October 24, 2018

301 INC and CAVU Venture Partners have come together again to invest $40 million in Kite Hill, a pioneering innovator and creator of plant-based dairy alternative foods. The capital round, which was led by 301 INC, is expected to close in the next month.

Based in California, Kite Hill employs a proprietary method of almond milk production, using non-GMO almonds sourced from California’s San Joaquin Valley, as the base ingredient to produce their plant-based cheese, Greek and European-style yogurts, cream cheese, soft cheeses, and raviolis which are being sold through Whole Foods, Publix Super Markets, Target, and natural and specialty grocery stores across the U.S.

“We started Kite Hill because we knew we could make first-rate dairy alternatives that everyone would love,” said Tai Ronnen, co-founder and chef of Kite Hill. “What we’ve created to date has exceeded our expectations. Now that we are available nationwide, we want to continue to offer people the high quality, innovative products they have come to expect from us at Kite Hill. We are showing consumers just how delicious plant-based foods can be.”

This is the second round for Kite Hill backed by 301 INC and CAVU Venture Partners. In May of 2016, the two made an $18 million investment in the company.

“Plant-based used to be more synonymous with sacrifice than with taste,” John Haugen, vice president and general manager of 301 INC, General Mills’ venture capital arm, told the New York Times at the time. “Now, companies like Kite Hill are able to deliver plant-based products that taste good.”

Indeed, plant-based food producers such as Kite Hill have long been a segment of particular interest for such funds, according to Food Dive, which noted in 2016, “Plant-based foods, particularly dairy, are a sweeping industry trend with both cost and health implications that could upturn long-dominant categories.”

Disrupt traditional categories it has. As more and more consumers reach for dairy alternative products stemming from lactose intolerance, concern for animal welfare, concerns over the usage of antibiotics or possible hormones in production, or veganism, U.S. dairy farmers are put in the position of having to dump their milk. Through July of this year, U.S. dairy farmers dumped 145 million pounds of milk, the most in a decade, and dumped 23.6 million pounds in the month of July alone, reports Bloomberg. Meanwhile, a report released in March of this year by Grand View Research concludes that  the dairy alternatives category is expected to grow at a CAGR of 16.6 percent, and reach a value of US$35 billion by 2024.

“Kite Hill continues to set itself apart in what is now a mainstream demand for plant-based nutrition,” said John Haugen, founder and managing director of 301 INC. “As more people are making changes in their diet, we see incredible untapped potential in the market for the brand to expand its consumer base and grow.”

To help serve that potential, Kite Hill plans to use the capital from this round to increase its capacity, and to strengthen its marketing, innovation, and team to continue to foster its rapid growth rate.

Lynda Kiernan