Sponsored Workshop: Meeting Consumer Demands with Ingredient Innovations from Fungi

Caroline Schwarzman [00:10] Well, thank you all so much for joining us this morning. I know there's a lot of great events happening at the show and people to talk to, so thanks for spending an hour with us. My name is Caroline Schwarzman, and I'm the head of business development at Microtechnology, and we are really excited to share with you today some of our proprietary consumer insights about consumer perception towards sugar reduction and reduced sugar formulations, as well as the sweetener landscape available today. And at the end of this session, you're going to get to be amongst the first people in the world to taste our new sweet protein that we're bringing to market, honey truffle sweetener. Um, so with that said, we'll dive in. We've got a lot to cover in the hour, so I'm going to just give you a brief overview of what's coming up next. We'll start with just a brief background on microtechnology so you understand who we are and why I'm here talking to you today. Um, and then we'll dive into our consumer insights about reduced sugar formulation and sweeteners. Now you might be wondering why is a mushroom company talking to me about sugar reduction. I thought mushrooms were savory, and I thought I was coming to a session about adaptogenic mushrooms. Where's the rashi in the lion's mane? Well, there are a lot of different things you can do with fungi. It's one of the least tapped kingdoms of species in the world. So we're going to share just two of our solutions with you today. Those are our commercial line of Clear IQ Natural flavors and our new sweet protein that we are launching to the market. Um, coming up, and you're going to get to taste this at the end in a low sugar, uh, functional soda demo. And we'll finish with Q and A. So, a bit about microtechnology. We are a food ingredient company that pairs advanced fermentation technology with the ingenuity of nature to harness new solutions from the fungal kingdom that can create breakthrough ingredients that solve some of the biggest challenges in the food and beverage industry. And like I said before, the endless possibilities that exist from fungi are really exciting. We've only studied about 2% of the species that are out there, and even within that there are countless untapped bioactives that we can bring to market to really accelerate everything from food and beverage to industrial. Processes to cosmetics and beyond. But today we're just going to focus on two our clear IQ line of natural flavors, which is a commercial line of ingredients already on the market and being used extensively to improve flavors for better for you beverages, bars, baked goods, you name it. And then our next generation ingredient, our new sweet protein honey truffle sweetener that we are in the process of commercializing as we speak. Um, watch this space. There's always new exciting stuff happening that we're discovering from mushrooms, but for the sake of time, we'll keep it to these ingredients today. be able to get this presentation There's going to be a webinar that's posted after this, yeah, sure. So microtechnology is not a new startup. We're not in someone's basement playing with vials of mushroom mycelia. We've actually been around for 11 years and we've got a history of bringing products to market in an innovative way that is committed to quality. So if you're ever in Denver, Colorado, come visit our facility. We've got an 86,000 square foot commercial production facility that's AA plus BRC certified and it features 6 different 90,000 L fermentation tanks. So the latest problem that we're looking to solve is sugar reduction. I think probably everyone in this room can agree that overconsumption of sugar is an existential problem for our society. It has huge health risks for our population, which in turn creates a big economic burden as well. And because of this, both consumers and regulators alike have stood up and said they demand more from food and beverage products. They're looking for healthier, lower sugar solutions that really satisfy the consumer. And we agree, so which is why we decided to launch and bring to market a new sweetener. But before we did so, we wanted to understand consumer sentiment a bit more. What are they looking for? What are their challenges? How can we help? So we partnered with Brightfield Group. We've got a few members from Brightfield in the back of the room here today, and they're an AI-driven consumer insights group, and we worked with them to launch a consumer survey paired with their social listening platform to get deeper, richer insights on what consumers think. We focused on three things primarily. Their receptivity towards high intensity sweeteners and new sweetener options on the market, as well as their reception to reaction to honey truffle sweetener. So before we dive into the results, I want to tell you about who this audience was, because we're going to break it down into different customer segments that operate quite differently from one another. First is the baseline population. This is our total sample size of 1110 US adults. We set quotas on the survey for everything from age and gender to region and ethnicity and income, really making sure this is truly representative of the US adult population. Within that, the first subgroup are those that want to reduce sugar. So these are folks who said that they would like to reduce their sugar intake in the next year, but they might not actively be doing so. This is the largest subsegment, about 58% of our consumers. Then we get to those who are sugar limiters, and these folks said they are actively watching their sugar intake today. They're either following a low sugar diet or they're tracking claims like no added sugar or sugar free when they're making purchase decisions, and this comes in at just over half the population, at 52%. Then we have those who said that they were very interested in honey truffle sweetener after reading a brief product description. This is about 28% of the sample size. And then finally, those who are already consuming naturally derived non-caloric sweeteners today, those are folks who indicated that in the last 3 months that they have consumed food and beverage products that have been formulated with stevia, allulose, monk fruit, and erythtool. These groups are not mutually exclusive and they overlap in a lot of interesting ways, but I think you'll see they have quite different reactions to what their views are on reduced sugar formulations. So now that we know who's in the survey, I want to get a sense of who's in the room with us today. So if you wouldn't mind, bear with me. I'm going to do just a quick audience poll here to understand what products you guys work on. If you work a lot with refreshment beverages, and by that I mean carbonated soft drinks, juices, or flavored waters, if you could just raise your hand. Great. Um, what about folks who work on, uh, functional beverages? So everything from energy to protein shakes to functional sodas. Great, we got like 50% of the room on that. Um, alcohol? Awesome. And then non-alcoholic alternatives. Great. And then a few folks who haven't raised their hand at all and you're mystery members, and we'll find out more later. So, now that we know who's in the room, we also asked our consumers about their consumption patterns. We wanted to know. What foods and beverages containing non-caloric sweeteners have you consumed in the last 3 months? And you'll see here the top consumption category for all respondents are these refreshment beverages. About 60% of the general population has had a non-calorically sweetened refreshing beverage in the last 3 months. That goes to then about 27% for functional beverages and 17% for alcohol. What about consumption frequency? Well, it turns out it's actually quite often. So, refreshment beverages are consumed. We took out the top 2 responses from the survey. The majority of people are consuming them at least once a day or multiple times a week. And then you have about 1/3 of the consumers who are consuming a non-calorically sweetened alcohol or functional beverage at least a few times a month. This is a pretty high frequency percentage. When we look at those who say that they're very interested in honey truffle sweetener, that consumption rate actually jumps up. We've got about 2/3 of folks who are very interested in that, uh, honey truffle sweetener who are consuming refreshment beverages that are non-calorically sweetened at least a few times a week. So given that they have this high frequency of consumption, what are their views on sugar reduction? Well, unsurprisingly, they really care about reducing sugar. It's the number one diet that people follow if they follow any diet at all. But unfortunately, a majority of Americans, 54%, say that while they want to reduce sugar in their diet, they simply can't resist it. So how are they doing this? We asked about their tactics, and what stood out to us is that the biggest response that we got is that people are simply opting out of the sweet category. They're, they're eating fewer sweets and 55% are simply drinking less sweets. And that's in comparison to only 31% who are opting for a reduced sugar formulation. 77% more people are simply opting out as opposed to opting for a different formulation. This is lost dollars for everyone in this room. Um, and if we want to actually move the needle on providing healthier solutions and providing a healthier diet, we've got to find a way to change this ratio to get people to be consumers of a different kind of beverage as opposed to non-beverage consumers. Clearly, this means that there's room for improvement in the market. But what are the challenges? What are the main pain points that these consumers feel? So we asked them. But first, I want to ask you guys. So, if you've had any challenges with sweeteners on the market, and I don't want to presume, but if you've had, uh, feel free to either shout out what those are or raise your hand and I'm happy to call on you. Don't be shy. Flavor, tastes fake. Anyone else? Bad taste. They get headaches. OK, so negative health side effects. All right, great. Anyone else? GI disturbances. Perfect, thank you. They give pretty similar answers. So a lot of head nodding in the room. We saw that half of the general population said that they agree with the statement, I am willing to sacrifice on taste in order to get a lower sugar product. 3-quarter of respondents said that they agreed that they want a better tasting non-caloric sweetener option on the market. So then we said, well, what are the issues that you're facing? What are those challenges? The biggest answer, 44%, said nothing, no problem. And then we got answers around taste, aftertaste, too sweet, and stomach issues, as you all have called out in the room. But what about the folks who are already consuming the naturally derived non-caloric sweeteners, the stevia, erythritol, allulose, and monk fruit consumers? What do they think? Well, it turns out that 6 in 10 say that they're either satisfied or very satisfied with the options in the market. Fantastic. But then an even larger number, 7 in 10, said, yeah, but I'd still be interested in something new if there was something out there that was better. Well, what would better look like for these consumers? So we zoomed out from sugar reduction and asked a bit more about their consumption patterns in general. What are they looking for in food and beverage when they go to pick something up off the shelf? And it turns out the general population is primarily concerned with naturality and non-artificial ingredients. You'll see the number one claim here that's most important. Made with real food ingredients. Then no added sugar, fantastic. And then you get back to no artificial sweeteners, all natural, free from artificial preservatives, free from artificial colors and flavors. There's a theme that's evolving here. And if you look at those folks who say that they're sugar limiters, their order of priority is quite different. They start out by saying number one most important claim. No added sugar. Number 2, sugar free. Then raid with real ingredients and then back to no artificial sweeteners. So these folks have decided that they will, they will opt for products that have artificial ingredients if they can get them to a no or low sugar formulation. But the wider population is saying no, Natural ingredients that feel safe to me, that I can understand, that I read on a label that I am not concerned about, that's my number one priority. And then if you can do it with those ingredients and you can make it sugar free, great, I'm in, but I'm not willing to sacrifice the other way around. And I'm not surprised. I don't blame them. There have been panic headline after panic headline and article after article extolling the fact that artificial sweeteners might be dangerous. If I'm a regular consumer and I'm reading this and I'm seeing it again and again, I'm going to have concerns. We'd all have concerns, so we asked about this question too, and we weren't surprised to see that 80% of consumers said that they believed that naturally derived sweeteners were healthier than artificial sweeteners. But then we dug into their feelings on the naturally derived sweeteners, and that's when things got pretty interesting. Consumer awareness about the health of these ingredients is quite low. So, first, you'd say, OK, 48% of people who aren't drinking products with naturally derived sweeteners think, I don't know if these products cause cancer or serious illness. Maybe that's why they're not consuming them. But of the actual people who are consuming these ingredients, only 40% say they don't think they cause cancer or serious illness. That means the majority of consumers either aren't sure or think they are potentially quite dangerous from a health standpoint, but they're consuming them anyway. The same ratios hold for whether they think these products are going to make them consume more than if the product was formulated with sugar, and whether they think these ingredients will make you gain weight. These are not great stats for the sweetener industry. It means there's a lot of skepticism out there. But we asked, do people really know what's naturally derived? Do they know what's artificial? Are they classifying things right? And what we see is that consumers are really familiar with the top kind of whole food ingredients used to sweeten foods. So, sugar, maple syrup, agave nectar, honey, and they know the biggest artificial ingredients such as aspartame, saccharin, scralose, high fructose corn syrup. You'll see the only other sweetener that's properly classified as naturally derived is monk fruit. Any guesses as to why the word fruit is in the name? Uh, but the other sweeteners had a very different story. So it turned out a plurality of consumers think that stevia is artificial. Same thing goes for erythritol. And then the majority of folks just didn't know how to classify sweet proteins, Xylitol and allulose. There's a lot of room for consumer education in this space, but we also know consumer education is expensive and it's hard to do. So where does this leave us? Well, clearly, a lot of people want to reduce sugar in their diet. They know that that's important, but they're resigned to the fact that in order to do so, they're either going to make sacrifices on taste or they're going to have to drink or eat products with ingredients that they don't know if they are safe. And this means that the main reason, the main way people are adopting a lower sugar diet is by opting out of the category entirely or reducing their consumption rate as opposed to opting for different formulations. So how do we change that? Because opting out is not, it's just not sustainable. People don't have a great track record of diet and contraction of what they find indulgent and fun. So we've got to provide better solutions, and we can, and we can do so from fungi. So I mentioned earlier, what is a mushroom company doing here talking to you about sugar reduction? Well, we've got some really interesting ways of addressing it. The first is our commercial line of Clear IQ natural flavors. We've been working with companies for years to improve the taste of better for you products using natural flavors. Natural flavors are a great way to overcome some of the inherent challenges with functional ingredients and some of the off notes common to other sweeteners in the market. And Clear IQ is really a unique tool to do this. Unlike maskers that are usually a 1 to 1 solution where you're working on a particular off-note or a particular off-note from a given ingredient, Clear IQ is a broad-spectrum flavor modulation tool. So it works in a number of ways to both mute some of the undesirable off notes in a formulation while boosting and amplifying your desired characteristic flavor profile. It's a naturally derived product from a mushroom mycelial process and it's available in organic and conventional versions labeled natural flavor on Pack. So how does this work? Well, in a number of ways. It has the ability to both brighten, uh, your fruity flavors, and this is everything from citrus to berry and stone fruit flavors. It can also enhance indulgent flavors like cocoa and roasted and toasted notes, um, and it will mute and, and really dampen some of those harsh off notes from plant proteins. Like green and grassy notes from pea protein or some of those cardboardy notes that can develop from oat proteins, um, as well as some of the bitter, metallic or licoricey taste that you get from common functional actives and sweeteners. And the result is really a rebalanced, harmonized flavor profile where you get your intended characteristic flavor from the beginning of the sip to the end of the can. It also has a very interesting impact on mouthfeel and aroma. It can enhance mouthfeel, giving it a kind of a creamier, fuller body, uh, and dampen some of those aromas that you might not want when you pop open a bottle or a can. So just one quick example here. We did a study with a third party sensory lab through NC State. We gave them a formulation of a low sugar, no sugar pink lemonade sweetened with stevia, and we gave them a version of that with 1 0.12% of clear IQ as consumed, and you'll see they found a statistically significant decrease in bitter taste, metallic aftertaste intensity, and sweet linger. And now we didn't do this in the survey, but I, or in the study, but I would bet a lot of money that you'd have also seen a statistical, statistically significant increase in that pink lemonade flavor. But like I said, this is not just a stevia masker. It works with formulations that are, uh, formulated with all kinds of sweeteners, so allulose, erythritol, monk fruit, stevia, scralose, even flavors like tomatin. But what you'll see here in terms of the reduced off notes, these are common not just as sweeteners but other functional ingredients as well. And so when you pair clear IQ in conjunction with your flavor profile, you'll see a reduction in bitter, metallic, astringent, licorice, chemical, and cooling notes. Um, we actually have at the back of the room before you leave here, some demos to take with you of a functional beverage with Clear IQ that is working to improve the flavor profile of some pretty challenging ingredients like egg protein, um, and Megan Knoll here waving her hand at the front of the room is our head of sales and happy to have any follow-up conversations on that. Her contact info is also in the bag with the demo. So I said there's multiple ways to address sugar reduction and to provide better formulation approaches, and the other way is honey truffle sweetener. This is a brand new sweetener solution. It is a sweet protein that our team found when we went on a literal hunt for sweetness. We went with truffle hunting dogs into the forest and unearthed the honey truffle, which is only available for about 2 or 3 weeks a year. And we took it back to our lab in Colorado and examined this truffle that's been used in food and beverages for millennia, dating back to about 2000 BC. And this food turns out when we did the DNA sequence, there was one sweet protein that was contributing the entire characteristically sweet taste. And luckily for us, this protein happens to be the right shape and size that it's very well designed for precision fermentation. So we can scale it up and bring it to market at cost effective, sustainable, scalable technology that makes it widely available for us all to use in food and beverage products. So, we're pretty excited about it, or else we wouldn't be here talking to you today. But the reason that we are really, really excited to give you a chance to taste this is that not only is this product going to be a game-changing solution for the industry, it addresses the key challenges that we found in our consumer survey. First, it's natural. It's naturally derived, it's non-artificial. So this means that it's compliant with claims about free from non-artificial ingredients, uh, sorry, free from artificial ingredients. Um, but that wouldn't really matter unless consumers understood that it was naturally derived. And we did another consumer survey where we found that Um, when we asked the open-ended question, what does honey truffle sweetener mean to you, the top reactions, unaided reactions we got from consumers were healthy, natural, tastes like honey and sweet. This is pretty great. Because you all know there's not a lot of room for consumer education on your brand, let alone the ingredients on your product label, and you need those ingredients to work for you and not against you when it comes to purchase intent. So it's naturally derived and it's recognizable as naturally derived. And that wouldn't matter at all if it didn't taste good, but it has a very clean, sweet taste that is free from some of those really challenging off notes common to sweeteners like bitter, metallic or licorice notes. It's safe and fully digestible because it's a protein, so it's 100% digestible in the human GI tract, breaking down into common amino acids found in other food and beverage products that you eat all the time. Um, and it's going to have a low cost and use. So as I said, this is still a pre-commercial product. We are not yet on the market, but because this product is anywhere from 500 to 2500 times sweeter than sugar, depending on your intended sweetness level, we can bring it to market in a way that allows it to be cost competitive with sugar itself. And it's highly soluble. It's got 10% solubility in water, which makes it very functional for beverage formulations and up to 100 times sweeter than some other leading sweetener options. So you're going to get a chance to taste it in just a little bit before you do so, I want to draw your attention to the forms in front of all of you at the table because this product is still pre-commercial. It is standard practice to work with an institutional review board, a third party, to evaluate all of our safety data. And let us know and let you all know if this is deemed safe for consumption. So that party reviewed all of our data that showed that it's not allergenic, it's not toxic, it's 100% digestible, and they deemed that this is safe for consumption, but this form is intended to give you that information. This is not a waiver for us. This is really a protection for you. So, in order to participate in the demo, we do need you to sign this, the, the line on this document. If you're uncomfortable doing that for any reason, that's fine. Leave it unsigned, we just won't put demo down in front of you. Um, there's a witness signature that we will sign afterwards, so feel free to leave that blank. And if you are under 18, pregnant or breastfeeding, please do abstain from this tasting. So. This will be available soon, but this is still yet not on the market and so, therefore, we are giving the first public tasting today, um, and we'll collect these forms and lay out those demos in just a minute. Question in the back. Yes, so this is a non-GMO product. It will not qualify for the butterfly symbol because the strain that we use in the precision fermentation process has been genetically modified, but none of that material is present in the end product. Um, I'm gonna just hold questions just until we get to the end here, but then we'll feel free to have a rapid fire. Um, so before we get to the tasting, I want to share some information from the second part of our survey, and this focused on consumer reaction to honey truffle sweetener. We started just by asking about consumer reaction to the name. As we mentioned before, this is kind of a stand-in for the uneducated consumer who's reading a product label for the first time, what do they think about honey truffle sweetener? And what we found is that the majority of consumers said that they liked the name or they liked the name a lot. So then we wanted to dive a bit deeper and say, well, what happens if we share some basic information about this ingredient? How does that change consumer reaction? So we shared this two paragraph concept statement which lays out some of the basic information about our ingredient. It's a natural derived sweetener, the first one discovered in decades. It has a clean taste and as a non-caloric sweetener with a long history of consumption dating back to 2000 BC. We've isolated the protein molecule responsible for that sweet taste, and we're developing it through sustainable, cost-effective precision fermentation. Unlike a lot of other popular sweeteners, this is a protein that is fully digestible, that breaks down completely in the GI tract into the same amino acids you consume and other protein sources in your food and beverage. And it has a clean, sweet taste without bitter off notes. So after reading this product statement, we asked consumers, how likely would you be to try a product that was formulated with honey truffle sweetener, and we saw that the majority of consumers said, I'd be likely or very likely. In fact, those who already consume naturally derived sweeteners, about 3/4 of them said that they'd be likely or very likely. Well, what about how differentiated is this? Does it sound like just another sweetener option on the market? So we asked, we said, how different does this product sound compared to other naturally derived non-caloric sweeteners? And again, we see about 2/3 of people here say it sounds different or very different. It's addressing some of those pain points that they articulated earlier. So let's dive into this group a bit more. Those who said they're very interested in honey truffle sweetener, what is unique about them? Well, they tend to overindex on a few key things. They're more likely to want to reduce sugar in their diet. They tend to agree more with the statement that they wish there were better tasting non-caloric sweetener options out there, and they're more concerned that their food and beverage are created with real food ingredients. Now these three trends are not going anywhere. The focus on sugar reduction, taste, and real food ingredients, those are only increasing in terms of consumer concerns. So this is great news for us and really I think speaks to the key needs of the target demographic for a lot of better for you beverages. In fact, when we dug really deeply into our conservey survey data, we saw that those who are very interested in honey truffle sweetener are more likely to be a female head of households with a few children who's slightly more affluent and is already consuming stevia, high fructose corn syrup, maple syrup, um, and agave as part of their sweetener portfolio. So we want to know what stood out to them. Why were they very interested in honey truffle sweetener? So we asked them to pull out the statements from that consumer concept test that really resonate with them, and unsurprisingly, the top thing that people cared about was that it has a clean, sweet taste without bitter off notes. Taste is king, right? But what popped up next was a bit surprising to us. The 2nd most popular claim or part of this, uh, concept test, I should say, is that it was fully digestible by the GI tract because it's a protein that breaks down into common amino acids. And then finally rounding out this list is that it's naturally derived from truffles. So that focus on taste, digestibility, and naturality ties back to that same first slide we showed about consumers saying that sweeteners on the market, they have problems with the taste, stomach issues, and don't want artificial sweeteners. So clearly there's a big link here between the main attributes of honey truffle sweetener. And consumer challenges in the reduced sugar formulation space. So my colleagues here have been handing out samples, and we're excited to give you guys a chance to try this today. What you're tasting here is going to be a functional soda that's sweetened with honey truffle sweetener. I know we've got a bunch of beverage experts in the room, but in case anyone isn't aware, I just want to give some context on this demo. So functional sodas are typically sweetened with non-caloric sweeteners, and they'll have somewhere between 2 to 5 g of sugar in the formulation, mostly for balance and mouthfeel. They tend to feature a digestive fiber and other functional ingredients and importantly on the sweetness. Scale for beverages, they're kind of right in the middle. If your flavored waters are going to be a 0 or maybe a 2 in terms of sweetness intensity and sweetness equivalence and your traditional sodas are up there at like a 10 to 13, a functional soda tends to sit at around 8 for its sucrose equivalents. So without further ado, I invite you all to take a first sip of our functional soda sweetened with honey truffle sweetener. Please savor it. And if anyone is not seated at a table and wants a tasting afterwards, just find us in the back. And with that, um, invite any comments or questions, please feel free to raise a hand and let me know. Yes. Fingers. Mm-hmm Yes, so like most sweet proteins and most sweeteners really in general, they don't have the same sweetness curve as sugar itself. Basically every sweetener on the market has a different temporal curve than sugar, and this is no different. It has a sweet linger. Importantly, it's a clean sweet linger, but this is not formulated with any kind of flavor modifiers intended to cut that linger yet. It's really a clean demonstration of what this product does on its own. We expect like most sweeteners on the market, it'll be used in combination with other sweeteners to create your ideal flavor solution, um, and usually paired with natural flavors of some kind as well, which is pretty standard for formulation, but we want you guys to experience the sweetener kind of in its rawest form. Any other comments or questions? Yes. Yeah, including some sugar in the product that's really for that mouth feel in the product, so it has the same kind of texture that you're expecting from a functional soda. About, I want to say 80+% of the sweetness is really from the honey truffle sweetener. Yes, Yes, yeah, and this is not a commercial product. This is our own recipe that we created to basically showcase how this would work in formulation as a functional soda. But yes, the, the fiber is the functional ingredient in here. Yes. Oh, for a natural flavor, you have to be below 1.5 on the, 0, 1.5 sucrose equivalents. Um, so for us, that's about 24 parts per million. Great questions. Keep them coming. Yes. Mm-hmm. Yeah So, uh, no, that's a great question. This has a slight delay in sweetness onset. Um, it pairs well with something like sugar or one of the, uh, sweeteners that hits and peaks quickly for that reason, but it's actually pretty similar to stevia in terms of its sweetness curve and that it does have that slight delay, and then a later peak. Any other comments on the tasting? Don't be shy. No, OK, well. This is all for me, so I'm happy to stay here and answer any questions. Um, thank you all so much for your time. I really appreciate it.