Science fiction or reality?

Cellular agriculture is the process of making foods that conventionally come from animals without the need for slaughter. Meat and seafood can now be produced by cultivating animal cells directly via biotechnological methods.

“The breadth of disruption coming to conventional agriculture is vast and yet only relatively small amounts of capital have flowed into this sector,” says Anthony Chow, co-founder of Agronomics, a venture-capital business with positions in more than 20 start-ups in this field. “This is the biggest lever we can pull in the context of the environmental challenges we face, from emissions to water consumption, antibiotic use to animal welfare.”

Animal-based agriculture contributes to climate change, methane emissions, overuse of land, rainforest destruction, loss of biodiversity and soil pollution. These impacts can be mitigated by growing meat and seafood in a lab, helping cut emissions from agricultural production and stopping the conversion of forests into agricultural land.

Modern intensive agriculture produces more than enough calories to feed over eight billion people – the biggest global population in human history. Figure 1 shows how the number of humans has grown relative to animals.

Figure 1: Estimated biomass of humans and wild land-dwelling vertebrates in 10,000 BC versus today

Source: The National Food Strategy, 2021³

Animal agriculture is responsible for over 60 per cent of emissions from agriculture, forestry and land use (AFOLU).⁴ Figure 2 shows the second part of the statement. Addressing how and where proteins are sourced could make a big difference in reducing emissions.

Additionally, there is a huge gap between the amount of food produced today and how much will be needed to feed the global population in 2050. According to the World Resources Institute, as the global population grows from seven billion in 2010 to 9.7 billion in 2050, and incomes rise around the world, food demand is likely to increase by more than 50 per cent. Demand for animal-based foods is estimated to increase by nearly 70 per cent.⁶

There could be significant environmental benefits by using cultivated beef compared to plant-based protein and conventionally farmed counterparts. Figure 3 shows the carbon footprint variations in a range of animal and plant-derived proteins based on terrain, climate, production and farming methods.

Lab-grown meat should have health benefits too. “Not only could we replicate the perfect burger, with just the right amount of fat, but it would be antibiotic free,” says Jonathan Toub, co-manager of the Aviva Investors Natural Capital Transition Global Equity strategy.

The overuse of antibiotics has significant health and environmental impacts. According to a report from Global Research on Antimicrobial Resistance, antimicrobial resistance (AMR) was the direct cause of at least 1.27 million deaths globally in 2019, making it the third leading cause of death. This is a health challenge comparable to HIV, tuberculosis and malaria.

Although there is growing investor interest in lab-grown meat, regulators have been slow to respond while the technology is relatively new. That may be changing. Last November, the US Food and Drug Administration (FDA) cleared the first lab-grown meat product as safe for human consumption. The decision was a milestone for cell-cultivated meat to eventually become available in supermarkets and restaurants in the US.⁹

Singapore is the first, and only, country to have approved the commercial sale of lab-grown meat in the form of chicken nuggets and chicken breast produced by Good Meat.¹⁰ In March 2023, Good Meat announced it had received a “no questions” letter from the US Food and Drug Administration – a clear step in bringing Good Meat to restaurants and retail in the US more than two years after its historic approval and launch in Singapore.¹¹

Once production scales up, three factors will be crucial to win over consumers: price, taste and convenience.

Price is especially important. “Except for a small cohort of people doing the right thing for environmental reasons or animal welfare, the vast majority of consumers are not willing to pay a premium for products when cheaper alternatives exist,” says Chow.

The demand for cultured meat might increase as the price for real meat goes up or a meat tax is introduced, making it a luxury good again.

However, Eugenie Mathieu, senior impact analyst and Earth pillar lead at Aviva Investors, highlights that while the UK’s 2021 National Food Strategy review cited eating less meat as the best solution to a multitude of environmental and health problems, it shied away from recommending a tax on red meat.

“The current thinking is that it’s better to use the carrot approach to reduce meat consumption, for example by making it cool to be a vegan or vegetarian, than to use the stick approach of taxes,” she says.

The price of cell-cultured meat has already significantly decreased as production efficiency is improving and the cost of materials has fallen. In 2013, the world’s first lab-grown burger cost $330,000; today, Dutch company Mosa Meat can make 80,000 hamburgers from a single cell sample, pushing the price down to €9.¹²

“To scale the industry to produce sufficient cell-cultured meat to fill shelves in supermarkets requires a huge increase in currently expensive growth serum and large bioreactors. Up until now, these have only been used for small-scale production in the pharmaceutical industry. The challenge is to solve this bottleneck and reduce costs,” explains Toub.

However, according to the book Moo’s Law, we are probably a decade away from cultured meat being available at the likes of Whole Foods, a shop where consumers are willing to pay higher prices for natural produce.¹³

“That is where it is going to start, where all the food innovations begin. It will work its way down, from niche to an expensive luxury good, to supermarkets,” says Chow. “There are many challenges, but private capital is coming into this area and there are well-funded companies on the cusp of commercialisation,” says Chow.

Taste plays an important role in food choice, so it is vital that lab-grown meat tastes just as good as “the real thing”. But while taste is easier to replicate, the same cannot be said for texture. That is why minced meat (described as unstructured meat) is easiest to replicate.

“It is already challenging to produce enough cells and get them to differentiate into specific cell types to make burgers and hot dogs. Adding extra complexity to get the cells to line up and form multinucleated muscle fibres won’t be economically viable for a long time,” says Chow. 

Besides, the market value of the meat industry is expected to rise to over US$1.3 trillion in 2027 (see Figure 4).¹⁴ “As minced meat represents around 50 per cent of the global meat market, that is a pretty big chunk of the market to go after,” he adds.

While Singapore is the first country to have approved the commercial sale of cultivated meat, hybrid products could be a transition option. 

In addition to the cost savings compared with fully lab-grown meat, combining plant-based meat substitutes with precision cell-cultured proteins could improve taste.

“Plant-based products have failed to meet the sensory profile and price point meat eaters expect. A product made of 30 per cent cell-cultured meat and 70 per cent plant-based protein is almost indistinguishable from conventional meat,” says Chow.

Many meat eaters have not been persuaded by vegan meat substitutes. Could lab-grown meat prove more popular? Combining lab-grown meat with plant-based substitutes might also result in creating a solution to the problem regarding poor-quality vegan options flooding the market.

Last year saw the lowest number of internet searches for veganism in five years.¹⁶  “Will interest come back? I’m guessing this is a blip as consumers got put off by inferior meat alternatives but will come back as progress is made with the higher-quality ones. Lab-based meat will be part of that,” says Mathieu.

While questions remain over when lab-grown meat will become viable at scale, another form of lab-based food cultivation could be closer to fruition: precision fermentation, the use of single organisms coded to produce larger molecules once fed sugar. Egg protein and whey protein are two examples.

In contrast to lab-grown meat, large-scale production of dairy and egg protein is already happening. Fermentation is a well-understood technology, used in human therapeutics since the early 1980s.

“Novo Nordisk is the world's largest producer of insulin for type 2 diabetics and uses precision fermentation for the production of human insulin,” explains Chow. “Prior to that, it used pig pancreas to extract pig insulin type 2 diabetics had to use.”

What has allowed precision fermentation to be applied to food production is that the cost of genetically modifying those organisms has come down by several orders of magnitude. However, capacity is a challenge.

“Even though the leading companies have developed their organisms to be quite efficient, there is only 61 million litres of capacity installed in the world. Billions would be required by 2030 to put a dent in global protein production numbers,” says Chow. 

However, in the short term, consumers may be more willing to have ingredients created through precision fermentation added to other food products than to consume entirely artificial items.

“Cultivated meat and seafood are often the centre of the plate, while dairy and eggs can go into cheese, yogurt and baked goods,” explains Chow.

As technology improves and consumer awareness of the ethical and climate costs of meat-eating grows, more customers could be persuaded by alternative proteins. According to Barclays, two-thirds would be willing to purchase cultured meat globally, with Asian consumers most receptive.¹⁷

As mentioned, the uncertainty around scalability and consumer appetite mean cellular agriculture is no silver bullet for the planet. The impact of traditional farming on the environment is an urgent problem and investment in lab-grown proteins needs to be accompanied by efforts to decarbonise agriculture and shift more of the world onto greener, plant-based diets (see Change diets, not the planet).¹⁹

Investors might consider three areas to access this theme – meat protein, precision fermentation and enabling technologies.

Both Mosa Meat and Aleph Farms are focusing on cell-cultured beef products, as conventional beef is known to have the greatest planetary impact of all meat products. However, replicating conventional meat in a lab presents technical barriers.

“Mosa Meat is taking on the tough challenge of growing fully matured muscle and fat to create a burger hardcore carnivores would be happy to eat,” says Toub.

Some established companies look well-positioned to reconfigure existing functions for this opportunity. Fermentation companies, for example, can develop tailored growth media; the industrial-enzymes industry can make signalling compounds (such as insulin and growth factors) at scale.

Toub notes coffee giant Starbucks is testing Perfect Day's fungi-based dairy-identical milk in select locations. Meanwhile, The Every Company makes animal-free protein by taking the DNA sequence of chicken egg protein and inserting it into yeast. Then it feeds the yeast sugar, which is turned into protein through fermentation.

Enabling technologies offer another way for investors to gain exposure to the growth in cultured agriculture, as bioreactors, growth media and the right infrastructure are essential. One of the biggest producers of bioreactors, Sartorius, works primarily in the pharma industry, but it might become a leading supplier for cultured agriculture producers when demand grows materially.

Meanwhile, Genentech produces signalling molecules that cells use as instructions on how to grow; Novo Nordisk uses yeast to produce insulin at $4 per gramme and should be able to produce similar media at a comparable price point. Brewing companies might see a similar story to solar farms, which were initially supported by large government subsidies.

One caveat is that many lab-grown meat companies are currently not investable because they are either small start-ups or adventure tech companies.

“We expect huge growth in cell-based technology over the long term. But it’s quite a lot for people to get their heads around. The labelling of these products will be vital and determine broader acceptance levels,” says Toub.

Figure 6: Production process for cultivated meat

Cultivated meat is made by taking a small sample of animal cells and growing them in a controlled environment.

1. Purchased/developed

Purchased/developed animal cell lines are preserved in cell banks; when producing a batch, the cells are thawed in small shake flasks and moved to seed train bioreactors.

2. Growth

Cells grow in nutrient-rich media in seed train bioreactors. As they grow in volume and density, they get moved along the seed train into progressively larger bioreactors.

3. Density reached

Cells reach the desired density in the main bioreactors. The optimal cell density strikes a balance between cell volume and batch time (i.e. the longer the batch time, the higher the cell density). When the desired density is reached, the bioreactors are drained into centrifuges for harvesting.

4. Harvested

Cells pass though a continuous centrifuge, which separates the media from the cells and achieves a low concentration of media in harvested cells.

5. Distributed

Meat cells are prepared for distribution with processess varying based on end product; cells can be blended with other additives to achieve the desired texture before being formed and packaged for storage and distribution.

Source: Aviva Investors, May 2023