don't put regeneration in the packaging. What we did was we're carbon neutral today. So we put the carbon footprint in the product and some other stamps that defines all this circular economy and the fact that we are woman-owned and the fact that we're carbon neutral and we're using smallholder farmers ingredients but regeneration as a word we don't put it in the in the packaging just because it's sort of talking about yoga a year before yoga is mainstream

SPEAKER_02: 17:13

and everybody looks at you as like

SPEAKER_01: 17:15

what are you talking yeah

SPEAKER_02: 17:18

they don't they don't see i mean even though in brazil it seems like especially in the agroforestry side of things it's extremely developed compared to to other places there's so much happening on Centropic Agroforestry and agroforestry in general. Of course, there's so much happening on the agribusiness on the other side as well. But there seems to be quite a bit happening there. So if you're, in terms of sourcing, in terms of talking to people in the business, in the food business, do you see there an interest in these topics? Do you see there, is it easy to find your peers and people to work with and to source and to build these products at the end because at the end of the day you're making things that end up on the supermarket shelves of the biggest supermarkets in Brazil

SPEAKER_01: 18:04

yeah no it's not so easy well you may have this impression that things are going here in Brazil in terms of you know agroforestry and centropic movements because you have some good players but it's not you know just commodity and it's just so huge here and obviously the government doesn't put any energy whatsoever in Regina so it's a bubble and what we did was to find these peers as you've said and the people that were working in the field and one of our counselors that's in our board of advisors it's from Fazenda da Toca do you know their work?

SPEAKER_02: 18:44

I know their work we have never been obviously because I've never been to Brazil but also I haven't interviewed them but we interviewed a few people I think that have worked there and

SPEAKER_01: 18:53

all of them yeah

SPEAKER_02: 18:55

but just describe for the people that didn't listen to that what is Fazenda da Toca

SPEAKER_01: 18:58

Fazenda da Toca is from, so there is this big chain in Brazil called Pão de Açúcar. It's the second biggest one in Brazil after Carrefour. And the founder's son used to be a pilot actually from the Formula One, how do you call that? The

SPEAKER_02: 19:20

race car driver. Yeah. Formula One race car

SPEAKER_01: 19:23

driver. Yeah. And he left everything and just bought this farm and started working regeneration. And now they are the biggest ag producer in Brazil. And they also started working with grains. So they're the biggest corn organic. With

SPEAKER_02: 19:41

Rizoma, right?

SPEAKER_01: 19:42

With Rizoma Agro. It's in the farm. And now, recently, two years ago, one year ago, they also incorporated a no-carbon company called No Carbon Milk, No Carbon Cheese. So it's a huge... farm working in different fields and their CEO is in our board of advisors just because I watched him talking in this webinar and I was like I need to understand what you're doing because there's not a lot of people doing this in Brazil and now he's in our board of advisors so it's pretty cool and in the region that we're at 80% of our suppliers come from 40 kilometers from the factory so we're very very local. And when we started building the factory, in the same time, we were looking for smallholder farmers that had this mindset. And there was zero. No one in the surroundings. And this is a big agribusiness area. No one was looking at agroforestry or having these principles. And so we started going to the government and to different institutions to find resources to go to at least one smallholder farmer and do him as a living lab for others to see what he's doing. And we were funded by the International Development Bank to do this shift from one farm that do raw milk cheese to do a carbon neutral raw milk cheese. So we're implementing this project powered by the International Development Bank. But this is just something that you need to go through different areas just because we're a small company. We don't have the resources needed to educate and do workshops, but we're a voice now in the region. So much to be

SPEAKER_02: 21:40

done now. And with that one farm, let's say in transition now, is the interest shifting? And of course, with your interest to buy these ingredients, like there is an off-taker, there is a buyer for this. It's not that you're pushing them to change to something and then there's nobody to buy anything. Is it shifting the conversation over the last, like as you see that something concrete is happening? Is there something shifting or is it still pushing up the hill?

SPEAKER_01: 22:10

No, it is. From two years to now and obviously after ESG became big with big food companies, there is a need for suppliers and you see big, big companies like Danone or Unilever or Nestle they're looking for the smallholder farmers that does any of this practices and at the last food summit we were part of this program powered by Rockefeller Foundation and I don't know if you heard of it it's called Game Changers Lab did you did you hear anything about it yeah

SPEAKER_02: 22:51

heard about it but tell me what it is because

SPEAKER_01: 22:55

yeah it was an interesting topic so they for the food summit, the IDO and the Rockefeller Foundation and a lot of different institutions came up with this sort of accelerator where they divided into 24 cohorts. And my cohort was to scale agroforestry, was to find a solution to scale agroforestry. And we had people from Africa, Europe, here in Brazil and different people working this project for six months And we came up with this idea called Agropedia, where a smallholder farmer, and since I'm from the farm, my parents are from the farm, I know the reality of a Brazilian smallholder farmer. He doesn't have the resources to do this shift. So Agropedia is an online resource where he goes and see, you know, I have a farm and this is the size of the farm. What's the marketplace? You know, like who's going to buy from me? What's the nonny ones? What's Nestle wants or what these big companies want and what are they willing to pay because there is a premium price for this product. And so, yeah, so Agropedia is coming. We also were funded and we are just developing the platform to do some resource, to give to some smallholder farmers some resources to do this shift. But it's a work in progress. I mean, it's just, it takes long. It's going to be a long journey.

SPEAKER_02: 24:29

And what kind of products, like what products do you think, let's say you had a clean slate, you can develop any product you wanted. I mean, the resources are there. What would you develop to unlock that potential of agroforestry? Like what would be needed to really pull instead of push maybe?

SPEAKER_01: 24:50

Yeah, there is this number that I always often think that we can eat 31,000 different plants and 43% of all we eat comes from corn wheat and soy I mean it's just we narrow down so much the possibilities that we have so here in Brazil obviously there are the superfood ingredients from the rainforest but Savannah itself and beyond that we are working in the factory it's that there's so many nuts and fruits and you know acai that's so famous in Brazil it's a super ingredient but you have manioc as a root you have coffee here in Brazil pretty big and there's just so many resources and in my company what we're trying to do is to put livestock in the equation because I feel that there are a lot of people working with plant based products and we see from files forecasts that the consumption for me and dairy products are going to increase at least we're going to increase at least in 50% till 2050 so we need to find ways to put you know the cow in the equation so to me I'm more interested in understanding how we can work with dairy products in a return to perspective and obviously using other resources such as Manioc to create these amazing tasty products.

SPEAKER_02: 26:58

Do you see that I mean that is there a pushback as well in in Brazil on let's say the animal agriculture side and your story or your push there to say let's see how we use the cow and not necessarily take that completely out of the equation is that something that's been happening there because I see it globally like it's immediately let's get rid of all animals because we need to be plant based and often forgetting that like fertilization has to come from somewhere it's either from gas or from from very, very large scale compost facilities, which we need a lot of time and space, or from animals. And I mean, we know the issues with gas, especially, I mean, not only environmental, but also political, as we see in the last months. Like, is that discussion happening in Brazil as well? Like what, or is it more, like the animal is still more part of the agriculture system or the future system of mostly, I mean, there's always city people that never visited a farm that say, let's get rid of the animals. They saw a few documentaries and think how agriculture works. works but how is that discussion when you say I want the animal to be part of the system is that you get pushback for that or not

SPEAKER_01: 28:09

yeah so Brazil has more cows than people can you imagine that we're a huge player currently in

SPEAKER_02: 28:17

a country I mean the Netherlands slaughters which is not a good thing at all 1.2 billion chickens a year so I mean there are places which you would be surprised about the amount of animals but okay so the cow is a fundamental it's a strong part of the culture

SPEAKER_01: 28:31

it's a strong part and we export a lot of it but we consume a lot of meat in Brazil as well it's part of our cuisine and plant based it's rising especially in food tax and startups and venture capitals are looking for it and I think it's a legit legit legit

SPEAKER_03: 28:50

legit

SPEAKER_01: 28:51

legit legit it's legit it's legit it's legit and I think it's a

SPEAKER_03: 28:58

part

SPEAKER_01: 29:00

yeah but I think that we have a huge we're missing out a huge opportunity to understand how we can use every product in a regenerative way and we don't see a lot of entry capitals investing in this in Brazil and I just a couple of months ago I saw that Bill Gates invested in a no carbon milk and everyone was like you know so oh my god you need to be investing in plant based and this is not the solution but we see that you know and this is one of the books that i'm reading uh depending beef have ever uh seen this book

SPEAKER_02: 29:35

yeah we had we had her on actually in the show notes uh around christmas last year it's it's very interesting

SPEAKER_01: 29:43

it's so interesting

SPEAKER_02: 29:44

in terms of data and and where a lot of these reports come from and and how they are let's say statistical not not statistically not really well like well founded and never but never retracted and these numbers stay out there like 50 of emissions come from livestock which is somebody once said it somewhere it's completely nonsense but it stays there forever in the general mindset so I think there's so you're saying there's a huge opportunity there to look at dairy which is true I don't hear anybody or very few people talk about let's disrupt dairy it's usually then plant based instead of you saying let's disrupt dairy with dairy and see how to do that and what are examples of that like what are you working on or working with that is really fundamentally different from the dairy industry we now see, which is mostly inside feeding a lot of soy and corn, even though sometimes organic, but still that, I mean, there are a lot of questions to be asked and then we get a dairy product out of there that, yeah, we can ask a lot of questions about. What is the dairy you're envisioning or working with?

SPEAKER_01: 30:52

Yeah, so we work with smallholder farmers that have up near 50 hectares farms so they're not big so it's good in terms of how you can implement different systems and proper rotations and you know it's easier than big lands but at the same time they don't know about these resources and that's the key issue that we're seeing how we can bring the message to these farmers so we're using these different institutions to support us So government, the Ministry of Agriculture, Environment, and these different projects such as the one that I've mentioned with the International Development Bank. But we are also starting different peers, other peers that are working with methane and how cow feed can decrease methane emissions and how the crop rotation can sequester carbon and decrease also gas emissions. And the taste of the product also changes a lot. And that's one of the key things. Yeah. So

SPEAKER_02: 32:07

how did it change since you, I mean, how would you, again, we're an audio program, but how does the taste change when the milk changes? Or what the cow ate and how the cow

SPEAKER_01: 32:21

ate? This is so, and this is so, we're so, we need to develop so much in terms of how we understand food. Because when you go to a When you go to a chef, you go to a restaurant, you know that today you're going to have your favorite plate and tomorrow it might taste different, right? Have you ever had this experience where you go to a restaurant and like, it's slightly different, it's more, I don't know. You just know that you expect that from a restaurant. But when you go to the supermarket and you get a package, you, as a consumer, have this knowledge that you're going to have the same thing and the same, you know, taste over and over again because that's how food industry developed our brain I mean if you eat a McDonald's here in Brazil and another one in Japan it's going to have the same taste because everything is ultra industrialized and this is something that we are putting in the package this is a natural you know with artisan ingredients and handcrafted ingredients and it's going to taste the same because it's not going to taste the same because it's natural and you know naturally it's not going to taste the same and that's one of the things that we see that from different farms and we buy from different farms the cheese they just taste different and we have in the factory we have a room a cheese room and we say that they hear country music because you know the wines in Argentina or in France they hear like opera or something yeah like classic music we hear country music but just fun fact but we see different from different farms and it just tastes better I don't know how we haven't put it any lab data on it but it tastes better do you ever get

SPEAKER_02: 34:14

complaints like people say yeah but this wasn't like this package is different than that one or did you ever get comments on that like

SPEAKER_01: 34:21

yeah we

SPEAKER_02: 34:22

do

SPEAKER_01: 34:23

and the color is also different and I'm like okay so the chicken put in some eggs that has more or orange color in it this season and you know that's just gonna happen and we don't like butter changes color i

SPEAKER_02: 34:36

had a conversation last week with someone and said yeah of course during the season butter changes if you have grass-fed butter or grass-fed cows that the butter changes color and for sure changes fat content depending on the pasture exactly and they never thought about it you could see the light bulbs going on um like oh my god it's actually it's an alive product and it changes and it yeah it depends on the season etc

SPEAKER_00: 34:58

exactly

SPEAKER_02: 34:59

and like, is that, I mean, I can't imagine that your customers that are buying these products are off-put by that because otherwise they would be going for the industrialized one. But how do you respond to that as a customer service? Like, yeah, this is nature. Welcome, welcome to the season.

SPEAKER_01: 35:17

We sent some pictures. Yeah, we have this, we have this new ladder called NUA and we started eight months ago after we were deep diving in the regeneration and we just had this massive mission to inform consumer that everything changes. And it's so neat. I'm going to send it to you. It's in Portuguese though, but it's so neat. We have a journalist that goes and interview chefs and go to farmers and interview them to see what's in the season. Just, I think that this is a message that we want to educate consumers to understand that nature doesn't, it's not in their disposal just because, you know, they want to. It's not because they want to eat avocado every month that they should be eating because because it's no driving overseas, this avocado, and it doesn't make any sense. And that's why the first question that you've asked, that's why I think that everything should be local. We need to be eating as much as we can, things that are produced here in the seasons and respecting nature.

SPEAKER_02: 36:20

When you see that enormous attention that, let's say, the industrialized plant-based meats get, or plant-based dairy, and the investors are all it seems really it seems really hyped or like the amount of attention going in that space what would you tell a room full of investors about the excitement or the potential of regenerative dairy and regenerative cheese and regenerative beef etc or meat in general or the proteins like what would you say to your group like imagine we're in a live theater and it's a room full of investors and you've convinced them about okay nature is extremely important or extremely fundamental they will walk out to at the end of the evening and and what would you tell them obviously without giving investment advice but where would they start looking more where would they start um digging a bit deeper or where where to start as an investor in this space because it's so easy to join the hype on the left let's say on the right whatever side you choose but the hype that is going okay we just have to to build a lot of huge factories with fermentation fats etc and and all these slides look amazing and the everything just goes up and up and up and the rounds seem to to never end and then we're sort of in the other side saying yeah but actually there might be another way and there might be a different way like how do we what would you tell them if investors are interested to explore further

SPEAKER_01: 37:44

I would say that just look at the numbers and what size you know how big is dairy products compared to plant-based how big is meat products compared to plant-based it's gonna only I know that plant-based is gonna increase but meat consumption and dairy consumption is also going to increase. And these are the biggest sales in the supermarket. I mean, I have one of our distributors. He sells 400 million reais per year. It's huge. And 50% of everything that he sells, it's meat. So people are eating meat. It's part of their daily routine. They, you know, use butter every morning and they are eating cheese every morning. So I feel that they're missing out an opportunity to go to the market that it's already developed, it's already inherent in every cuisine, every chef. And there is a lot of people in the plant base, but few people in dairy, looking at dairy ingredients and meat itself. And I feel that we're just missing this opportunity to find, you know, how we can incorporate regeneration in the products they're already selling and they're in the big sales actually in the retail so I would just look for this tradition and people usually say oh you sell cheese bread this is not there's no innovation there's no technology obviously there's a lot of technology involved you know from a dairy perspective but also from the manioc that's the root and that's going to come the dairies up in it and we're going to put the product up but how many technology you can unfold from you know understanding manioc as a superfood ingredient and you can have a pasta or you can have a flour you can have so many other ingredients and bake it with dairy products that's what we are trying to do

SPEAKER_02: 39:46

i think it's a very interesting point i mean there's an enormous amount of innovation happening and it needs to happen which involves a lot of technology but going to the the sector that is already developed and that that needs a massive shift i mean there's no There's no question about it, but it's not going to disappear tomorrow nor in 10 years, even if we completely are disrupted by any cellular ag, et cetera. It's just, it won't, I don't think it won't disappear that quickly. And so we, if we like it or not, we need to change that sector just as we, if we like it or not, in general, we need to change agriculture. Even if tomorrow we invent the best modular nuclear fusion machine that we can scale really, really quickly and we get a fossil fuel in a second, or we scale solar, I extremely quickly. We still have to change agriculture if we like it or not. And so it's a shame that it's, but it's neglected, which should be very exciting for investors and other people in this space because there are not so many others, which means you can make a huge difference and you can play a huge role if you want to. Because yeah, it's literally, as you were sort of referring to as calling it the desert, like you were quite lonely in that place, maybe still are partly that is changing, but it's still, there's a lot of room for other innovation and there's a lot of room for investment and there's a lot of room for technology people are like oh yeah let's go back to how it was 100 or 200 years ago I think they really need to visit the farm and see the potential of drones of certain light equipment new robotics of virtual fencing of processing on the spot or much more local and to keep all this freshness of obviously the DNA sequencing following bioacoustics I mean there's so much I heard somebody talking about an AI use case to help farmers incorporate cover crops and I mean there's a lot on the technology side to do there but I think it's a really good message like go where the opportunity is and this is a blue ocean basically so what would you do if you would be an investor let's say you're not running new because you cannot both run a company and put a lot

SPEAKER_01: 41:55

of money to work and have twins and

SPEAKER_02: 41:58

do a gazillion other things for sure but if you had to put let's say a billion dollars to work um could be in brazil could be anywhere else what would you focus on like what would be the main would it be really on the food company side would it be on technology side would it be on transition finance all of the above but what was your your main where would you start

SPEAKER_01: 42:17

i'm very interested in understanding the power of smes they're looking up different ways to produce products so um there is this group called the good food hub that I'm involved in it was created from me and after the food summit and it's a hub where there are a lot of SMEs around the world and we won the prize for United Nations 50 best small business and we are all together and it's just so interesting to see these SMEs working in different fields to fix the broken food system so I would definitely look at these small startups that are in different Just trying to understand how you can produce products in a nature positive way and not just decentralizing the whole operation. Because that's just something that when you go to the supermarket and you see everything, all this packaging, this is agribusiness. You know, agribusiness is inside all of those packaging. So if you don't see, if you don't look, if SMEs don't look how they are impacting the whole system, Who's going to do that? You know, big corporations are having their plans for 2040, 2050, but SMEs can shift now. And we did that. In two years, we shifted the whole model. So I would definitely look at SMEs around the world. And they're usually entrepreneurs passionate about, you know, they're climatarians and they're passionate about regeneration and regenerating also recipes, right? That's one of the things that we've mentioned. People are not talking so much about indigenous recipe or grandma recipes or things that you used to eat, your grandmother used to eat and you don't find it any longer. So I would put some investment in those people.

SPEAKER_02: 44:58

Yeah, I think it's very interesting that sort of layer. I mean, it keeps coming back, I don't know, over the last six months or so with Paul Lightfoot as well, which I will put in the climate neutral or climate positive food companies like this layer which is beyond the farm and sort of is that interaction between the farm or the land and our consumer or the hospital that buys it or the restaurant I mean but there is a layer in between because many many products rightfully so are not going to end up on a farmer's market and we don't buy directly from the farmer because they have to be processed in a good way and processing is not necessarily an ugly word but somehow there is a transformation going on there and that layer is so fundamental and you're saying there's a huge huge opportunity there because there are these companies that can shift if they haven't already done so and that have a lot of space to grow because what you see and I think just asking the question the consumer is ready for this the consumer wants clean label not every consumer but enough of it to have an interesting business

SPEAKER_01: 45:59

obviously have you seen a shift

SPEAKER_02: 46:00

there as well

SPEAKER_01: 46:01

yes like the last years yes well there was a research run here in Brazil last year and said 83% of consumers want to buy sustainable products but they don't want to spend more so that's a tricky thing because they want to buy from local producers and obviously with impact but they don't want to spend more just because inflation is huge here in Brazil but I feel that we have an opportunity to produce products in a more intelligent way and we saw that when we built the factory it's cheaper to have clean energy, to have solar panels. It's cheaper to storage rainwater and use it in the factory. I mean, if you bring technology, but also sustainability and circular economy principles, it's going to be cheaper. It doesn't need to be expensive, more expensive, the product. And so there is obviously a shift. And I feel that food techs and startups, it doesn't need to be a food tech, but startups that are having CPG brands, they work in so many different areas, right? Because they dialogue with farmers because they need to buy the ingredients. They dialogue with co-packers or they either process in their own factories. They dialogue with consumers. They dialogue with retailers. I mean, there are so many different stakeholders they can change. Yeah, and that's why I'm so interested in seeing how this food tax can change perception. in different areas.

SPEAKER_02: 47:40

So you're arguing that that's the biggest lever we have or leverage point we have are the food companies and especially the small to medium sized ones, because they're still nimble. They can shift around in a couple of years or a couple of months if they're very small and they can grow quite rapidly and touch a lot of farmers, a lot of land and a lot of people, obviously on the consumer side, but also all the other stakeholders you interact with. They will be, maybe at the beginning, they're annoyed that this regeneration piece comes up again or maybe they're like oh there they're talking again about recycled rain water etc but at some point yeah it becomes almost normal like you're you're definitely opening a path there which is very tiring but those are very needed

SPEAKER_01: 48:20

yeah and i think that the key point um it's how much can we grow and this was a aha moment that i had a couple of months ago i was with my husband and we ordered mcdonald's because we're in this business but sometimes you drink coke or something you know I'm not so rigid and we ordered McDonald's and we were eating McDonald's and I thought if new was the size of McDonald's how it would be how could that be possible and that's the thing about CPG brands once they grow they can't sustain regeneration that much because you know if I I have a hundred tons factory here in Brazil but if I go to 10,000 tons per month I'm not going to have the suppliers, local suppliers. I'm going to export to Netherlands and you're going to eat it. And, you know, we're just going to... It's a contradiction. Yeah, it's a contradiction. So then I thought, how can a CPG brand be global and at the same time doesn't harm the ecosystem? And that's the theory that we are going through. And that's why I mentioned that we're going for the first round of investment is that we're expanding... but being global but at the same time being local and that's the only way you can't produce here in Brazil and export all around the world you need to go to US and see who are the dairy producers who are the ag producers you know how you can find local farmers and smallholder farmers and how can you produce there and then sell it there and go to Europe and go to you know

SPEAKER_03: 50:02

repeat

SPEAKER_01: 50:03

exactly so you can be a global CPG brand and be a regenerative with a nature positive perspective but you need to be local that's the only way that we found

SPEAKER_02: 50:16

is that what you referred to at the beginning as scaling deeply is that the similar or is that connected to it yes and then how does it look like would it be sort of a collection of global brands under the same principles guiding principles because different would it be different food as well because it would be different Brazilian cheese bread in Kentucky because yeah I mean it would be a funny thing to eat but it's not part of the culture so would you then take the guiding principles and set up local I wouldn't say versions but like almost local version but in like the local translated version of what you're building in Brazil

SPEAKER_01: 50:55

or building so far that's exactly yeah that's exactly what we're doing we're gonna obviously we don't have Maniac in US and we're gonna need to import but that's the only ingredient we need to import the rest of ingredients We can find it locally. And that's the part of scale deep. You need to find local suppliers for your products. You can have a co-packer. It doesn't need to be, you know, you don't need to have a factory, but you can find local co-packers and work with the smallholder farmers. And if you reach a state, as we've reached here in Brazil, you can build a factory, but it doesn't need to be a factory replicable factory.

SPEAKER_00: 51:37

As we

SPEAKER_01: 51:39

are doing here in Brazil. But we're using Brazil as a living lab. And that's why the factory is within 40 kilometers from the farmers. And that's why we're putting the agroforestry from Petro Terra. We're already doing free-range eggs here. We need to learn, right? We need to learn so then we can teach to other farmers. And that's the only solution we see to scale the model. It should go deep, to go from soil to plate. That's the thing about CBD. You can go from soy to plate.

SPEAKER_02: 52:11

Two things on that. Wouldn't it be possible to find a local root that is, so you don't have to import the manioc into some place? Like what would it be? Ideally, we would try to find the local root that is very unloved, but also a superfood and could be a perfect ingredient. Not sure if that's possible. And second, I'm imagining in Brazil, there's so many biomes in so many different regions. that are so different from each other that there is a lot of space to repeat there as well to repeat because Brazil is enormous and you're doing 40 kilometers 80% of your ingredients come from 40 kilometers that means there are a lot of these radiuses you can draw on the map and set up another one

SPEAKER_01: 52:56

yes that's part of the plan but what we want to do for next two years is go to US just to prove that we can replicate the model internationally but in In Brazil, we have opportunities to go to the north, for instance. We're in the center of Brazil, but we mapped producers in the north. And in the south, they're doing great. They're using dairy farms, producing a maize cheese and milk. But yeah, that's the knowledge. Just have the small production in different areas and produce it in small scale, and then you can... be and scale up

SPEAKER_02: 53:41

and if you could change one thing overnight in the food and egg space what would that be you have a magic wand you have the magic power to do one thing differently and tomorrow morning we wake up and that's the case you have done one thing what what would that be

SPEAKER_01: 54:00

there's so many things i would do but um but i'll again try to localize everything. I will again try to shift the way we consume and not have avocado every month and just educate consumers and find what's in the surroundings and restore biomes and restore local biodiversity. We saw that we lost 60% of biodiversity since the 70s after we grew a lot the agribusiness so we lost so much and we came to this tipping point where there's no coming back and I feel that if we localize and see what is you know in the state and what can be produced there's so many amazing products that the indigenous used to eat and we don't have the privilege to do it so that you've mentioned about a root in US I bet they have and I bet we can use it and it's going to taste a little bit different but it's going to be as yummy And for us, we always say that taste is queen because that's the most important part of CGPG band. But I will localize if I could have a magic wand.

SPEAKER_02: 55:19

And how does that contradict almost your wish to repeat in the US? If you have so much work laying out for you for the next decades, probably in Brazil, why not simply, I mean, simply between markets, but inspire someone in the US to do this as well? Why do you need to do that? which is far from culture, far distant simply because it's going to be running two brands in two different countries, et cetera. Why is there that wish to do something in the US if you have so much work and so much things have to be rebuilt and built in Brazil as well?

SPEAKER_01: 55:54

I feel that I have a personal wish to extend the knowledge that we are learning here with Nu to different SMEs around the world. And that's part of what we're doing. We're in so many forums in different United Nations and the Good Food Hub and just different institutions that we're just explaining things in the way that we're doing here. But there is just a personal wish for me and my family. I want to move to the U.S. and spend a couple of years there with the twins and just bring everything that we're learning here to different countries. And that's one of the ways that we can increase impact the most, not only have all knowledge stored in my company but understand how we can inspire and really explain to other SMEs what we are learning what have been you know going right what have been going wrong and all knowledge shouldn't be only with us

SPEAKER_02: 56:57

thank you so much for that and I want to be conscious of your time and I don't think it's the last time we'll be chatting and thank you so much for sharing this super early morning before I think an important board meeting to share with us the journey of SME CPG brand going all in into regeneration and it's a journey a fascinating one never done but definitely a very necessary one so thank you so much for the work you do and for coming on here to share about it

SPEAKER_01: 57:27

well thank you I've sent you the video of me at Sumauma in the botanical garden here in Rio but it was a true one I I'm very inspired by your podcast and everyone that you're interviewing. And I'm so grateful that there is a movement and that we're part of this movement. And so it's a privilege. Thank you.

SPEAKER_02: 57:54

Thank you so much for listening all the way to the end. For the show notes and links we discussed in this episode, check out our website, investinginregenerativeagriculture.com forward slash posts. If you liked this episode, why not share it with a friend or give Thanks again and see you next time.