[Disclosure: AFN’s parent company, AgFunder, is an investor in Fable Food.]
Sydney-based Fable Food notched up 50%+ year-over-year growth last year with its “fantastically meaty” shiitake mushroom-based products and is projecting even better numbers this year at a time when the alt meat category is going backwards. So what’s its secret?
There’s no magic formula, says Michael Fox, who founded Fable Food with Jim Fuller and Chris McLoghlin in 2019 and has recently moved to the US to accelerate Fable’s growth there. But a laser-like focus on taste, price, and health coupled with growing interest in mushrooms and minimally-processed products has helped Fable avoid negative sentiment around “fake meat.”
“When we’re talking to consumers, we don’t talk about vegan or plant-based meat,” says Fox, who has developed patented cooking methods that amplify shiitake mushrooms’ meaty flavors and de-emphasize their sulfuric notes while preserving a firm bite and retaining moisture for extra succulence.
“We position it as a delicious, reasonably-priced, healthy mushroom product. People are having mushroom coffees and powders, so they understand the health benefits of mushrooms and they know that mushrooms are natural.”
He adds: “We did a test with a Mexican restaurant in Australia where you choose your protein for burritos, nachos, and so on, and one of the protein options was our pulled shiitake mushrooms.
“Over six months, we tested eight different names for this product for three weeks each. The four best-performing names all mentioned mushrooms, and the four worst performing names were the ones using plant-based meat type names such as ‘beef’ in inverted commas. The difference in sales was stark. When it was labeled as pulled ‘beef’ it performed really badly compared to pulled shiitake.”
Blended meat and shiitake mushrooms
Fable’s shiitake products are gaining traction in quick service restaurant chains and meal kits across Australia, the US, Canada, the UK and Singapore, says Fox. “Mexican is our best performing cuisine type so we’re focused heavily on that segment in Australia, the US and Canada. We also do well as a topper on salad bowls, pulled meat style burgers, and Asian cuisine.”
Fable’s latest innovation—a “shiitake infusion” product designed to be blended with regular beef—is also picking up steam following its launch in 2024, he says.
While several foodservice companies have experimented with dicing button or Portabella mushrooms and adding them to ground beef to make blended burgers, Fable’s product offers a completely different experience, he claims.
“We’re using shiitake mushrooms, which blend really well with beef, and with our patented cooking processes you not only get a better taste and texture, you get a much higher yield and therefore lower cost. Normally when you cook mushrooms, you lose half the weight in water, but that doesn’t happen with our product.”
A blended burger combining ground beef and Fable’s shiitake product recently outperformed all-animal-protein counterparts on taste in a large blind taste test organized by nonprofit NECTAR, noted Fox. “Only three products outperformed 100% beef and we were one of them.”
One in three Americans wants to reduce meat consumption, he adds, but that doesn’t mean they are necessarily seeking out meat analogs. In many cases, they are simply cutting back, eating smaller portions, or trying to substitute more vegetables for some meat.
“When we saw this data, it was a case of, why don’t we meet consumers where they are? Let’s make it more convenient and cost effective and delicious for people to reduce meat consumption,” says Fox. “And that’s why we came up with the shiitake infusion product, which is very simple, just shiitake mushroom, rice, a small amount of oil, yeast extract, mushroom powder and salt, and you mix it with ground beef.”
Fable typically recommends an inclusion rate of 33-50% mushrooms to 50-67% beef, but says some customers will go up to 70% mushroom and 30% beef.
While the infusion product performs particularly well with big caterers keen to meet carbon emission reduction or health goals, says Fox, Fable also sees potential in retail, with small-scale tests underway in Australia and new tests planned with a partner in the US.
“It’s been really successful so far in Australia with really high velocities of around 50 units per store per week. Next we need to understand how we should package and position this kind of product in the US, so we will be doing a 20-30 store retail trial over the summer with a partner [a meat brand] who wants to test and learn with us.”
Low-cost process
Unlike firms growing mycelium via submerged fermentation in costly bioreactors, Fable’s process does not require bespoke pricey equipment, observes Fox.
Fable’s partners set pricing for the end consumer, with some choosing to sell blended beef and shiitake products at price parity with 100% beef, some offering these products at a small discount, and some charging a bit extra. But in terms of costs, he says, there is no price premium associated with using Fable’s product, a major selling point.
Fable produces its products in Asia and ships them frozen to multiple markets, says Fox. “For the shiitake infusion product, we partner with local beef processors who are already processing beef into ground beef so it’s very simple for them to just add the mushrooms.”
Ultimately, Fable is looking at growing the shiitake mushrooms to be used in its products, which might sound like adding an unnecessary layer of cost and complexity, but makes sense, claims Fox.
“So the way shiitake mushrooms are grown today, everything’s optimized for getting a small, unbruised, unblemished cap to be sold in retail, so they’re typically harvested when they are very young and hand-picked. But we’re optimizing for a different use case. We don’t need an unblemished cap, because we’re grinding or shredding the mushroom and we don’t need to hand pick the mushrooms. We can basically grow them much larger and essentially [mechanically] mow them when they’re ready to harvest.
“So we can save a lot of money on picking and a whole bunch of other things to reduce the cost of our mushrooms. Next year we’ll set up a pilot growing facility and we’re confident we can reduce the cost of growing shiitake mushrooms by 80-90% and grow them locally in market.”
‘We’ve been very prudent with our capital’
To date, Fable Food has raised $14.5 million and still has $3.5 million in the bank, says Fox. “We’ve been very prudent with that capital and we’re on track to be cashflow positive next year.
“We grew 50% last year and this year we’re growing faster than that, so we’re looking to do a small round to accelerate that growth. Then the goal is to do a series B round in two years’ time. At that point, we will have had two years of greater than 50% year on year, that growth will be profitable and cash flow positive, and we should have our mushroom growing pilot facility in action.”
