Keith Anderson is joined by Darko Mandich, founder of MeliBio, a sustainable plant-based honey alternative. Together, they discuss the importance of new sustainable alternatives to industries that impact both the environment and animal welfare, contrasting conventional approaches with the innovative practices of MeliBio regarding the commercial considerations of honey alternatives. Tune in for an enlightening perspective on the commerce, innovation, and considerations regarding honey bees and the industry built around them.

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TRANSCRIPT BELOW: 

Keith Anderson: Welcome to Decarbonizing Commerce, where we explore what's new, interesting, and actionable at the intersection of climate innovation and commerce. I'm your host, Keith Anderson, and together we'll meet entrepreneurs and innovators reinventing retail, e-commerce, and consumer products through the lenses of low carbon and commercial viability. 

Hello, welcome back to the decarbonizing commerce podcast. I'm your host, Keith Anderson, and we've got a sweet episode for you this week. Our guest is Darko Mandic, founder of MeliBio, a sustainable plant-based honey alternative. And we talk a lot about the importance of creating, new sustainable alternatives and industries that, We have a significant impact on the environment and animal welfare.

We do some comparison and contrasting of conventional approaches to honey production versus the practices that MellyBio is using. And we spent a ton of time on some of the consumer and commercial considerations that Darko and his team have faced in areas like taste and unit economics and distribution strategy,

as they develop the product and are building both a national brand in Mellody, which you'll hear more about, and supporting some retailers with private label brands. So, I'm really excited for you to meet Darko, learn more about bees, honey, and MeliBio.

Darko, thanks so much for joining us. Welcome to the Decarbonizing Commerce Podcast.

Darko Mandich: Thanks for having me.

Keith Anderson: Well, I love to start with a bit of the founder's story and a bit about the company that you're leading. Can you tell us a bit about MeliBio and Mellody and how you came to invent and start the business?

Darko Mandich: MeliBio started with a big dream of two people who really care about bees and are really connected to the importance of bees for our planet. So in 2020, after I emmigrated from Europe to the United States, With this idea to update the hunting industry, make it sustainable. I came to San Francisco to join the food tech scene that was booming at that time over here.

And at one of those meetups, I met a scientist. His name is Aaron Schaller. And, he was finishing his PhD at UC Berkeley at that time. And we started talking about bees. He told me that he's a scientist who's looking to join the food tech scene. He loves bees because he's also a gardener. I have my own story with bees.

I used to work for honey companies and companies making bee products using bees. And I've seen everything about that industry. Wanted to bring some changes there. And when Aaron and I met, end of 2019, just felt like it was meant to be.

Keith Anderson: Tell us a bit about what you learned as somebody working in the honey industry, as it's conventionally operated, what are some of the challenges of producing honey and other related products with live bees.

Darko Mandich: Honey is a fascinating product as well as some other bee products too. bees are such intelligent creatures that work in amazing way as community and many communities, and they have this ability to produce. Amazing ingredients that traditionally have been used by food, beverage, beauty, personal care, cosmetics and pharma industry.

So bee products are really everywhere. And I joined this industry in 2012, right after I finished my business school, without having any prior knowledge. I just got a job offer from a company that is a significant company back in Europe that has a division. That works on bee products and that really got me excited.

I joined that industry not knowing anything and, now I'm still in it in a different form. But before launching MeliBio as the world's first company that's giving bees a break by putting science to work instead of honeybees, I can say that, it's, it's an industry that is fascinating in so many ways, it's an industry that's growing because next time you go in supermarket or a pharmacy store, you'll probably identify many products that are formulated with one of the ingredients that bees are known to make.

Especially Honey.

Keith Anderson: Well, I'm the father of a seven year old daughter and you'll be happy to hear Darko, she asks for honey on everything. This morning, she agreed to have oatmeal if I would put honey on the bananas in the oatmeal.

Darko Mandich: I'd love for her to try our product and, see how things go, so. we have to

definitely a taste happen.

Keith Anderson: We'll,

Darko Mandich: let's do that.

Keith Anderson: On a future episode, we'll come back and share the results.

Darko Mandich: yeah, that, that's how we landed some of our customers, but we'll speak about that a little bit later. I think, humans at some point identified a way to domesticate one species of bees. their name is Apis mellifera or European honeybee. And that was figured out a long time ago and in 16th or 17th century, Spanish conquistadors brought first beehives to this part of the world.

They brought them to Yucatan in Mexico. And then since then, the beehives with honey, European honeybees proliferated across this side of the world and are now one of the biggest, biggest species here, but that's just one of the 20 000 bee species that exists. People when people talk about bees, they usually refer to honeybees and people usually get surprised when I tell them you probably don't know much about bees because if you think of bees, you probably think of this one subspecies.

And people get surprised when I tell them the story, there are 20 000 different bee species, 4 000 of native bee species only in North America.

Keith Anderson: That's amazing. so, in the business of using bees to produce honey, I don't think of necessarily the footprint as being immense, at least compared to some of the other animal-based product categories. But I am aware that bees have been under a lot of environmental pressure and I know there's a lot of interdependency of other crops on bees.

So why don't we spend a little time talking about some of the trade-offs between a plant-based versus conventional approach in the category.

Darko Mandich: Absolutely. So our company, MeliBio, commercialized this approach to take the same plants that bees visit in nature and turn them into a product that taste the same, look the same, behave the same, and is very close on the molecular level to real honey. And that's where we launched Mellody, our brand, plant-based honey, as well as some private label deals with retailers, especially in Europe.

And, the reason we're doing that is we really love the bees. And we say that there's no other company in the world that loves bees as much as we do. And because of that, we want to give them a break. And then people ask, but why would you give bees a break? Because they're doing what they're meant for.

So the story here is that we essentially need bees to keep the plant as we know it, because bees are essential pollinators. They contribute to the food system, to the plant diversity. Essentially, our existence as humans on this planet wouldn't be possible without bees. So, why the need to give them a break from the work on the products that we harvest from them?

In the process of Manufacturing bee products, especially honey, on a large scale, the species of bees, as I mentioned, European honeybees, are being artificially bred and added into ecosystems where they don't belong. And that is causing them to do this thing that I like to refer to as pollinator gentrification.

They don't allow other pollinators and other bee species to share this space. And they're essentially very aggressive and invasive. So our thesis is, if we take the work of the honeybees and start turning plants into the honey, the bee ecosystems will get a break from that artificial pressure that humans are creating.

And therefore, The nature will balance things out in ecosystems. Bees will be thriving, all these species, they will be doing their favorite work, which is just, pollination. And we'll take over from the work that is essentially very damaging for our planet. If we continue just relying on these honeybees that will just push, back on all the other pollinators.

Keith Anderson: I like that solution more than another one that I've heard of, which is robotic bees to pollinate, because in that scenario, I don't get the honey.

Darko Mandich: So with the robotic bees, I'm just hoping, I think a lot about that because, there are things that need to be done on the pollination side, especially in California. You have these large almond orchards where a lot of honey bees are being brought because it's very convenient for almond growers, but that's actually not great for California bumblebees that are specifically endangered species, here in California.

For me, the robotic bees feels like if that comes into play and becomes a mainstream, that would mean that we lost other opporunities to make things right.

So if we really end up using robots to pollinate the planet, that would tell me that we failed in so many ways to make nature balance things out. So for us, to have nature do its thing is really making sure that we don't have too much honeybees. As a company, we're not saying, "hey, let's stop, beekeeping entirely or bee pollination.

Let's kind of, destroy the presence of honeybees in North America." We're not saying that. We're just saying that it's too many of them. And it's just requiring a thoughtful approach to producing bee products. So we believe that if we take those same plants and turn them into products that people love, that chefs love, that people can't distinguish on blind tasting, and we do that in a bee-friendly way, we have an opportunity to, just kind of, give a slight nudge to the nature to tell it, "Hey, we're here. You can take over." Every time someone consumes our product and you can see behind my back, you are contributing to removing the work of 20 000 honeybees from ecosystem. You're basically helping bee biodiversity.

Keith Anderson: That's really interesting. One of the things that I find myself doing is sort of sorting product categories on a couple of dimensions. We talked about the category's environmental impact. The flip side of that coin is its susceptibility to more extreme temperatures, more volatile weather. We had a guest on from a company that produces olive oil. And that's a category where droughts and other crop disruptions have really impacted quality and quantity of supply and therefore pricing. Is that a present issue in the animal-based honey industry, or is it more of a future possibility?

And where does plant-based honey fit into that equation?

Darko Mandich: It's a great question. People are reading about their chocolate prices going to the roof because of issues around cocoa supply chain. There are challenges around all kinds of oils, including olive oil and palm oil. I think honey is coming up next, unfortunately, and here's why. THe, honey, manufacturing, is complex because it only happens within a few months in a year.

So in a given geography, within a couple of weeks per year, you have an opportunity to make spring honey in Europe, or you can make, summer honey in Asia. And if weather conditions within those couple of weeks, within a given geography, are not perfect, that heavily influences the yield of the product. So I've seen years working for honey companies where I had to deliver thousands of tons of products.

I'm talking about million dollar plus contracts where within few weeks price doubles. So imagine how does that affect the supply chain, the purchasing departments of various ingredients companies and private label companies. They just don't understand what's happening. They're flying their teams from Western Europe or the United States to Ukraine or the Balkans to see for themselves how come that the ingredient that they used to pay this much doubles in price within a few weeks.

So that is because of weather affecting the crop very much and that particular animal working in that particular geography only within those few weeks when certain flowers are blooming. So, when I think about environmental issues and, animal welfare, which are definitely something that's close to my heart, and the main reasons I'm doing this, there's a set of reasons that require us to update honey industry that are just purely capitalistic.

Efficiency, supply chain predictability, for United States, it's important to say that people mostly don't consume American honey because you don't get to consume it because most of the products on the shelves that you buy are formulated with imported honey. I mean, importing food, it's not a big problem, the world functions in a global trade environment, but I need to say that most honey coming into this country is dependent on different regions in the world in different countries that don't have levels of standard that are required here. And very often some of the shipments go through and some of the product that is not honey ends up on the shelves. And that's usually a product that's cut with rice syrups and things like that. And we make our honey without bees, our plant-based honey.

We only use components that would be components of honey in nature. So, some people ask me, "Oh, in a world of fake honey, what are you guys, what are you guys doing?" And I'm saying, "hey, that's a great question." Fake honey is 10 percent of real honey and 90 percent of rice syrup. We don't use rice syrup in our product because bees wouldn't bring rice into honey.

But there are so many challenges and we believe that Mellody being an American brand, bringing the manufacturing back into the US, guaranteeing our consumers that were regulated here by domestic market that we have to comply with very stricter quality standards than many other markets out there that are trying to, sometimes just dump their products here.

I think there are so many reasons outside of the environment that build a strong case for the existence of companies of ours and our brand Mellody.

Keith Anderson: Well, as you said, you're one of the first vegan honey companies, maybe the only, and you've followed an interesting path so far, with both B2B and B2C routes to market. I'm often looking at the value equation for these disruptive entrants in a category through the following lenses. One is what you can think of as, the merits, I guess, sort of conventional taste, nutritional profile effectiveness, whatever the consideration factors are for the, for a given category. And the second would be sort of climate alignment, both through the sense of is it low impact and is it in steady supply?

And then the third is sort of, unit economics and how those compare. And I know that it's very early so, a lot of the economies of scale that the conventional honey industry enjoys, I'm sure are not here yet. But how do you think about the business case, whether you're pitching distribution for your own brand to a retailer, or whether you're pitching your product as an ingredient or a private label alternative.

Where, what do you find is most resonant in those scenarios today?

Darko Mandich: Taste is the king. And then taste is the king. And again, taste is the king. The first three important things to make a product successful. So we nailed that. And when we were comfortable with the taste of our product, we wanted to land, and we were successful in landing Eleven Madison Park, a three Michelin star restaurant, as our first customer.

After me hearing a podcast where the founder of Eleven Madison Park, Chef Humm shared his story of their restaurant turning plant-based except for one ingredient, which is honey, because they were not comfortable with honey alternatives at that time. That, that was an interesting story. We wanted to convince them that there's a company who succeeded for the first time ever to make an alternative that tastes great, and that is also, by the way, vegan. Vegan honey alternatives existed, actually, before our company. They were usually syrup-based products made of tapioca, stevia, all these ingredients that naturally are absolutely not connected with honey. I'm not saying people shouldn't go for other sweeteners, try products and see what works for you.

But we wanted genuinely to make, as much as we can, real honey made without bees. So once we nailed the taste, we realized that there's a certain level of people that will get excited about a very expensive world's first product. And then that story can live for a certain amount of time. And if we don't expand that into including more customers, that's not going to be a viable case, because we want to build a large company because large company for us means large impact, less honeybees required to make, those volumes of honey.

The price was the next thing that we started working on. I can say that at this point, we match European honeys in Europe and American honey in the US we are on parity with those, and that's amazing because we've done that within three and a half years of R&D, and we raised about 10 million.

In the food tech industry, many companies exist that raise hundreds of millions of dollars. There are a few that raise almost a billion dollars and are still not at a commercial level that, that we are. I think the goal by the end of this year is try to make our solution a little bit cheaper than domestic products made by bees here in the United States.

And then the next target would be to try to compete with countries like Ukraine, Brazil, Vietnam, where a lot of, cheaper honey is being made. With the inflatory pressures and consumers and businesses that I project and the economists say will last through the next couple of years, I think it's responsibility, huge responsibility from companies like ours to continue working on scale and science to get up, to make our prices go down. Because yes, we're vegan, honey, but we also want to include everyone, including the vegans. And we want to make sure that when we talk to food service operators, retailers, businesses, that our approach is the most efficient and that them joining the bee coalition, heroic mission of saving the bees also makes a good impact on their calculation.

And for all of that, to put more dollars back in consumers' wallets.

Keith Anderson: Yeah, I will say, I think you've done a nice job describing the challenge that so many companies, whether they're technologies or consumer products, are trying to cross that chasm from the early adopters and reach a critical mass of mainstream customers or shoppers. And, I think more and more of the industry is prioritizing product superiority and parity.

But I haven't encountered a huge number of examples where pricing and unit economics are competitive, and so it's really exciting that you're, in some ways there and still making that a focus.

Darko Mandich: It's back to the DNA of our team. Because when we were thinking about who should be part of our team, we really thought that one big requirement to join our team would be that you have a previous scale up experience and hopefully with a lot of mistakes. And the reasons I'm saying mistakes is that people learn through mistakes.

And in the past few years, there's been this huge influx of activists going into the food industry, wanting to pitch solutions that make the world a better place. And that's amazing. I think of myself, big part of myself being an activist, wanting to build this world for humans and bees that's better, for myself and the future generation and for people around me.

But there's a big part in the way how I run this team and the members of our team around our previous experience in scaling manufacturing. Working for other companies, I built two manufacturing facilities. I worked with co-packers. I built extensive international supply chains. And that kind of knowledge really helped us get past the activism and coolness.

Because activism and coolness has this initial phase that lasts. And even for companies like Tesla or Apple, at some point, it just kind of faded out and you just start to become this company that talks about efficiency, latency, how fast can you fill out the orders, how can you make the people on the other side of supply chain happy.

And I think if you build teams with that DNA, any, in any industry that requires physical products to be manufactured and moved, it's being required. And I would like to see more of that. And as we also grow as a team, I would love to see more people who have dealt with ingredients or even honey

who would happily join our mission and use that knowledge from before and hopefully many thoughtful mistakes and do things differently to make people happy.

Keith Anderson: Well, the, love the idea of the DNA being so essential and predictive of outcomes. Darko, if people want to learn more about you or your products, where would you direct them?

Darko Mandich: Absolutely. If you are an industry executive looking to learn about more about our technology and possibilities and some of the large enterprise deals that we've done, such as a deal with Aldi in Europe, I advise you go to, MeliBio.com, which is our company website. If you're a consumer that cares to know where you can get our brand Mellody in your favorite restaurant or store or even online in the US, go to Mellodyfoods.com and, learn about our story and get one of our two products that exist in the US market. We have Golden Clover, which is a regular, original, our number one product. But we also have an exciting Spicy Habanero, world's first plant-based hot honey. Hot honey is a growing category, especially in pizzerias.

And if you like some spiciness or you like to add some kick to a burger or salad, I try you suggest, I suggest you try our new product that we just recently launched.

Keith Anderson: That one caught my eye when I was poking around the site. 

Darko Mandich: It's super hot. People love it.

Keith Anderson: Is it? I'm going to have to put it somewhere where my daughter won't, confuse it with the regular though. She's not as big a fan of spice as I am. Well, Darko, what a, fascinating opportunity. Congrats on the progress so far and good luck.

And thanks again for joining me for the show.

Darko Mandich: Thank you for having me and thank you for thinking of the bees. 

Keith Anderson: Thanks for listening. I'm Keith Anderson, the executive producer and host of Decarbonizing Commerce. Sonic Futures handles audio, music, and video production. If you enjoyed the show, we'd really appreciate it if you took a moment to subscribe and leave a review or share it with a colleague. For the full episode and more member exclusive insight and analysis, join the Decarbonizing Commerce community at decarbonize.co. Thanks for listening and we'll see you on the next episode of Decarbonizing Commerce.