Investing in Regenerative Agriculture and Food
Investing in Regenerative Agriculture and Food podcast features 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. Hosted by Koen van Seijen.
Investing in Regenerative Agriculture and Food
402 Martin Reiter – Building a $100B home for regenerative brands
What is needed to truly move the needle on health? Create more research, more trials on nutrient density, more advocacy? Or, as Martin Reiter, founder of RARE argues, create the next regen Nestlé or Unilever: a 100 billion (yes, that’s a B) regenerative consumer goods conglomerate, with only better-for-you and better-for-the-planet brands. The demand is there; the current incumbents are unable to innovate in regen, as they are built on chemical ingredients.
The story usually goes like this: a group of people sets up a food (or cosmetics) brand that is better for you and better for the planet. Much better ingredients, honest sourcing, actually healthy, not UPF, etc. Then they need some money and raise funds, keep building, scaling, and at some point, 10–15 years down the road, the founders get tired and want to take some money off the table. and their existing investors need to get out and return money to their LPs.
Currently, their only option is to sell to an incumbent, which then unfortunately usually screws it up. They start tweaking the ingredients, squeezing farmer margins, etc. The original founders leave after a few frustrating years.
Is there a better way? A permanent home for regen, good-for-you, good-for-the-planet brands? A regen Nestlé or Unilever, if you will?
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In Investing in Regenerative Agriculture and Food podcast show 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. Hosted by Koen van Seijen.
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Need to build a hundred billion conglomerate of regenerative brands. Good for you and good for the planet. What is needed to truly move the needle on health? Create more research, more trials on nutrient density, more advocacy, or as our guest of today argues, create the next regen Nestlé or Unilever. A hundred billion, yes, it's a B, regenerative consumer goods conglomerate with only better for you and better for the planet brands. The demand is there. The current incumbents are unable to innovate as regen is completely different from their current business models, which are mainly built on chemical ingredients. The story usually goes like this: a group of people sets out to set up a food company or cosmetic brand, which is actually better for you and better for the planet. Much better ingredients, on the sourcing, actually healthy, not UPF, ultra-processed food. They need some money, they raise some funds, they keep building and scaling, and at some point 10-15 years down the line, their founders get tired and they want to take some money off the table. And their existing investors need to get out and return the money to their LPs. Currently, the only option is to sell to an incumbent, which then unfortunately usually screws it up. They start tweaking the ingredients, squeezing margins, squeezing the farmers, and the original founders leave after a few frustrating years. Is there a better way? A permanent home for regen good for you and good for the planet brands? A regen Nestlé or Union Ever, if you will. Is it easy? No. Is it needed and worth trying? Absolutely yes. This is the Investing in Regenerative Agriculture and Food Podcast, where we learn more on how to put money to work to regenerate soil, people, local communities, and ecosystems while making an appropriate and fair return. Welcome back to another episode with someone we had on the show almost to the day, two years ago. Of course, depends when you listen to this. I'm very happy to have Martin back on the show. It's the episode we talked about two years ago where we talked why haven't we seen more Elon Musk's and more Steve Jobs', not specifically those characters, obviously, in regenerative food and agriculture, and where we see an influx of talent, and I think we see that more now than we did two years ago. So I'm very happy to have Martin back on the show and unpack what he's building and also what he has seen in the last two years of going deeper and deeper into regeneration and what needs and more importantly, what can be built. So welcome back, Martin. Hi. And to of course, we'll link the previous episode we did with your background and how you came to regeneration. But I listened to the previous episode as well. You were still searching, like certain there are opportunities here, there are opportunities there, there we already, funny enough, because we've been in touch quite a bit the last two years, you if you listen to that when you can hear directions and seeds you're planting already for the work you're doing now, and now it's very focused and it's very specific and super exciting. That's why we have you back here. So just as a photo of the moment, like where we are, we're talking the beginning of 2026. What are you busy with now? And where have your energy and focus and your research has come to a specific piece of the regeneration puzzle? And you say, that's the lever. That's the one we need to pull as hard as we can.
SPEAKER_00:So it both broadened and it narrowed. It broadened because I expanded my overall look a little bit into the broader set of consumer goods, because the underlying problems that we are facing are the same, and the underlying players in the space are very similar. What I mean with that is when you look from a population health and environmental health perspective, we don't need to just replace our food system. We actually need to replace the broader consumer system. If you look at the main health and environmental pollutants, food is, I think, still the largest driver, but we are equally like we need to look at beverages, which is a main uh driver of stalate, um, like plastic softener um contamination. We need to look at fashion, which is the largest uh freshwater polluter uh from the consumer system, and we need to look at cosmetics and personal care, which are a tremendous source of hormone disruption in humans. And all of those are more or less driven by the same conglomerates, the nestless unilevers, proctengers of the world. So, in in one way, I broadened it because when you look into what makes us sick, uh it's basically all that we ingest, and that goes beyond food. At the same time, I narrowed it. When you look into breaking points and leverage points in the ecosystem, and you look into what makes our consumer system, there's a few distinct stages. There's the production stage, which we would call the farm level, then you would call the wholesale level, which is the ABCDs, the main ingredient suppliers, then you have the packaged good companies, which are the nestlers, unilever's craft, heinzers, and so on, and then you have the retailers that then sell to the consumer. And when you look at it from that angle, there's quite a lot of work happening on the farm level. And I'm incredibly excited about the farm level, but that work is already happening. What is actually more of the critical path is how do we get great produce unadoured to the consumer? And the main problem when you look at it over the last 10 years is that a lot of companies that do better, that are cleaner, healthier, that work on regeneration at some point get sold to the incumbents. And the incumbents are not necessarily easy or good stewards of their mission.
SPEAKER_01:Which is an understatement, right? We see that so many times. You have these brands that are good for you or better for you and not poisoning the planet, or the other way around, not poisoning you and better for the planet. And then they end up being bought, and we can probably all are thinking about a few examples by the incumbents, which we understand. Like the entrepreneurs, the founders want some money off the table, they want some kind of exit, they work with the team, obviously, their asses off for probably 10 plus years. And then the phase of great delusion or disappointment starts within these large. Not because they don't want to, but they are just they don't seem to be able to steward and grow and not mess it up, a brand like that.
SPEAKER_00:I think there's two drivers of it. And first and foremost, I don't think there is ill will. There's simply It's not a conspiracy theory of putting it on the shelf and take it off. There's two very distinct drivers. The first one is those large conglomerates are quite old in terms of their tenure, often they're more than 50 or 100 years old. They have super established corporate structures where their core skill is the administration of legacy profit lines. That's it. They usually do not launch new products. Their muscle is really about administering existing very mature businesses. That is totally different from working with a founder who built a 100, 200, 300 million business over the last 10 years. Their speed, their drive, their view of the world is entirely different. So you have a massive culture clash that you basically, there's no real way you can reconcile that. And the second thing is incumbents pay high multiples because, in their calculation, they say, oh, I can use my distribution and my supply chain to immediately increase the profitability of that brand and the growth potential. The problem is that basically what it usually means is they bring a modern regenerative supply chain into their own traditional supply chain. So in a weird, ironic way, they erode in their very natural aim to create synergies, they erode what made the brand successful at the first place. And that's a very hard problem. So both of those problems are basically very hard to solve. So when you look at the ecosystem, my lead hypothesis is that we should create an alternative for founders to the traditional 100% exit. Strategics usually want to buy 100%, they pay very well. But that also usually means that there might be a small earnout, but then the founder leaves, and their company will not exist in the way they probably imagined it to end up with a few years later. Sometimes they stay successful, sometimes they get reformulated, sometimes the brand gets folded in. But it's very rare that you see one of those companies really do great, exist as a brand, as a company that the founders would be proud of to be around 10 years later. And so I was thinking a lot, and I'm working very actively on creating an alternative to founders where they can take some money off the table, but they do stay heavily invested and they can keep running their company long term, where we would consolidate part of their early investors, take buy them out, and provide them with long-term, basically permanent capital in a Berkshire-style fashion, where they can actually keep on building their company for the long term if they want so.
SPEAKER_01:And because that's the key piece here are the founders and the founding teams, and the key they've brought these companies to significant success, but still very small if you can if you look at the broader scale of things and the potential impact. And it's not easy to fight into supermarkets, and it's not easy, like it's nice to have some muscle behind you or some synergies, because that is what some of these big ones also bring. Like they discuss with and they get into the large retailers easier. But these founders they get bored after their two years is up when they sign. If they sell to one of the big ones, they maybe sign a contract to stay around for two years. They usually leave and will start again or are too disappointed with the food space to ever do and touch it again. And you're saying if we keep them around and if we actually get them what they need, there needs to be other ways than selling to one of the incumbents, which not for their own, but just will probably not reach the impact we need and not reach the hectares we need and not reach the healthy people we need, because they will probably end up putting other ingredients in that we are not really happy about. And so that is more permanent vehicle that we know. People have been saying evergreen vehicles, permanent vehicles. We have some successful examples around that, but not necessarily in food and egg, right?
SPEAKER_00:This is a financial structuring problem, and that can be solved. The bigger problem is that you need to think about should founders have an alternative to 100% exit to a strategic? And I think the answer is yes, because if they want to build a long-term, really market share-grabbing company that really defines and shapes how their category looks, an exit to a strategic is basically never the answer.
SPEAKER_01:They're in it, probably for the long run. Anyway, like these founders start not because they want to have a day job, they start because they want to disrupt cornflakes. Many of them do.
SPEAKER_00:And there are some, I think, who basically are very excited about the game of building businesses, and for whom making an exit and starting something new might be better. But there is some who basically want to become the Jobanis of regenerative dairy.
SPEAKER_01:What is Giovanni, just for the background of people?
SPEAKER_00:It's the leading Greek yogurt company in the US. And it's one of the few companies that remained independent and basically really grabbed market share over time.
SPEAKER_01:Because that's what we need. We don't need a few small brands, we need a lot of bigger brands that start to eat up market share.
SPEAKER_00:I I think you need to build category killers for the main land use and main perception driving categories. That is grains, dairy, meat, minimally processed food, uh, convenience food, personal care, beauty. And there are those companies out there, it's just that usually at some point get acquired, and then usually those companies go away, the brands, they don't grow in a way that they would with the founder being around long term.
SPEAKER_01:And the other side of the coin, the consumer, or the eater or the user, whatever the term is we want to use, what is different now? What if you people say, but yeah, is the consumer ready or are they paying? Is there a premium? Is there enough conscious, interested, health focused, whatever term we want to use to drive those companies to actually be category killers? Because we can imagine the small, the pioneers, the intro ones, a few, maybe 5%, 10%, but to be category killers, you need to get to a different level, which means you need to get enough people to get you off the shelf, otherwise to buy you. Otherwise, nothing happens.
SPEAKER_00:It's an excellent question. And I think it's one of the most important differentiators. So I want to answer it in two ways. The first one is um better for you segment or the conscious consumer segment is the fastest growing profit pool in the Western world, in the consumer world. That is accelerated and will keep on accelerating because there's a generational shift where the boomers in generation Y are now for the first time overtaken by Gen Z and millennials. And they often did not grow up like boomers in a very healthy world. Before, like they were still getting milk runs of glass bottles and eggs delivered by an egg wagon in the 70s. People in the 90s and 2000s grew up in a very different environment. So for them, health issues and consumer toxicity are much more top of mind. And it's these people who are now starting to dominate more than half of Western world retail sales. So the first thing is there is oil put on the fire of better for you expansion. But the second thing, and I think it's an even more important one, is consumers are demanding. They do not see why they should compromise on clean regenerative health drivers versus function. So selling a deodorant that doesn't work, but is clean, that is not a winning strategy. Selling an organic tomato that doesn't taste like a great tomato is not a strategy to win. We need founders and companies that make clean and regenerative an asset. The tomato should be better because it was grown regeneratively. And frankly, if you know about how regenerative works, you usually get better taste attributes and you get better function.
SPEAKER_01:And so it's that combination of a growing, significantly growing interest of consumers, eaters, deodorant users, etc. They demand function, taste, functioning deodorant, etc., and met by brands that actually deliver and potentially deliver at scale. That creates a perfect serve because the current incumbents are not serving that market in a way that, let's say, the consumers and users are happy about. We're not being served at a level that we need to. And so you see a massive unmet demand there that is just waiting to be not waiting to be taken because none of this is easy, but definitely waiting to be potentially served. Exactly.
SPEAKER_00:If you build your DNA, create such a very unique market opportunity because the incumbents are heavily counterpositioned. It's super hard for the company that has a legacy of products that have known health issues, that are ultra-processed, that are relying on the agrochemical supply chain. It's very hard for them to build credibility and saying we now reinvent ourselves as a clean, regenerative, healthy company, which is why they struggle so much. That leaves a big opportunity space. But that opportunity space can only be captured if you get out of this either we are clean or we are functional. You need to have both. And it is possible.
SPEAKER_01:And so you're mentioning a number of sort of subsectors or themes you're focusing on first, and then we get to the financial engineering because I think that's a fundamental uh piece here as well. But what are um pieces you're most excited about? You mentioned grain, meat, dairy, uh, cosmetics. What's on your list and why and how and why now?
SPEAKER_00:So when you look into product categories, there's different disruptors in those product categories. I personally believe that the no-gluten time was mostly shaped by the US's excess use of glyphosate, which more or less made people react to wheat in a very bad way. And so they concluded that gluten was the problem. We have built Western civilization on grains, on wheat. So it it's a big stretch to believe that gluten is a problem for humans. We co-evolved to that. What we did not co-evolve with was glyphosate. So I think having wheat strains and that are population seeds that have a much more that have actually an anti-inflammatory pattern, like wood grains. There's other options. There's wild farmed in the UK. I think that's one big category driver. Because wheat has some wonderful baking properties that you can basically not replicate. The other one would be regenerative dairy. I personally am a big fan of low heat pasteurization and minimal homogenization. But dairy you can have very long discussions about it. I just believe that you're safer on staying as close to evolution as possible. Every time we aired up far away from it, it might have taken us 20, 30 years, but we usually found out it was a mistake. I think another category disruptor is endocrine disrupting chemicals and an abundance of poorly tested synthetic chemicals in personal care and beauty. Uh where you have companies like COSAS that are that are driving a lot of category growth in that area. Um, then on the beverage side, you have low sugar, no sugar fermented water kafirs, you can use some inulin or prebiotics, and you can create very attractive soda replacements. You saw what happened to Poppies in the US. I think that's not the end of that category. It's got bought, right? Just for a background. Yeah. I think another category would be frozen convenience food that is minimally processed, like similar to how Rx bars printed their four or five ingredients on top. You can make frozen pizza that is home style with regenerative wheat, with a regenerative tomato passata, with high quality ingredients, and you just freeze it. Which I think we cannot force families to suddenly that have two jobs, that have two kids, to cook all day just to be healthy. I think that is another category where there's a lot of innovation.
SPEAKER_01:And then comes in the financial innovation here, because then the question comes okay, if that's technically possible, why those brands haven't taken over yet if the incumbents are so slow and not structured to do so, is probably because they need money. These brands need money to grow to two, three, four, five hundred million in sales, and they take some investors on board, and then what? They get anxious at some point and hit the ceiling.
SPEAKER_00:I I don't think it's anxious. It's just like when you go to traditional investors like VCs, you have the seed stage, you have the series A, you have the series B, and typically then after Series B, you would call it like a late stage investment. Those funds have a fiduciary duty to the investors. That's absolutely correct. They need to get out at some point. After five years, plus or minus, they need to get out. That is how their business world works, and that that's a beautiful business model. The challenge is that after you hit Series B, you go into the 150, 200 million revenue territory. Usually the exit of choice becomes the 100% exit to the strategic, which would be the top 12 conglomerates. They can pay high multiples because they basically say, look, I can reformulate, I can use my cheaper ingredients that I have at scale, I can use my facilities, I can use my existing distribution. So I can easily take a few hundred basis points of EBITA on top of it, and basically their internal calculation multiple is lower than the external one. The problem with all of that is that the same actions that make them de-risk their high multiple usually create a lot more risk because they erode the brand quality. And that doesn't matter for the founder who wants cash, but for the founder who wants cash and the legacy, it matters a lot.
SPEAKER_01:Yeah, and you have a consumer group that walks away really easily when they find out. And there is a vocalism and a voting with your for with your fork and your money and a deeply disappointed when a brand you love and you're deeply committed to, etc., get bought, first of all, and then slowly got hollowed out.
SPEAKER_00:Yes. And I think that somehow we ended up in this weird dichotomy of you either keep on grinding forever as a founder with no help and against the odds, or you sell yourself out to a strategic and you take the money. I think there should be a third option. And in my old career in the technology space, there were those third options where you were able to keep on driving your company the long term. And that's why you have seen those companies succeed vastly. It's not that Facebook didn't have an offer, I think, to sell to Yahoo back in the days. Or imagine IBM would have bought NVIDIA. Do you think those companies would be that big? It's just that in the food and consumer space, this third option has never been really built out. And part of that is because some of the categories make it hard for a standalone IPO. In the consumer world, the business model of choice is the holding or the conglomerate where you have a multi-brand home, which in an industrial setting and Buffett has built out. But in the consumer setting, um LVMH is more of a brand house. There is JAB in Germany that has been building out a holding that basically nobody knows, but they control a vast amount of consumer brands. So that model exists. Always a multi-brand option is usually the winning one. And so I was thinking, why don't we build out a multi-brand option that lets founders grow their business long term for mission-led better for you company?
SPEAKER_01:There are basically three options on the table: either a new kind of form, which you're building, or IPO, which is just not happening for single brands, and or incumbent. And we established that those two are not really options. That realization comes, but from oh, there should be XYZ for regen brands, better for you and better for the planet, to actually building, that's quite a step. How come in all the different directions you've looked at over the last years, this is the one where you say, okay, this is the hook and the lever and the piece where I get excited, where I can bring my skills, I can bring my network, and I can actually have a shot at doing it?
SPEAKER_00:I think there's two angles. The first one is it suits myself very well. I have been working with scaled-up founders or business leaders for a long time, and I thoroughly enjoy it. And I think that that's something that very few of the traditional investors basically have founders or senior execs who actually operatively have built multi-billion dollar companies and who enjoy doing that and working with founders. So the first one is a very personal level. The second one is I think that it's a tremendous opportunity if you do it correctly. Now that's a big if it's a path where every next step can be a last. But if you do it the right way, I think you have the chance to build a$100 billion modern consumer company. Because the encumbrance will have a very hard time to adapting to the new world.
SPEAKER_01:And so where are you now? We're talking January 2026. And what are steps you take to build 100 billion regenerative consumer goods company?
SPEAKER_00:What's the playbook? You do need to find limited partners, capital providers, who are excited about that. You can make very real market returns, but you do need to be aware that it's a bold, audacious task. And so ideally, you work with investors who can de-risk it by saying, look, we do want our money to potentially have tremendous impact, but also we really want our money back and we want to make a return. If those two come together and they can write large enough checks, they are used to traditional private equity investing. Or so you have quite positive momentum. And then the second thing is you obviously need founders who say, I'm excited about that. I want to build a billion company and I want to be part of that. And that say, look, I could imagine even being in a group with two, three other founders like me, and we are gonna do this together. We can take leadership positions in building something that will have tremendous and accelerating momentum.
SPEAKER_01:And so on those two fronts, how are things?
SPEAKER_00:On the first front, good. It's a small ecosystem, but that ecosystem is very interested. On the second note, it's quite similar, it's small, but this ecosystem is very interested. So you basically have a small subset of investors and a small subset of founders. And if you get the timing right and you are not in a rush, I think you can build that match.
SPEAKER_01:What kind of narratives do you encounter in the first side on the finance? Because we I mean you published something on LinkedIn and on impact investing or impact and return. I think that's one. I think food and ag still you you publish a lot, you just publish something as well. On the enemies, on the Rubinant side. So where are you doing education more than you're doing fundraising, let's say on the investor side when you meet people? Or how is their level of understanding of biology, photosynthesis, food systems? Like what's your take there? Or are they super sophisticated, the ones you talk to, and actually you don't have to go into that at all?
SPEAKER_00:I would answer differently. They are very sophisticated when it comes to understanding investment. They very easily get that the better for you is a macro trend that provides wind in your sales.
SPEAKER_01:They probably have been looking at for themselves and their families if they are into So that the that that is a tick mark.
SPEAKER_00:The one narrative challenge is that it's very non-conventional to do late-stage consumer because usually the strategics do that. So usually you would say it's L'Oreal or Mestle or whoever, they're so desperate they will pay a crazy multiple, and then they can de-risk it with their own distribution. So you basically cannot compete. And that is the key narrative to explore, and there is some truth to it. But on the other hand, you need to ask yourself: what is the need for distribution if you have a better-for-you company with strong marketing that basically every retailer wants to list? Do you really need distribution? And what is the price you would pay for the distribution? The price for the distribution is that you cede control to a company that will alterate and adulterate your brand in ways that you didn't think was a good way. So it's one where the remedy can kill the patient. So I think that the distribution advantage is not really a strong advantage. The second one is they say, yeah, but they can take so much EBITDA out by using their own supply chain. I said, yeah, but if you replace a regenerative supply chain with an agrochemical supply chain, you basically dismantle the brand. So it's another fake victory. But that is something where you need to spend time with. It's not been done at scale before that you basically do late-stage permanent capital too. Better for you, consumer regenerative, consumer bad.
SPEAKER_01:And it leads into the second group, the founders, because if the investors or potential investors are skeptical that you can take those positions if a founder can also sell to an incumbent for a crazy amount because they're so desperate, even though they might not want to, what's the pool for the founders to not take that immense amount of money potentially? How many of those conversations do you have and how many of those are leaning in? Actually, I want it more permanent, but maybe less money in the short run, but a much more long run competitive piece.
SPEAKER_00:You're a founder of a your company's worth$200 million and you own 30% of it. So if you do 100% exit, you make 60 million bucks. That's amazing. How many of those 60 million will change your life in the next two to five years? I would say that if you buy yourself a house and you upgrade your life a little bit, let's say you take 10 or 15 million.
SPEAKER_01:Most people listening to this will be like, okay, that's a few more zeros than I expected, but let's go with that.
SPEAKER_00:But it's a traditional late stage. The companies that um are in that space, they that's more or less the numbers. So but then they often might have a very bad hangover because they say, look, I have now 60 million, I spent 10 million, I have a great life, and now my company is not doing that well. And the people that are in charge of it, they will run it to the ground. At least they might. And so I might have paid a very high price because I spent 15 years building something I truly believe in, and now I have the money, but in the end, I actually might need to do it all over again. Why didn't I just stay with the company I built? And so the pitch then becomes why don't you take those 15 million anyway? But the other 45 million you leave in the business, and out of those 45 million, you can make 400 million over the next 15 years. And that's not for everybody.
SPEAKER_01:No, but you need a few. You only need a few. That's what it is. You need two or three, and and maybe four, and that's it. And then for the current investors in those companies, is this a better deal? Because that might be pushing for, let's sell the whole thing for the highest bidder. Like, how do you get them on board to take this longer term?
SPEAKER_00:You do need to pay a fair price. But prices are always done in an envelope. All deals go to the highest bidder. Deals usually there's a various inputs that determine it. And many investors in that space are mission-led on their own, have a fiduciary duty. They do need to return capital, but they I think they would have a preference to see their company succeed long term. So if you are within the L envelope of pricing that is reasonable, I think that you can make deals.
SPEAKER_01:And how important is, we talked about it last time, like vertically integration in this, like processing, which get a bad rep, but of course you need some kind of processing, minimum, as you said, or like how like the companies you're looking at, how closely are they to the land and or not? And why is that important? Of course, it depends on categories, but like some examples you've seen or you looked at in terms of how important it is to get as as vertical as possible, or not, maybe.
SPEAKER_00:I don't think that many of those companies have a choice. And that might be a beautiful thing. Let me elaborate. When you listen to some of Warren Buffett's most famous speeches, he says, I want a business that is a beautiful fortress, and then I want to have a terrifying moat around it, with crocodiles and with water and with high walls, so that I can fend off competition. When you look at regenerative or alternative supply chain brands, it could be in personal care where you need to find a way to formulate functional products without problematic synthetic chemicals. So you basically don't really have a choice other than to build your own supply chain, which usually is on the spectrum of vertical integration. And if you are scaling a US regenerative dairy company, um at some point you will find that you will actively need to incentivize new farmers to move to a grass-fed regenerative system because you have outgrown the existing supply. Now, that can be scary because it more or less means vertical integration, but it also builds a tremendous moat. Because it's very hard for anybody else coming in and doing what you do, because you sit on top of that supply chain. And that is also where the true impact comes from. Because you are at the forefront of changing land use or ingredient use.
SPEAKER_01:Because that's exactly what we want. We want it to that you run out of regenerative dairies to buy from, and then you're gonna actively change non-regenerative dairies to regenerative dairy.
SPEAKER_00:Like the point is you need companies that make being clean a virtue and make the company more functional because of it. And then you need business leaders who can pull that off without making too many mistakes. So it's not an easy way, but it is a way that has win in its sales because it's the most profitable growth pool out there, and you can build a tremendous competitive advantage over time. So I would say it's very difficult, but it's very rewarding.
SPEAKER_01:And how important is the health? We're gonna say health movement. We see, of course, the tremendous health costs you published on that as well. The basically the toxicity we live in, we breathe, we eat, we put on our in our clothes, etc. More and more people wake up to that luckily every day, still not allowed, uh not enough. Then you have the other side where a lot of research is going into from Audacious and a lot of universities and on the nutrient density, like it is very important how the tomato is grown or the dairy is grown, etc. That's sort of those two together is leading to a lot of this growth in demand. Do we need more, like how much do we know enough to drive that? Do consumers know enough and understand enough to really drive a lot of demand, or is there still a lot of confusion? I see now, I think Eric Smith posts something on the CEO of Audacious and the founder on fat. Fat is the next one. And is there are we over that sort of hump that we now know enough to say, okay, let's act and buy and eat because we know what we shouldn't eat and we know what we should eat, or is it still very greyish in terms of knowledge?
SPEAKER_00:I think the science is mostly settled to an extent that I could answer those questions definitively. That doesn't mean that in the consumer sphere there isn't any more confusion left. I think that a lot of topics have been well identified, but not thoroughly understood from a first principle perspective. So is a good example. Gluten is not per se a health hazard. That's just plainly wrong. Glyphosate is, and certain strains, unfortunately, most of the seed strains that we use of wheat show inflammatory properties. But we also know that there are other wheat strains and spelt strains, more ancient wheat ones, that lab tests show anti-inflammatory properties. So there's a lot of nuance. Uh, another one I think that is very important is when we compare and we look at, oh yeah, should we use feedlots for beef, concentrated animal feeding operations for beef, or should we use grass-fed? Oh, but what about meat and what about that? I think it's a very simple way of tackling that argument. Corn fed beef is not suitable for human consumption. You're basically eating cholesterol. And the science for that is 100% clear.
SPEAKER_01:So and and is that getting out there? What's needed for consumers that are that couldn't care less about the environmental piece, maybe that care about their health to see their stake as actually an inflammatory cholesterol bomb and start actively looking for other things. Is that happening? Do you see it happening? If not, what do we need to push that button a lot harder?
SPEAKER_00:Yeah, I don't think it is happening in a simple enough, clear way. There is a lot of interest out there to muddy the waters, as it was with tobacco.
SPEAKER_01:It is actually tobacco is still so strong.
SPEAKER_00:When you do a quick research, there is there's tremendous interest and a very good PR narratives spun around creating muddying the waters about it. But just to say it in very simple terms, we know conclusively that a omega-6 to three, like unsaturated fatty acid composition in our bodies that is north of 2 to 1 or 3 to 1, omega-6 to 3 is driving constant inflammation. And that constant inflammation basically drives havoc in our bodies, it drives cardiovascular disease, it drives plaques, it causes stroke, it drives dementia. Like it goes wild. And so we know that conclusively. And we do know that corn fat beef has an omega-6 to 3 ratio of 10 or 15 to 1, and grass-fed beef has an omega-3 ratio in line with nature of 2 to 1. So we don't need to look a lot further. I think that sometimes having very strong, firm first principles is the grounding that we need in a world that is complex enough by itself.
SPEAKER_01:And have you talked to companies, not to mention names here, but that are focused on that specific, like the meat side, basically going from inflammatory, bad for you, the same with eggs, by the way, to this is actually healthier or even almost as healthy as, or as healthy as fish. What would a company look like ideally in in the meat space you would look at, or maybe you already looked at just to keep it anonymous? But what is something because you've seen this boxes to the consumer, you've seen meat boxes manage it, but not really, people buy directly from the butcher. There are a lot of attempts, but I haven't seen like a brand that really is built around this.
SPEAKER_00:Fresh meat is a complicated business. So when you put a pure business angle onto things, you want to be able to brand products, and ideally, you want to have a certain amount of shelf stability, you want to have a certain amount of broad-scale distribution capacity. That is all hard for fresh meat. Now, in a way, you could say that makes it more exciting because it's hard, but from a pure business perspective, um needs to be doable, not just hard. Yeah. Like it's not perfumes where you have 80% gross margin. If you have a lot of space for error. Meat is traditionally low-margin business, a high-scale business. And in high-scale businesses, actually scale itself is the competitive mode. And so the big meat packers have that scale. I think you were very spot on when you talked about brand. When you think about it, real brands and food is vaguillo or cob. And a little bit in Europe, you have Chugichu, the Spanish, Rubia Gallega, the old cows. I think you would need to find a way of branding and differentiating high quality grass fed beef in a way that resonates with consumers and that you can replicate and scale up. It's one of the more challenging ones. I would have said the same. Four vegetables, and then Franco, who you know from Natura, is pulling it off. And that is as difficult or even more so.
SPEAKER_01:Fubini of Natura, yeah. And so it's definitely possible. We just haven't seen the right puzzle pieces of entrepreneur plus the right background skills, money, logistics, resources, etc., to actually do it. And coming to what have you changed your mind or opinion about, let's say, looking two years back when we recorded for the first time, what have you felt very different, let's say, over the last two years? In the regen space, obviously.
SPEAKER_00:I did not understand well enough that ruminant methane emissions are not an active driver of climate acceleration. Let's repeat that again. Yeah. Just for the people in the back. I was long in that mindset that we need to eat less meat to save the world. And the arguments have been put forward by Bill Gates and others that enkyric or basically methane emissions caused by digestion of ruminants is a large source of global warming. It turns out that the science is again very settled and very clear, and it's simply not true. And I was shocked when I realized that, and how few people, even in the regenerative space, know that. If you look at IPCC12, fast cycle greenhouse gases, methane is one of them. Methane has a cycle time in the atmosphere of 12 years. That means that if you keep the stock of ruminant animals constant after 12 years, basically the methane cycles through the atmosphere, and there is zero, let's say zero incremental warming coming from that methane. And it turns out that ruminant stocks in the world have been mostly constant over the last 12 years. So basically, you would say the methane from these animals is priced in already. And that is a very important nuance because carbon is very different. Carbon has a hundred-year cycle time. That means every new element of carbon that we put out compounds is a problem. Versus the methane of the existing ruminants is not. And so when you look into that narrative, that oh, we should feed cows corn because we can fatten them a little faster so they live a little bit less long, so there is less methane. It's a totally bogus argument. It's terrible actually. Or feed them some kind of ingredient that produces. The corn, the animal food that we grow, has a negative energy return on investment. That means like we're putting more energy, and that's usually fossil energy in terms of carbon that actually goes into the atmosphere, that actually compounds and that accelerates climate change. We're growing that corn with all that fossil energy, and mostly of it is used in the Harbor-Bosch process of producing nitrogen and in the nitrous oxide of excessive fertilizer application, which is all 100% settled. Um we produce that to then feed it to cows to produce steaks that make us sick in order to save us from a few cowburbs that actually had never been a problem to start with. And that narrative is still out there. And I think it's it's it's horrible.
SPEAKER_01:And you notice that as well in in like investor meetings you have, like with key decision makers that could make or break a potential investment in your holding company?
SPEAKER_00:Honestly, the investor discussions are usually different. Investors they want to know that you know your stuff, but they also want to know that you're a good business person. And they often do read up on my publications, they're very interested in it. But and I mean it in all the best ways, their core interest is that they make market returns on something that has the potential upside of being a force for good. And that force for good cannot be naive. And once they understand that I have done a lot of research, and I think I have a strong first principle in that space, that helps. But in the end, doing something that has a lot of impact but fails doesn't have any impact at all.
SPEAKER_01:Which also probably is worth repeating. But I when I double-click on the methane, that doesn't mean methane isn't an issue. But I think the rising methane, is methane rising, by the way, over the last decades in the atmosphere.
SPEAKER_00:Is rising mostly driven by oil and gas burnoff, which is by the way, which is very convenient that we're not talking about that. Yeah. Yeah, it's by far the dominant driver of avoidable methane emissions. By far is just plugging methane leaks and flaring and all of that, right? So in a there was the I think the US Secretary of Energy who made the argument. He said, look, oil and gas production is not going down, so I'd rather produce it here where I can make sure it adheres to certain standards than in Kazakhstan. That is a dangerous argument and a slippery slope, but at face value it's also true.
SPEAKER_01:And coming back to that point of the impact and returns, not with the investors you talked about, let's say the more general, also regen crowd, that you're saying there is a massive financial opportunity here. Financial first, we need to get market returns, rate returns for these investors, and we have a potential, not a guarantee, but a potential for a massive positive impact beyond the financial returns. That narrative, how is that landing beyond, of course, the investors you're talking to, they're interested in that. Otherwise they wouldn't be talking to you. But does that come across as naive? Like, how does that land with other people you talk to? You share what you're working on.
SPEAKER_00:I think that the consumer space itself is underinvested when you have a pure impact lens on.
SPEAKER_01:Many people have been burned by brands and some like cute startups, etc., I think as well.
SPEAKER_00:I think the uh alternative protein space burned a lot of people. And I do think that inside and outside. I think there was I do believe there's a space for alternative proteins. I just believe that selling it as a we need to stop eating beef to save the world, to save us from methane emissions, is just scientifically unsound. And it's hard building a consumer narrative on something that is scientifically unsound over time. And so I think that's one of the reasons that space got overinvested and accordingly later the valuations crashed. I do believe that there is a space for it. I just believe that the market might end up smaller than we all thought. But other than that, how do you sustainably change land use and input? You usually change it by providing consumers with better alternatives. But here's the key thing: you need to build those better consumer alternatives. So a lot of the impact can be rolled back to the farm and ingredient level once you have a strong and successful consumer brand. And I think once you talk to them about that, it becomes usually quite obvious. But for reasons I don't fully understand, it hasn't been a particularly explored area.
SPEAKER_01:It's interesting because many times in the region space as well, we're like, okay, if we grow better ingredients on the farm, then the people will come, or then the clients will dare, or the people will buy, etc. Actually, I'm not saying it's the opposite, but it needs to be something that tastes really good, is very functional in terms of health, even functional as a weird word, but it needs to definitely make you feel better and makes you healthier, and need to taste amazing because you there are just not many people that are going to eat something that doesn't taste amazing and doesn't function well. There's a small group, we've learned that in the organic space and the alternative space, but to reach larger audiences, it just needs to perform. And if you crack that nut, which is not easy, then you can buy a lot of ingredients from a lot of farmers because you have the market. And probably that's the order of things that people get wrong.
SPEAKER_00:Um when you look into a recent consumer space that has been absolutely revolutionized, it was how Tesla did it for cars. Tesla built a sexy, attractive car. A lot of people called a Tesla, including me, because it was just a better car. Now, the fact that you are contributing to the world we live in by driving an electric car is a massive benefit. But I'm not sure it's benefit enough if the car would be shitty and ugly. So, and then look at what happened.
SPEAKER_01:Hence the Prius. Yeah, no, there are different arguments about that, but definitely not a beautiful one. No, it needs to perform.
SPEAKER_00:And and once Tesla got so successful, incumbents were forced to adapt or basically perish. So you have a massive multiplier if you play the consumer game well. And then politicians and legislation and lobbying, the biggest currency in politics is voters. And if a lot of your voters suddenly buy Teslas, you will very carefully think about how you shape your narrative towards electricity and sustainable electricity. So, what I'm saying is the consumer space has tremendous advantages that I think are not obvious to every investor's eye, but once you explain them, they become quite clear.
SPEAKER_01:And looking at that, what's the biggest risk here? Not the biggest risk of not working, of course, but like devil's advocate, what could go wrong? Like it still works, like you still raise the money, you invest in a number of companies, but then you don't, for some reason, don't reach the impact. And or maybe even the financial results. What is what do you see if you look in first principles on this itself from a critical outsider? If you can step out of yourself and look at the thing at rare, what you're building, what's the biggest risk that could go horribly wrong?
SPEAKER_00:I'm not at all worried about the impact side because the impact scales with your revenues if you stay true to your mission. And it would be quite stupid not to stay true to your mission because we discussed about it before. If you're selling regenerative yogurt and you stop being regenerative, you basically stop selling the product that made you great in the first place. So I'm not at all worried about mission drift.
SPEAKER_01:But there will be pressure on margins, there will be pressure on supply chains, it will be they're slipping up a slippery slope.
SPEAKER_00:The consumers that you market to, they're very smart. Don't get away with shortcuts. If you look at, if you take a little space in the luxury world, the moment you make the smallest mistakes that erode your brand, you basically erode your entire business. Plaintiff example. So you can never ever compromise on your brand. And for a better-for-you brand, the brand is the integrity of your product. So it would be a poor business decision, not a strong business decision to erode that. That's why I'm actually not so worried about mission drift in that context. I'm not doing this to play a fool's errands game. So that I don't think there's the biggest risk is that you partner with the wrong company. Uh either their total addressable market is smaller than you thought, or you, as a team with the founder, make too many mistakes. Because what you want to build is not easy. I think those are the real risks.
SPEAKER_01:And so when it ends up being too small, what do you do? Like in a holding structure, let's say plateaus, whatever you try, you do all the right things, but somehow there's an end to your return of lipsticks. I'm just saying something.
SPEAKER_00:Yeah, the first one is a careful product line expansion. And the real important word here is careful. Because if you stretch the brand envelope too much, you risk up erolling the first business. Or the second option is you do the Sears Candy that Buffett did. You use the excess cash of a low TAM but highly profitable business, and use it to deploy it in your other businesses that have a higher TAN.
SPEAKER_01:And a whole income structure, holding company structure gives you explicit ability to do that.
SPEAKER_00:But it requires discipline. It requires a strong skill of capital allocation. None of those things is easy. But as I said, it's it can be very rewarding and it can be very defensible.
SPEAKER_01:And as you said, I think at the beginning, when you started where this is not easy at all. It might not work, but it's too relevant not to try, or I'm butchering your quote, but something like that. I have to try this because it's a potentially big.
SPEAKER_00:Look, let me let me say it in a very different word. We are in a world where more or less 12 to 15 CPG consumer package conglomerates stock 90% of our supermarkets. Um nearly all of those products actively make us sick. We are by many ways six times sicker than in the 1960s, but we're also six times richer on a GDP per capita. It's the stupidest trade ever. We made ourselves sick by buying products that we have no urge, we don't need hormone disruptors in our shampoo. We don't need ultra-processed ingredients in our food. We were very good 60 years ago without any of that. And we have tremendous more wealth right now. So it's a very stupid system we locked ourselves into. So the price is tremendous. And from an economical perspective, consumers are waking up to that. And the companies, these 12, 15 companies, have a market capitalization of 2 trillion. And none of them are doing well. They didn't even return inflation on the stock as a total return of shareholders over the last decade. So some of them will go away, and that means there's hundreds of billions of retail sales up for grass. So the opportunity is from an impact and business perspective staggering. And yes, it's very tempting to go after that.
SPEAKER_01:As a final question, do you remember when you realized this, like the last, let's say, 30 seconds minute you mentioned, like that opportunity and that it is in brands and it is in Better For You and Better for the Planet companies done really, really well. Do you remember when it was it a moment or was it a careful process? Because you did a lot on the farming level. You've been deeper into AIC and regenerative practices with Nicole Masters and Create than I've seen anybody do that's not a farmer. Probably more so than some farmers I know as well. Like when did it dawn on you that actually it's on something very intangible on brands?
SPEAKER_00:I'm a consumer person. I'm a consumer myself. I'm a passionate chef, I'm a passionate about the landscape. I'm extremely nerdy. I just recently made my own organic perfumes. Just sourcing the ingredients is surprisingly hard. Um I'm making my own hair shape.
SPEAKER_01:There's like a label of nerdiness that I think probably too bad we're just recording this on audio, not on video, people. Yes. You should see the hair of Martin.
SPEAKER_00:So there is clearly a very strong personal uh driver here. It's been a long process, and just to caveat that, I am incredibly passionate about enterprise stacking at the farm level and building and showing that you can create 15% compounded annual growth rates on a profit level on a farm level. Because I do think it's possible. I just believe that my personal value add, given that I have grown several multi or helped grow several multi-billion dollar companies, is at working with late-stage founders and providing them an alternative. But in the end, changing the ecosystem means that we need to do many things in lockstep. And finally, I did grow into that through a process. I was actively looking into building farm-level multi-stack saladin-style operations. I am very interested in seeing if there's space for a wholesale lever or a more regional processing lever for regenerative ingredients. It's not that I am I'm not seeing that. It's that I think probably the biggest leverage point we have is on the consumer brand level.
SPEAKER_01:And again, I say final question and never is a final question. On talent, do you see have you seen a shift or change or that people with talent like yourself that come from elsewhere? They don't they didn't grow up on a farm, they haven't spent all their lives probably better in that sense because you have another perspective and other resources and other skills. Have you seen in the last two years that the influx of people I always like to say bitten by the soil buck, quote unquote, getting into regeneration, getting into food and ag, is that starting to shift? Because you need that talent. You need the people. Have you seen a shift in there? Is it a trickle? Is it a flood, or is it a gentle stream? What have you seen on the talent space? Just raw talent come into our space. I think there's a lot of pent-up demand.
SPEAKER_00:I think that if we can provide market compensation for people that are between 25 and 40 years old, we could go after some of the best talent out there quite fast. But here's the thing: we need to provide market compensation, and that requires scalable high-value creation model.
SPEAKER_01:Meaning you're saying the talent is on the sideline looking at it, but doesn't see a clear path of okay, if I build something, I'm gonna raise this and this, and I have a path towards rare or a path towards.
SPEAKER_00:When you look at the first, second generation of technology or third generation of technology companies, they have usually drawn their talent in from other more legacy high-talent employers. So a good example is strong brands, the top law firms, the top investment banking firms, and the top consultancy companies. When you build a high-value generation business, and most of that over the last 20, 30 years has been in technology, you would go into those industries and try to get their best talent because you can actually pay them more or less what they are demanding, but you can provide them with upside and with a lot of excitement. And what I'm saying is that we can do the same here. We even have an edge because a lot of younger people today, they do actively want to work on something they believe in, and that can have an impact. But at the same time, they have rent to pay, they want to build a family. So you cannot just tell them like work for nothing, but do something and live in a yurt, yeah.
SPEAKER_01:That's for some people, not for all. I think we covered a lot of ground, Martin. I want to thank you again so much for the work you do coming here in a busy period to share about it. And I'm just very excited to keep following what you're building and where RARE stands in a year or in a year or two and see where it leads to. Thank you, Kuhn.
SPEAKER_00:Same here. Thanks for all the work you're doing for the ecosystem. It's accelerating. Absolutely.
SPEAKER_01:So thank you so much for listening all the way to the end. I'm really curious what you think of this one. It's just a fascinating topic. I find like consumer brands in general, so much intangible value in a name, in sourcing, in a combination of people, and a combination of health ingredients, etc. And I'm just really curious if this is gonna fly. As Martin said, this is not easy at all. It's so worth trying and so worth exploring because it can lead to so much more demand for farmers for ingredients that are sourced. Properly and to make that connection good for you, so it actually actually has to be functioning, it has to be tasty, it has to be healthy, it has to function for you. Function is a horrible word, but that's what it needs to do. And really good branding and really good, let's say, entrepreneurship to build and scale these businesses. Most of it will won't work, most of them won't make it. But if you can get to two, three, four, five, five hundred million revenue, you can do really interesting things. But it's of course using, let's say, explicitly the capitalistic growth mindset and also the tools to do regen. And there, of course, could be tension and there could be, yeah, there could be trade-offs. And I'm just really curious what you think there, what do you what you feel? Doesn't mean we shouldn't try it. I think we we absolutely owe it to the movement and the research on nutrient density and the potential for good for you, or better for you and better for the planet, the potential to actually build a number of these larger companies to start deliver and see how far we can quote unquote push the system. Again, super curious what you think, how you think about this. Where do you think this financial innovation is, and if that's the unlock that's needed, like a permanent holding company compared to a 10-year or a seven, eight-year fund? And of course, yeah, what would you buy from these companies or would you invest in these companies if they go public? Like a holding like this could go public, and we could all invest in that. Would that be an interesting part of your portfolio? Definitely let me know, and thank you so much for listening and see you at the next one. Thank you for listening all the way to the end. For show notes and links discussed, check out our website, investinginregenerativeagriculture.com/slash posts. If you like this episode, why not share it with a friend? And get in touch with us on social media, our website, or via the Spotify app and tell us what you like most. And give us a rating on Apple Podcasts or Spotify or your podcast player. That really, really helps us. Thanks again and see you next time.
