And now for something completely different in biotech: Lab-grown, “clean” meat. If Bill Gates and Warren Buffett like the idea…well?

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The Premise:

Contemplate a world where eating meat derived from animals is a thing of the past. Ridiculous, you say. But during the past year, the field of cultured (or “Clean”) meat has evolved from just a few pioneers to a growing number of players working towards the common goal of making cultured meat as a way to solve some of the big problems of an increasingly crowded planet and oh, I almost forgot, making a ton of money in the process.

We are now at a point where the arrival of cultured meat seems inevitable, says Clara Rodríguez Fernández at Labiotech.eu. To prepare for its arrival, it’s important to start thinking about the impact the technology will make, how it will be regulated and whether people will actually want to eat it.

Why eat cultured meat?

“In time, I believe that cultured meat could fundamentally change the way the majority of meat is produced in Europe,” Peter Verstrate, CEO of the Dutch company Mosa Meat (Maastricht), said.

Founded by Mark Post, the scientist behind the world’s first lab-grown burger, his company might be one of the first to sell cultured meat at restaurants and supermarkets in Europe.

“We will see a shift in the way production is organized from feedlots and slaughterhouses to cultured meat ‘factories,’” Verstrate explained. “Moving to this more efficient method of production would have many potential benefits for Europe, such as helping to reduce emissions of methane that contribute substantially to climate change.”

The shift to cultured meat could not only reduce greenhouse gas emissions, but also decrease significantly the use of water and land by over 95%, Rodríguez Fernández suggests. Growing meat without the animal would also eliminate the need for antibiotics and hormones in the final product.

“Cultured meat is going to change the world,” said Daan Luining. Having worked in the development of the first cultured burger, he’s now CTO of Meatable, another Dutch cultured meat company. “It’s going to change how we view meat, how food is produced, what type of food is being produced, where it’s going to be produced, and what people will demand of it–on quality, on texture, on taste, on nutrients.”

Many companies working on cultured meat–including Mosa Meat and US-based Memphis Meats, the two startups with the most funding–have a similar time in mind to launch their first product: 2021.

“There’s a big hype, there is a race happening,” Mercedes Vila, co-founder of the Spanish company Biotech Foods, told Rodríguez Fernández. “In the past few months new players have appeared, we’ve counted almost 20 companies in Europe, all of them of very recent creations. But I think we don’t compete between us, we are rather ambassadors for a new concept and it’s better not to be alone.”

How will cultured meat be regulated?

“We are fortunate in Europe that the regulatory pathway is much clearer than in the US,” explained Verstrate. “The EU’s novel food regulations have sped up the process so it may be faster than in the US, although we will have to see what happens.”

Steve’s Take:

After reading the above account of the emergence of “clean meat,” I had to ask myself whether I would eat it. Hmmm. Perhaps it’s “clean,” but it’s also undeniably “unnatural.” And therefore perhaps unsafe somewhere down the line. Then I asked myself is this perhaps the Tesla of the food industry?

I rummaged around the Internet looking for some evidence of the viability of the cultured, clean-meat concept as a possible investment prospect and saw a piece from CNBC saying that Bill Gates and Richard Branson are betting lab-grown meat might be the food of the future.

“Investors like Tyson and Cargill could put ‘clean meat’ on grocery shelves within three years,” says Rick Morgan for CNBC.

Traditional meat production is ecologically devastating, and a growing world population could make farm-raised animal meat unfeasible by 2050. Billionaires, including Bill Gates, say there is no way to produce enough meat traditionally to feed the world population of the future. For lab-grown meat start-ups, going after $50-per-pound foie gras makes as much sense as grocery-store staples like burgers and chicken nuggets, Morgan adds.

“When they taste the product, they have to have the experience of meat, not the experience of a product that looks like meat and comes close to meat or has the distinct hints of something that looks like meat,” said Peter Verstrate, the CEO of Mosa Meat. “It just has to be meat.”

“The ultimate filter is, ‘Does it taste exactly like the meat you’re used to?’” said Josh Tetrick, CEO of clean meat start-up JUST, who already tasted success with JUST Mayo.

There are two business-world barometers for clean-meat products that are make-or-break as well: price and scale. Right now clean meat is much more expensive to produce than traditional meat because of scaling and infrastructure. The land, feed, farmers, slaughterhouses and transportation are already in place to produce meat from dead animals. Growing clean meat may be more efficient and will require less total marginal costs in the end, but until the systems needed to grow clean meat on a large scale exist, it will be more expensive.

Scientists estimate the world population will reach 9.6 billion by the year 2050. This population will increasingly live in urban areas and have a rising middle class, both of which mean more meat consumption. According to the Food and Agricultural Organization of the United Nations, world food production will need to increase 70%. Feeding that many people with traditional meat production will require double the amount of deforestation, which will increase greenhouse-gas emissions by 77%.

Bill Gates has invested in lab-grown meat companies, as has Richard Branson.

“Raising meat takes a great deal of land and water and has a substantial environmental impact,” Gates wrote on his personal blog, Gatesnotes.com, a few years ago. “Put simply, there’s no way to produce enough meat for 9 billion people. Yet we can’t ask everyone to become vegetarians. That’s why we need more options for producing meat without depleting our resources.”

Mosa Meat plans to start with burgers in high-end restaurants, where it can be price-competitive. Both Tyson Foods and Cargill have invested in clean-meat company Memphis Meats, alongside billionaires Gates and Branson.

“It’s a train that’s leaving the station,” Verstrate said of the need for the established meat giants to invest early. “It’s relatively cheap to buy a train ticket today.”

Surveys show about a third of the population across the US and UK are willing to try clean meat, but that number could increase if it became more prevalent. Bruce Friedrich, the CEO and co-founder of a think tank accelerator called The Good Food Institute, said the powerful antibiotics in live animals should turn people toward clean meat.

“People are eating meat now despite how it’s produced; they’re not eating meat because of how it’s produced,” Friedrich said.

He believes that when the public can choose between two identical products and one is produced safely and humanely while the other is produced in a slaughterhouse, people will choose the former.

In 2018, at least five startups using cellular agriculture have raised funds as this fledgling industry diversifies and grows, says AgFunder.

First in January, SuperMeat, an Israeli cultured meat startup, raised a $3 million seed round to develop its cultured chicken product. Also that month, Tyson Food Ventures joined Memphis Meats’ $17 million Series A round, originally announced last August.

In March, Wild Earth, a Berkeley, CA-based startup focusing on pet food raised a $4 million seed round. Just a few weeks later, The Wild Type, a San Francisco-based startup raised a $3.5 million seed round to focus on culturing salmon.

Perfect Day Foods, a California startup using cellular agriculture to produce dairy products raised a $24.7 million Series A round in April.

Bottom Line:

While it’s still in the very early stages, the technology is worth putting on your radar. Here’s what investors need to know about clean meat, according to Motley Fool.

  1. The potential benefits are staggering

Factory farming is problematic in many ways, but it exists for a reason. Intensive animal farming sprang into existence after World War II as a way to ensure food security. That may be a remote concern for most Westerners today, but it’s important to remember that an estimated 20 million people died of starvation during the war. That’s roughly equal to the number of combat deaths.

Clean meat could potentially provide the best of two worlds: food security and reduced impact on the environment. There’s no consensus on exactly how, and how much, this yet-to-be-commercialized tech could benefit society–but nearly every study agrees that the benefits would be extraordinary. One widely cited study estimates that clean meat production could reduce the industry’s greenhouse gas emissions by 96%, energy consumption by 45%, land use by 99%, and water consumption by 96%.

  1. The market opportunity is enormous

The incredible potential benefits of clean meat are certainly a big reason that companies like Tyson Foods and Cargill are interested in the fledgling technology. The sheer size of the market opportunity is a pretty big factor as well. Annual meat and poultry sales in the US total over $200 billion, and the global market opportunity exceeds $1 trillion. Capturing just 1% of the market would create a $10 billion opportunity.

Tyson Foods is the largest meat-producer in the US, accounting for 23% of beef, 17% of pork, and 21% of chicken production. It generated 51% of its fiscal 2017 sales, or $19.5 billion, from consumer products. That’s an important consideration, as the first clean meat products will be geared toward higher-margin consumer applications.

Tyson Foods further announced a stake in the start-up Memphis Meats, joining Bill Gates and Tyson’s largest competitor, Cargill, to help the young company scale its first beef, chicken, and duck products.

Tyson Foods president and CEO Tom Hayes is a big believer in the technology (he started the in-house VC fund months after joining the company). Meanwhile, Cargill CEO David MacLennan called clean meat “the future” of the industry. While the first clean meat products will be very expensive compared to traditional meat products, these market leaders think the economics could overwhelmingly favor the new technology one day. They might be right.

  1. It’s still years down the road to full attainment

The difficulties of scaling up novel biotechnologies like clean meat are daunting to say the least. Successfully scaling a novel process capable of cost-effectively producing a clean meat product will likely prove an enormous challenge.

I agree with Motley Fool’s advice to investors: We’re nowhere near seeing clean meat in supermarkets, but the fact that Tyson Foods and Cargill–the top two meat producers in the world–are staking their futures on clean meat is not something to shrug off. These two companies are taking a long-term view, investing millions of dollars into the technology space, and they’ll be key to commercializing clean meat for the masses.

Early bird investors interested in being initial stakeholders in clean meat should feel comfortable buying shares of Tyson Foods–at the very least to keep abreast of updates from the new industry. Just know that the company will remain a traditional meat-producer for the foreseeable future.

In short, clean meat is coming–and likely sooner than later. But we have a ways to go in terms of regulation, terminology, and public perception before it gets here.

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