With contract for Just Egg, family business could turn Minnesota town into food-tech hub

APPLETON, Minn. – Clouds of steam rise on the north edge of town, above a low-slung industrial building surrounded by tall tanks and towers several stories high.

Inside, a transition is underway from small family business to billion-dollar corporation.

The sale of Del Dee Foods — which has operated in Appleton, in western Minnesota, for nearly 40 years — to San Francisco-based Just Inc. was announced recently. It's one step in what the company hopes will be a boon to the Swift County city and a disruption to the food industry.

"This is great news for this area," said Lori Lind, who owns Del Dee Foods along with her husband, Mike, and her brother, John Droogsma. They've worked at the company for the last three decades.

Lind's dad, Del Droogsma, whose legacy is reflected in the company's name, bought the factory in 1980 when he saw an opportunity to process and sell whey, a waste product from making cheese, as a protein for use in food products.

Over the years, Del Dee Foods has worked in the middle of the food-production industry, honing its expertise in extracting animal and plant protein, creating material used in food products like the Just Egg. Plant protein has been a focus for the past decade.

"The market for vegetable protein has expanded a lot. It's the next big thing," said Mike Lind, the company's CEO.

Del Dee has helped many companies develop new food products based on plant proteins. But not all of them have caught on.

"We've had to work hard to keep the lights on at times," Lori Lind said. "Because some products will come in and we will have such hopes that it's going to be the one."

But this time, she said, it appears they've connected with a winner.

About 14 months ago, Del Dee Foods started working with Just Inc., a Silicon Valley startup that has invested several years and millions of dollars in an effort to find a plant protein that behaves and tastes like scrambled eggs. They finally determined that a protein from the mung bean, grown mostly in Asia, was the answer.

Just Egg, the product they created from those proteins, is now sold at Walmart, Kroger, Whole Foods and other major retailers — and recently hit grocery shelves in China, too.

"It's the processing capabilities we have here that are unique," Mike Lind explained.

The company's factory was deliberately designed to be flexible, able to adjust to client's needs.

Inside the plant are centrifuges, pasteurizers, dryers and an in-house quality-control lab.

Mung bean flour arrives here on trucks in large totes. The flour is mixed with water and run through a process to separate the starch from the protein.

The protein powder is then bagged and shipped to other plants, where the egg substitute is made. It's sold in grocery stores and used in college cafeterias and restaurants across the country.

Tetrick's goal is to produce low-cost food with a smaller environmental footprint than its traditional counterparts. Another of the company's products, Just Mayo, is made from pea proteins — without the eggs found in mayonnaise.

But Just Egg is still about twice as expensive as real eggs. Tetrick said he thinks that, by using the Del Dee Foods factory in Appleton to increase his company's efficiency, the price of Just Eggs will come down dramatically.

"The average cost of an egg is 8 cents," he said. "Today, [Just Egg is] a little bit north of 20 cents per what we call egg equivalency. The goal is to get to 4.7 cents."

That is: If Just Inc.'s plan in Appleton works, the company will be able to reduce the price of a serving of Just Egg from double the price of its egg counterpart to half of it. And Tetrick doesn't want to stop there.

"Our objective is not just to be lower cost than an egg, but also lower cost than beef, pork, chicken, tofu and other plant proteins," he said.

Investors are eager to dive into such ventures because they recognize a growing world population will need access to cheap, sustainable protein-rich foods, said Michael Boland, director of the University of Minnesota's Food Industry Center.

These potentially disruptive companies, Boland said, are thinking about food production and sourcing in different ways: "Are there other ways of doing it that don't require as much water? Are there other ways of doing this that don't require as much land? Are there ways of doing this that we haven't thought about that's better for the environment, that could be low cost and more scalable?"

As part of his research, Boland tracks data from food sales — which he said indicate that plant-based food options are attracting more omnivorous consumers.

"They're buying milk — conventional milk — to put on their cereal, and they're buying plant-based almond milk to drink," said Boland. "People are looking at experimenting with all these things, and that's not going to change. I think it will become mainstream, certainly in the next 10 years."

As sales of Just Egg have grown over the past few months, the Dell Dee Foods plant has quickly expanded production, from one shift five days a week to round-the-clock shifts six days a week, said John Droogsma, the company's production manager.

Mike and Lori Lind plan to retire when their company's sale to Just Inc. is finalized at the end of this year. But Droogsma plans to stay on through the transition.

Stepping away from the company has been a concern for the Linds. Appleton lost dozens of jobs when a private prison closed in 2010, and that loss weighed on them as they approached retirement. They worried their plant could become another empty building in a struggling community.

Instead, it's on its way to being the largest private employer in town — and Just Inc. plans to invest millions of dollars expanding the operation, becoming an answer to Lori Lind's prayers.

"The trickle-down from that for your grocery store, your hospital — everything like that," she said. "It has really been our hope and our prayer that [the plant] could go on."

Just Inc. CEO Tetrick said he hopes his company will spark interest in new crops grown in the surrounding area that can help feed a growing world demand for plant-based foods.

"Let's grow it, let's functionalize it, let's own it, let's make money around it, let's create jobs around it and let's build a better food system around it," he said.

New developments in food technology like Just Egg could mean new opportunities for farmers, but little public research is happening, Boland said. Much of the innovative research in the food industry is being done by private companies — and he said public universities are behind the curve.

"These technologies are really not being looked at in public universities," he said. "We can only surmise or guess what's going on in the private sector, so it's going to be disruptive in a number of ways because the private sector is funding all this."

In the meantime, Tetrick envisions Appleton becoming a food processing hub, with Just Inc. at the center.

"There's no reason why that can't be the case," he said. "There's a deep knowledge of agriculture here. There's a want to invest in new industry. With the investments we're going to make in the company, we think there's an opportunity for Appleton."