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Nestle teams up with Canadian plant-based ingredient makers

By Rod Nickel and Silke Koltrowitz
FILE PHOTO: Plant-based burger at Burcon's alternative meats protein lab in Winnipeg

By Rod Nickel and Silke Koltrowitz

WINNIPEG, Manitoba/ZURICH (Reuters) - Food company Nestle SA <NESN.S> said on Friday it has teamed up with small Canadian plant-based food ingredient makers Burcon <BU.TO> and Merit Functional Foods, the second such supply agreement this month that targets Canadian crops.

Meat substitutes from plants in burgers, nuggets and many other foods are a fast-growing industry, driving up demand for crops that produce them.

Canada is among the world's largest growers of peas and the biggest producer of canola, crops high in protein that technology companies like Burcon can separate and isolate for use in foods and beverages.

The agreement with Nestle is long-term, with no expiry, Burcon Chief Executive Johann Tergesen said in an interview. Nestle will buy pea and canola proteins from a 20,000-tonne-per-year Merit plant to be built by the end of this year in Winnipeg, Manitoba.

Merit will process the proteins using Burcon technology under a licensing agreement.

"It's a little bit like Christmas morning for those of us who have been doing this for 20 years," Tergesen said.

"In the early days, I had to explain to people what protein was. Now it has been a wild ride."

Burcon stock jumped 36% in Toronto to C$1.89 per share, touching its highest price in nearly three years. Nestle stock rose 0.9% in Switzerland.

With the deal, Burcon expects to report its first-ever commercial revenue and profit in 2021. Terms were not released.

Nestle launched soy and wheat protein-based "Incredible Burgers" in Europe last year. The deal gives the company access to a range of ingredients for its foods and beverages, using the "unique expertise" of Burcon and Merit, Nestle Chief Technology Officer Stefan Palzer said.

It comes after Beyond Meat Inc <BYND.O> this month struck a similar supply agreement with France-based Roquette, which is also building a pea protein plant in Manitoba.

The new commercial demand "provides a real sense of optimism for the future," said Gord Bacon of Pulse Canada, an industry group representing pulse farmers and processors.

"To have a diversified market base is what every group producing commodities or ingredients in Canada would hope for."

With so much of Canada's peas exported raw, finding enough supply to satisfy the Nestle deal will not be a challenge, said Ryan Bracken, Merit's co-CEO. The company is already planning to expand the Winnipeg plant under construction to more than double production.


(Reporting by Rod Nickel in Winnipeg, Manitoba and Silke Koltrowitz in Zurich; additional reporting by Kelsey Johnson in Ottawa; Editing by Michael Shields, Nick Macfie and Jonathan Oatis)