The age of alternative meats is upon us.
Beyond Meat is a $5 billion public company selling burgers in Canadian McDonald’s and American Carl’s Jr., breakfast sausages in Dunkin, and even chicken in a limited trial at KFC. Meanwhile, Impossible Foods has become a runaway hit at Burger Kings around the country. And the company is reportedly seeking to raise $300 million and $400 million at a valuation of roughly $3 billion according to reports in Reuters.
The plant-based up-and-comers have become a big enough threat that the meat industry has hired a marketing hit man to go after the new plant-based contenders to an increasing share of meat’s market. And they have a reason to be worried. By 2040, the conventional meat supply will drop by more than 33%, according to a report from the consulting firm AT Kearney.
As these no-longer-startups bask in the warm glow of success (and the rejuvenation of a sleepy corner of the supermarket) the question is what’s coming next from the research labs and test kitchens that are backed by millions in venture capital dollars.
Where’s the beef?
For the initial wave of investment, driven in part by a desire to appeal to consumers looking for alternatives to animal products, but wary of the cost of cultivating muscle tissue plant-based alternatives seemed obvious. Brown says animals are wholly unnecessary to make products that recreate the taste of a beef steak or a burger — and potentially surpass their flavor, all at a lower price.
Other companies have taken up that challenge as well in the months since Beyond Meat’s historic run in public markets (for a while, the company was the best-performing public offering of 2019). Startups like Rebellyous, Nuggs, and Daring Foods are making chicken replacements (along with big meat producer Tyson Foods through its Raised & Rooted brand).
Meanwhile beef gets its own challengers (outside of Impossible Foods and Beyond Meat) with companies like Nestle’s plant-based pitch Sweet Earth Foods, Tyson Foods, Beyond the Butcher, Hungry Planet and a host of others.
Even shrimp has a plant-based competitor in New Wave Foods, a startup that actually raised cash from Tyson’s venture capital arm earlier this year.
Tyson Ventures has invested in New Wave Foods, a startup making a plant-based shrimp substitute
What has set Impossible Foods and Beyond Meat apart from other competitors — at least in the eyes of the investors — is the research and development teams that are working on flavor profiles and products that simply are more direct corollaries to the products they’re looking to supplant.
For Impossible, that’s the use of genetically modified yeast cells that are manufacturing a protein found in soy called leghemoglobin. That’s the core of Impossible’s secret weapon — the use of heme (a protein found in blood) to make its plant products taste meaty.
These same benefits apply to investors’ approach to plant-based dairy alternatives that are trying to one-up soy and almond milks with a more direct one-to-one substitute for dairy.
Certainly that’s the argument behind Eclipse Foods, which is angling to be the Beyond Meat of the dairy business — starting with ice cream.
Plant-based dairy replacements are coming to ice cream pints in San Francisco and New York
Talkin about a cell-based meat revolution
While Beyond Meat and Impossible Foods have seeded a plant-based revolution in food. There’re still some hurdles these companies have to overcome. Chiefly, they can’t replace a steak, a pork chop, or a shrimp cocktail… and for many consumers, that’s the tipping point for truly making a dent in animal consumption.
Enter, the cell-based meat manufacturers. These companies are still in the earliest days of their development, but for some in the industry the tipping point is fast approaching.
By far the most well-known of these cell-based meat companies is Memphis Meats, which is backed by notable tech luminaries like Bill Gates and venture firms like Fifty Years, New Crop Capital and Tyson Ventures. The company was the first out of the gate with a cellular approach to meat production and is, to date, the best funded of the scores of companies working on cultured meat, with around $20 million in financing raised to date.
The problem for cellular meat production is the cost of the medium that’s used to grow it and the need for fetal bovine serum or another animal growth stimulant in the culture that the animal cells require to grow in a fermenter.
Future Meat Technologies, another Tyson Ventures portfolio company, has solved the problem by using Chinese hamster ovaries instead of fetal bovine serum. The company, while a bit younger than Memphis Meats has very concrete plans for its growth and targets for when its first commercial product will reach the market.
The Israeli-startup has raised $14 million in new financing to build its first pilot manufacturing facilities to bring the cost of production of a cell-made steak down to $10 per pound — or $4 if the meat is combined with plant-based meat substitutes.
The $10 price tag is a whole lot lower than the $50 target that experts from the Good Food Institute were talking about back in April of this year — and represents a significant cost reduction that makes lab-grown meat a potentially commercially viable option much sooner than anyone expected.
“With this investment, we’re thrilled to bring cultured meat from the lab to the factory floor and begin working with our industrial partners to bring our product to market,” said Rom Kshuk, the chief executive officer of Future Meat Technologies, in a statement in October. “We’re not only developing a global network of investors and advisors with expertise across the meat and ingredient supply chains, but also providing the company with sufficient runway to achieve commercially viable production costs within the next two years.”
Rather than sell product under its own brand, Future Meat wants to be the supplier of the hardware and cell lines that anyone would need to become a manufacturer of lab-grown meat.
‘Aleph Farms, another Israeli startup also intends to take a collaborative approach to working with the existing industry around meat processing.
“We will be part of the long-term solution,” said Didier Toubia, Co-Founder and CEO of Aleph Farms, in an interview with Forbes. “We intend to lead an open dialog with farmers and food producers. In addition, we continue to work closely with the regulators to ensure our products will be completely safe, healthy and properly labelled.”
Lab-grown meat could be on store shelves by 2022, thanks to Future Meat Technologies
Future Meat, Aleph Foods, Memphis Meats and the UK-based Higher Steaks are all focused on cattle, but as with the plant-based market, there are other startups who are spending their time looking at the broad range of options.
Just has made claims that it’s working on cell-based line of chicken meat products and Meatable, a Dutch startup developing cellular meat production tech, has turned its attention to pork. Meanwhile Shiok Meats, Wild Type and Bluenalu are looking at lab grown seafood (with Shiok looking at shrimp and Wild Type focused on salmon).
The biggest obstacle for many of these companies is still pricing. Wild Type’s salmon in a sushi roll would cost roughly $200. Shiok Meats had a $5,000 sticker price on its shrimp when it launched from Y Combinator and raised its pre-seed round.
Among the companies working on fish, Wild Type is by far the best funded, with a $12.5 million round closed earlier this year. That capital, from CRV also included Maven Ventures and seed investors including Spark Capital and Root Ventures.
And the founders echo the concerns of other entrepreneurs active in the industry when they talk about the current state of affairs, and the necessity of alternatives to reach commercial viability soon, if the world population will be able to sustain itself and advance its diet.
“The issue, when it comes to the oceans is one of being able to get our fish from essentially two sources. One is wild caught and the other is conventional aquaculture,” says Wild Type co-founder Aryé Elfenbein. “In wild caught the fish is depleted or crashed and we’ve created an unsustainable system. And when it comes to aquaculture, it’s a system that’s fraught with issues of pervasive contaminants, ocean dead zones and adverse ecological impacts. The majority of food is still derived from the ocean. If you believe that, then problem is available supply from sustainable fishing from the ocean and the difference is not addressed by aquaculture.”
It’s all about the proteins
Whether it comes from an animal cell, a plant, or a genetically modified organism, the problem is about making proteins at a scale that can feed a growing population that’s increasingly turning to higher protein more meaty diets.
The third wave of alternative meat, dairy, and functional food companies are drilling down to focus on those proteins directly.
That’s how Perfect Day (the Impossible Foods to Eclipse’s Beyond Meat) makes its dairy replacement. The company, which just closed on $140 million in new financing, isolated the genetic code for producing milk proteins (casein and whey) and edited a fungus commonly used in biomanufacturing to produce those proteins.
It’s also the technology that’s at the center of Impossible Foods’ approach (that leghemoglobin). Newer startups are focusing on finding the best proteins to use in a whole range of food products. Those are companies like the Chicago-based Sustainable Bioproducts, the company financed in part by Breakthrough Energy — an investment fund backed by some of the world’s wealthiest people including: Marc Benioff, Jeff Bezos, Bill Gates, Jack Ma, David Rubenstein, Masayhoshi Son, and Mark Zuckerberg.
The company has access to a kind of bacteria known as extremophiles discovered among the volcanic fissures of Yellowstone National Park, and has managed to harness those microbes to manufacture what chief executive Thomas Jonas calls a “complete protein”. Sustainable Bioproducts new protein has managed to garner the attention of not just Breakthrough Energy Ventures but also industrial partners like Danone and Archer Daniels Midland, which both contributed to the company’s $33 million round of funding in February.
Companies like Geltor, Shiru, and Amai Proteins are identifying proteins that can be used across a spectrum of products including — but not limited to food. For Amai’s founder, Ilan Samish, the biggest opportunity is sugar. That company has developed a new technology to replace sugars in everything from sodas to ketchup and jams with a functional protein that Samish says is healthier for humans.
Perhaps the biggest indicator of the potential for new proteins is in another Breakthrough Energy Ventures portfolio company, Motif.
The spinout from Gingko Bioworks is backed by a $90 million investment from Breakthrough and industry insiders like Fonterra and the global food processing and trading firm Louis Dreyfus Co.
“To help feed the world and meet consumers’ evolving food preferences, traditional and complementary nutritional sources need to co-exist. As a global dairy nutrition company, we see plant- and fermentation-produced nutrition as complementary to animal protein, and in particular cows’ milk,” said Judith Swales, the Chief Operating Officer for the Global Consumer and Foodservice Business of Fonterra, in a statement.
Large corporations know that there’s this rising demand for alternatives to animal proteins and in many cases they’d rather be working to develop their own brands rather than see an upstart company capture a large percentage of their market.
“Today’s consumers are seeking more protein options so we’re creating new products for the growing number of people open to flexible diets that include both meat and plant-based protein,” said Noel White, president and CEO of Tyson Foods, in a statement at the time of the new product’s launch. “For us, this is about ‘and’ – not ‘or.’ We remain firmly committed to our growing traditional meat business and expect to be a market leader in alternative protein, which is experiencing double-digit growth and could someday be a billion-dollar business for our company.”
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