David Protein Founder Has Expansive Plans for His Company
“How is it that we have all this protein and none of the calories?”
It’s a question Peter Rahal, founder and CEO of David Protein, has been asked before, even in court. He explained the symbiotic relationship between his popular protein bar and the ingredient technology company Epogee, which he eventually acquired, at today’s (June 2) Wall Street Journal Global Food Forum.
“The main leverage to get those macronutrients- or protein-to-calorie ratio would be the technology we bought last year this time, EPG; it's a non-nutritive fat,” he explained.
Epogee developed esterified propoxylated glycerol (EPG), which cooks and tastes like traditional fat but moves through the body like dietary fiber — largely intact and without being absorbed. That yields food with texture and flavor similar to full-fat products but with up to 92% fewer calories.
“If you're designing a protein bar with the assumption that what people want is the most protein with the least amount of other stuff, you really want to minimize fat,” said Rahal. “But if you do that, the consequence would be it doesn't form well. It's not palatable. So fat is like this underrated thing in food. Fat is essential in palatability. And it also functions as a way to bind.”
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Rahal also created the RXBAR, in 2013 in his parents' basement, grew the company and sold it to Kellogg Co. in 2017. RXBAR was famous for its packaging; the entire front was taken up by the four simple ingredients in the bar.
That’s 180 degrees from the David bar, which has a long list of ingredients, some with chemistry set-sounding names, not the least of which is esterified propoxylated glycerol.
Nevertheless, EPG is a fascinating, problem-solving ingredient. Why did no other food processor discover it?
As much as large food companies pursue innovation, they’re also wary of new ingredient technology, Rahal said. EPG is an expensive ingredient. “Big companies don’t want to cannibalize their best SKUs. So the big food companies aren't set up for it.
“And I think the entrepreneurs, the other sort of people that could use it, are more or less Luddites in the food space. They're anti-technology. And so it left it wide open for someone like me to utilize it.”
As Rahal got intimate with the company, it made sense for Epogee to merge with David Protein and for David Protein to own its supplier. “They own the [intellectual property]. We're using it. It's a big position of leverage they have.”
He talked earlier about the dangers of relying on a single supplier of a key ingredient. “So it was always a problem for us. So I had to solve the problem in some way.” Rahal raised $75 million in Series A funding, the bulk of which was used to buy Epogee.
Not only does he have a captive supplier of his key ingredient, he also has an ingredient technology he plans to scale.
The EPG fat substitute also was the source of a lawsuit. David Bar packaging lists 150 calories, 2g of fat, and 28g of protein. A class of plaintiffs, who hired independent laboratories to test the bars, claimed they contain up to 83% more calories and 400% more fat than stated. The difference was in the interpretation of how EPG is digested.
The company claims it was using FDA-compliant calculations, which allow for listing fat and calories actually absorbed by the body, not the total heat released in traditional testing methods. “EPG contributes only 0.7 kcal per gram — compared with 9 kcal per gram for conventional fats,” Rahal wrote in a March 12 letter to customers.
The case either was dismissed or the plaintiffs dropped their suit this past March.
“Actually, the legal part was not a problem. It was more public reputation, like a public opinion issue. It was on TikTok particularly. And then a content creator made a really, really funny video about getting Regina George. So if anyone knows [the movie] Mean Girls, Regina George is a character who feeds her enemies bars that are really highly caloric to get them fat. And so it's like a really funny story that went viral.
“The legal shakedown that everyone is familiar with in food was just like, OK, we'll handle that. But it's really about the public opinion. So we have to address the misinformation. But then you have to spread the information because education turns out doesn't go viral. To go viral you have to be entertaining. So first, let's address the misinformation and correct the narrative. And then second, let's entertain. And the entertainment was this humorous video that went viral, luckily.”
The other lawsuit was antitrust. “You bought this company and then you took it all for yourself,” the moderator said.
“Epogee’s capacity was about 2 million pounds. David's need was about 2.5 million pounds,” Rahal countered. “So whether the deal went through or not, all those people would not have been serviced because we had a contract that would consume all the available supply.”
That case was dismissed, too.
The acquisition of Epogee also made Rahal reconsider what kind of a company he is running. “When we merged and acquired Epogee, it changed the aperture of our vision. We're going to be moving to the name Medici as a parent company, which, for anyone who likes history, they were the patrons of the Renaissance in both the arts and science. They enabled the masterpiece Sculpture of David. So we'll have different business units underneath Medici.”
Some, but not all, may rely on Epogee’s unique fat substitute. “We're going to create brands into places that make sense. We just launched ice cream yesterday. That'll be a protein ice cream. It's really a great product. And the next brand will be called Hall Pass, a confection business, so low-calorie, low-sugar confections.” That will launch in the fall of this year; apparently both candies and cookies are being considered.
And a fourth business unit will be in salty snacks, although there is no target date for that launch.
Even further out, Rahal also said he’s also considering a QSR concept, something involving breakfast. It could involve low-fat donuts.
About the Author
Dave Fusaro
Editor in Chief
Dave Fusaro has served as editor in chief of Food Processing magazine since 2003. Dave has 30 years experience in food & beverage industry journalism and has won several national ASBPE writing awards for his Food Processing stories. Dave has been interviewed on CNN, quoted in national newspapers and he authored a 200-page market research report on the milk industry. Formerly an award-winning newspaper reporter who specialized in business writing, he holds a BA in journalism from Marquette University. Prior to joining Food Processing, Dave was Editor-In-Chief of Dairy Foods and was Managing Editor of Prepared Foods.