‘This is a big step forward’: Imagindairy co-founder on industrialization, leveraging AI, and FDA green light

‘This is a big step forward’: Imagindairy co-founder on industrialization, leveraging AI and US product launches

The co-founder of the precision fermentation dairy company says that owning industrial-scale production lines allows for growth ‘on our own terms’ and predicts the market to ripen in one to two years from now.

Last summer, the Israeli company is among the first precision fermentation firms to obtain GRAS (generally-recognised as safe) status for its animal-free proteins in the US, taking it a step closer to commercialization in one of the few markets where animal-free dairy can be sold to consumers.

Recently, the startup, which has raised more than $30m in funding, has obtained industrial-scale production lines for producing precision fermentation-derived dairy ingredients.

Compared to other GRAS-certified competitors – Perfect Day recently purchased production in manufacturing facilities from a former biotech company in India, while Remilk paused its plans to build its own manufacturing plant in Denmark – Imagindairy claims to be the first on the market to run its own production lines.

“Other players in the precision fermentation space are turning to facilities that were developed for various industries, whereas Imagindairy has become the first company in the industry to fully own and operate its own industrial-scale production lines dedicated solely to producing its animal-free milk proteins,” Dr Eyal Afergan, co-founder and CEO of Imagindairy, told DairyReporter.

“This is a big step forward – not only is the facility tailored to what we’re producing, but it allows us full control of the production process, the ingredient’s quality, and the flexibility to scale on our own terms.”

“Imagindairy can now overcome industry bottlenecks that have previously been holding precision fermentation dairy back, by conducting shorter iterations from the lab bench to industrial scale, increasing production capacity, and ensuring that unit economics make sense across the supply chain,” he added.

The production lines are based in the Middle East, though not in Israel. They have 100,000 liters of fermentation capacity, which can be expanded to 300,000 liters.

The announcement was originally meant to go live late last year, but those plans were upended by the war in Gaza, which rages on into 2024. Asked how Imagindairy is maintaining continuity at this crucial juncture for the business, Afergan said: "This is a challenging time here in Israel, and we’re grateful that all Imagindairy employees have remained safe.

"Since we’re global players, with our manufacturing facility located abroad, our operations haven’t been affected, and we’re running as usual. In terms of specific provisions, the safety of our employees is a top priority at this time, and luckily, we have the option to enable working from home and allow flexible working hours. Having founded Imagindairy in the early days of the global pandemic in 2020, we are very familiar with maintaining business continuity during challenging times and are confident in the resilience of our team to keep delivering."

Back to fermentation, we ask how much product could typically be made by utilizing the production lines' full capacity, there isn't a straight answer - calculating the volume of cheese or yogurt alternatives that can be made with the company's animal-free ingredients isn’t possible without knowing the other variables. “Volumes are dependent on a specific product’s formulation, i.e. protein percentage, and customers’ needs,” Afergan told us.

Asked if the company would consider entering co-manufacturing contracts as an additional income stream, the CEO added: “We’re currently focusing on manufacturing for our own needs. We don’t have such plans for the near future.”

Imagindairy’s secret sauce to achieving cost parity with traditional dairy

Besides optimizing ingredient production, cost parity has proved another obstacle for the market. But Imagindairy claims it has managed to overcome that challenge, too.

“Cost parity has always been a main target for Imagindairy, as we understand it’s imperative for mass market adoption,” Afergan told us. “Our dairy prototype formulations, based on our protein, are at parity with traditional dairy products or even at lower prices.”

This feat wasn’t achieved through scaling up alone, we learned. “One of our key differentiators that has allowed us to optimize the development of sustainable, animal-free dairy proteins is the integration of our proprietary AI platform into the precision fermentation process,” Afergan explained.

“It has been shown to increase the protein yield, supporting a more efficient supply, and helping us reach cost parity. Our manufacturing facility allows us to incorporate optimized processes across the value chain to further cut costs.”

However, just how affordable such products would be to consumers remains in the hands of manufacturers and retailers. Aside from securing proteins at competitive prices, additional cost hurdles for FMCG companies looking to enter the animal-free dairy space are linked mostly with R&D and marketing, Afergan believes. “Imagindairy operates on a B2B model specifically designed to support our CPG partners who would like to enter this space,” he added.

When are new products arriving?

Imagindairy also announced it has received a ‘no questions’ letter from the US Food and Drug Administration for its GRAS notice. This signifies that the ingredient is safe to be used in food and beverage products, providing a regulatory ‘green light’ for food and beverage manufacturers to partner with Imagindairy.

The company has not publicly announced any commercial partnerships, but products made using its animal-free dairy protein are expected to be launched in the coming year, DairyReporter understands.

As for growing its fermentation production capacity in the future, Afergan says the company is flexible to expand based on demand. “We anticipate growing demand in the market based on our customers’ needs,” he said.

“We have the flexibility to expand when the market is ripe for this, approximately 1-2 years from now."