Conversation with Shahar Margalit and Asaf Cohen Jonathan of The Fat Company

Processors and factories for conventional meat blend unhealthy animal fat into various meat products to improve the taste, texture, and juiciness. Conventional animal fat is however costly and unhealthy, and supply is limited. The Fat Company has developed plant-sourced fat particles that replace animal fat. It’s ready-to-use and cuts costs for (animal-sourced and plant-based) meat factories, while providing a cholesterol- and trans fat free option — with the same taste and texture as animal fat. To learn more, I recently sat down with Shahar Margalit and Asaf Cohen Jonathan of The Fat Company.

FTW: “First of all, can you tell me a bit about your respective background?”

SM: “I hold a Master of Law degree, but never practiced — I went into business instead, managing companies. I for example cofounded a delivery company with an impact angle. We grew from three people in a garage to a company with hundreds of employees.

Then I did a startup in the gaming world which is still up and running. After that, I ran a family office, which helped me understand the other side — finding great entrepreneurs. I realized that no matter how impressive the PowerPoint decks and Excel models are, at the end of the day it comes down to the team; having the right people.

Two years ago I met Asaf, when mentoring at the 8200 program. He brought me into the FoodTech world. All the knowledge I have about FoodTech is thanks to him.”

Asaf: “And while I could share my knowledge about Food and FoodTech with him, I learned a lot about running a business, finance, and being an entrepreneur, from Shahar. I grew up in a family where cooking was prevalent. Everything was connected to food, we were all cooking. Cooking opens the ideas of creation.

I studied chemistry out of curiosity, wanting to understand how things react. I felt however that I needed to combine my knowhow about chemistry with my love for cooking, and take it to a much higher level. This fit like a glove. So I did another bachelor degree in food engineering and biotech, from Technion.

I then started working at Tnuva, the biggest dairy company in Israel. After that, I moved to Tivall, owned by Nestlé. It was amazing. I was in their R&D department. You become the brain of the factory. You invent products and get them to market. After Tivol, I moved to other B2B companies processing food ingredients and selling them to food companies. I gained lots of expertise, for example around starches and how to process raw ingredients from the field.

I then started a food consultancy, focusing on alternative protein; so meat, fish, and chicken substitutes. I delivered a lot of value to many startups here.

Two years ago I met Shahar in the 8200 program. We became friends and I saw the connection between us. He completes me. We’re like a married couple. As in any relationship, trust is so important.”

FTW: “What’s the problem your company wants to solve for?”

SM: “There are several problems. Let’s start with cost and taste. We’ll always need fat — for example for burgers, kebabs, and sausages — but the demand (representing about 20% of the total global meat market in value) is higher than supply, meaning prices keep climbing. It’s more than 2x its historical price right now.

As for taste, foodservice actors like McDonald’s want to keep the flavor a certain way. A burger without the fat is very dry and doesn’t give you the juicy taste that you’re used to. So foodservice actors specify to meat producers how much fat to add to products like burgers and sausages for a better culinary experience — and processing and integrating all this fat in meat is resource-demanding.

Then there’s the health aspect. Saturated fats lead to cardiovascular disease. The health aspect is something that restaurants and foodservice actors do care about, and of course to maintain product taste and texture.”

FTW: “Is this problem only relevant for animal-sourced meat producers, or alt meat producers as well?”

SM: “Both of them. For plant-based meat factories, getting a better fat is a no-brainer. They know that their products are ‘alternative’. This means it’s not the default or preferred choice by customers. Better tasting products are key to turning these products from alternatives to mainstream products.”

FTW: “So how eager are these meat factory owners to change things?”

SM: “I met lots of these factory owners. They do want to improve things and save money, but they don’t want to change the production lines because it’s costly.

I was actually afraid to speak to these owners. You’re going to a very traditional industry, with trillions of revenue, and you’re changing the formula. Why the hell would they want something new?”

FTW: “What was your conclusion from all these conversations and observations?”

SM: “That I should bring a plant-sourced fat to market, without cholesterol or trans-fats, and without any need to store and grind it. It should be ready-to-use, so you’d just blend it in. This would save costs and have a positive health impact, but at the same time maintain the taste and texture customers look for.

We had to mimic an existing fat in terms of appearance, texture, room temperature, melting point, how it fries, and so on.”

FTW: “How did you go about solving this?”

ACJ: “We had to understand and define what we needed to imitate. We learnt a lot about the source — the original animal-sourced fat we wanted to imitate. Then we broke the fat down to its basic characteristics; the melting point, the release of the smell, the texture, taste, appearance.  We understood the chemical composition of the fat. And then assessed what plant-sourced ingredients we could work with to get to the goal.

We ended up creating fat particles; about five ingredients go into them. We also had to create customized equipment to do what we wanted to do. Essentially it’s a machine that enables mass production of our fat particles, made from sustainable plant-sources identitical to animal-sourced fat.”

SM: “Patent applications have been filed for both our machine and production process.”

FTW: “What impacts are you hoping for, with your fat?”

SM: “The really exciting thing is that we hopefully will allow people to consume the meat products they love while reducing the prevalence of heart disease — without compromising the product taste and texture. No saturated fat, no trans-fat, no cholesterol. A burger with our fat will be about half in calories vs. a regular burger. And we facilitate the shift towards alternative protein products. Our solution is cost-effective, so we’ll save money as well as supply chain and processing headaches for the animal-sourced and plant-based meat producers.”

FTW: “What’s your business model?

SM: “We want to be an ingredient company, and sell a ready-to-use ingredient, B2B, to meat and plant-based meat producers of e.g. burgers, kebabs, sausages, French fries, and so on. We recently landed our first customer.”

FTW: “Do you have any industry peers doing similar things to what you do?”

SM: “We have competitors trying to cultivate animal-fat in bioreactors, extracting fats from seaweed, and so on. The price gets too high though. Our ingredient will be a commodity, so at price parity with conventional animal fat.”

FTW: “What asks do you have to people reading this article?”

SM: “We’re looking for a strategic partner such as a meat factory or a fastfood chain to produce 3,000 tons of our fat particles per year. And we also want strategic and impact-focused investors to get in touch.”

FTW: “How can people get in touch with you?”

SM: “They can reach me via email and LinkedIn — and reach Asaf via email and LinkedIn too.”