Cellular Agriculture – Where are we heading to?

Following our previous blogposts on?Food delivery ?and?Vertical farming ?sectors, this article aims at shedding light on the Cellular agriculture landscape and what makes us believe that we are also expecting a wave of acquisitions in this sector in the near term.

As you may know, cellular agriculture (also called ‘cell-based’or ‘lab-grown’) is an innovative technology that has the potential to revolutionize the way we produce and consume food, especially meat, dairy, and fish. This technology has undeniable benefits for the environment and the planet given that it allows the production of those products without killing or exploiting animals, but faces complex challenges that could be overcome by joining forces.

Let’s look more in detail at all the notable developments in this space.

A short deepdive into the science of cellular agriculture

The complex process of producing meat directly from animal cell cultures can be explained in a few key steps. First, scientists would take a small biopsy sample from the animal of interest (like a cow, chicken, or fish) and grow those cells in their facility. Some of the cells from the biopsy would include stem cells, which have the ability to self-replicate and divide into more cells that can become meat products.

These cells are then grown in a cell culture media formulation that helps the cells believe they are still inside an animal. The composition of the media formulation is important to help the cells develop to replicate and differentiate into the various types of cells found in meat products.

The cell culture media formulation and how the cells are grown are important aspects in producing cell-based meat, because they help the cells become the same meat that comes directly from animal cells.

At scale, the cells and the cell culture media formulation would all be placed in large bioreactors where the cells would grow and mature into meat. The bioreactors may also include scaffolding components to help provide structural support for the cells.

Essentially, the bioreactor is a complex chamber where all the different components come together to form a finished product: a cell-cultured meat product.

Simple right? Well not so fast…The sector faces a number of challenges, including the cost for cultivated products (which is much higher than traditional foods), the regulatory pathway (these products are subject to novel foods regulation) and consumer acceptance.

What obstacles cellular agriculture faces

One of the major obstacles is the costs involved in selling cultivated meat at scale is the costs associated with production. In a?recent paper , it was highlighted that given currency technologies we can optimistically expect a retail price of $18+ for a 0.14 kg hamburger. This price point will likely hamper a wider adoption of these products. In particular, the paper highlights the fact that growth media account for the highest share of the costs associated with production of cultured meat, at?30% of total costs . This is a well known hurdle, and startups that have started to work on solutions leveraging various technologies, such as molecular farming (Tiamat ), or precision fermentation (Multus Media ), have raised over €400M in 2022 alone (Source:?FoodTech Data Navigator ).

Another hurdle comes from the regulatory process, given that it’s lengthy and not standardized across different countries. So far Singapore is the only country in the world to have allowed the sale of?two products ?made via cellular agriculture, but recently FDA’s issued two?no questions letters ?and Australia received the?first request to regulatory approval ?for a cultured product. In this, only the most well-funded companies have a chance to commercialize in various geographies given that the above countries all have different processes in place for regulating novel foods, and going through this requires specific expertise that comes at a price.

In the future though, an obstacle to wider adoption may also come from consumers’ acceptance of products made with this technology. As doubts over the carcinogenic nature of cell-based meat are?constantly debunked by the scientific community , such bias may persist in people’s minds and could lead to avoidance altogether. In this, Singapore (the only country where it is legal to consume some types of cell-cultured meat at the time of writing) is a precious testing ground for checking people’s sentiments toward cellular agriculture.

The state of the market – consolidating one step at a time

It’s been a long way since the?world’s first cell-based burger ?was announced ten years ago. Nowadays this is an industry that counts over 130 companies which raised 75% of their total funding between 2021 and 2022 (equalling over $1.8B) (Source:?FoodTech Data Navigator ).

While somewhat in its infancy, the cell-based sector is experiencing record-breaking growth that has made it fit for acquisitions and, more recently, a large number of partnerships. Such frenzy from companies is due to many of them gearing up for wide-scale commercialization. Let’s look at both acquisitions and partnerships to better understand this space.

Acquisitions

As mentioned, this industry is still fairly young, and with little to no products available to the public so far, it doesn’t surprise that not many acquisitions have been carried out to date. However, companies that have acquired other companies are getting ready for an imminent wide-market opening as regulatory approvals seem to be opening up, albeit slowly.?

Steakholder Foods (formerly Meatech 3D) was the first company in this space to acquire expertise via an acquisition. In December 2020, the Israel-based company?announced that it had acquired Belgium-based Peace of Meat , a company specializing in cultivated avian fat, for €15 million. This acquisition was unfortunately short-lived as Steakholder Foods in April 2023 announced it would?cease operations for Peace of Meat ?to focus more on its core 3D printing tech.

Eight months later, Singaporean Shiok Meats, maker of cell-based seafood, announced a similar move. The company had in fact?acquired Gaia Foods , a company focused on cell-based meat instead of fish.?

Finally, as recently as January 2022, American Upside Foods, working on cell-based meat,?acquired Swiss Cultured Decadence , a fellow cellular agriculture company focused on seafood.

Another notable example of acquisition in this space comes from a corporate this time. Brazilian?JBS acquired a majority stake in Spanish BioTech Foods , a company making cultivated meat. The meat processing giant also announced the construction of a plant capable of outputting 1,000 tons of cell-cultured meat per year and that it will begin operations in mid-2024.

There is a common thread across these three instances – all the companies acquired were working on different products than those who bought them. This is no coincidence given that, just like

Food delivery ?and?Vertical farming , acquiring external IP instead of developing it internally, may prove to be a faster winning move towards scalability.

Partnerships

While acquisitions have had a great resonance due to their impact on such a small industry, partnerships are quickly becoming the preferred mode of collaboration among players in this space due to lower commitments and capital requirements than acquisitions. This approach proves to be very successful both from a startup-to-startup and startup-to-corporate point of view to tackle technical (such as growth media cost & composition optimization) and commercial issues (such as regulatory pathway).

In the span of a few months between 2022 and 2023, we’ve noticed a number of partnerships taking form. Here are the most notable ones.

In March 2022 SuperMeat, a cell-cultured meat company based in Israel, and the Japanese F&B conglomerate Ajinomoto?formed a partnership ?to establish a commercially viable supply chain platform for the cultivated meat industry”. At the same time, Israeli cultivated meat company Future Meat Technologies?initiated an agreement ?with Thai F&B giant CP Foods to develop cell-based meat products for the Asian market.

In April 2022 startups Bluu Seafood (the first company in Europe specializing in the production of cultivated fish) and CellX (the leading cell-based meat company in China)?joined forces ?to support each other along the whole value chain when expanding into their respective markets.

In May 2022 another sizable partnership took form. The Chicago-based ingredients and commodities giant ADM entered a?joint development agreement ?with Eat Just to create an optimized cell growth media for its cell-based meat division Good Meat.

More recently, in February 2023, biotech company Triplebar and cultivated seafood Umami Meats?announced that they intended to collaborate ?in developing cell lines for cell-based seafood.

In March 2023, Dutch incumbent Mosa Meat?announced an agreement ?with Nutreco (a Dutch food processing company) to create a cell feed supply chain, aiming at reducing overall costs and scaling up production. In the same month, cultivated fish BlueNalu announced the very same?partnership with Nutreco .

Finally, in April 2023 ingredient supplier ADM and cultivated meat pioneer Believer Meats?joined forces ?via a non-binding and non-exclusive MoU in a quest to accelerate the development and commercialization of cultivated meat products

This process of partnerships can be considered a natural progression of this space considering that no company so far can claim absolute technical or commercial dominance over the others. In fact, given that only Good Meat (also known as Just) has managed to obtain the authorization to sell some products so far (only in Singapore and only for two products), companies that join forces with others may have more commercial success.

The role of governments in scaling this industry

While many companies are indeed gearing up for commercialization carrying out IP strengthening via either acquisitions or partnerships, this will all be in vain if regulatory approval isn’t granted for foods made using this technology.

Governments can play a big role in this and some geographies are proving to be more active than others when it comes to fostering cellular agriculture. Starting from Singapore, the very first country in the world to allow for the commercial sale of?two Good Meat products ?and recently for?the use of FBS-free media ?for the production of cultivated meat. The US has very recently made important steps forward with Upside Foods receiving a?‘No Questions’ letter for its cultivated meat , followed shortly after by?Good Meat , both now being just one bit away from the commercialization greenlight in the country.

Overall, political influence can signal willingness towards this technology. For instance,?Israel ?granted $18 million to a cultivated meat consortium, while the?Netherlands ?invested €60 million in the industry. In Asia the?Japanese prime minister made headlines ?when he announced that the country would move forward in developing a cellular agriculture industry and more recently?South Korea ?debuted a 10kg piece of cultivated meat at the opening of the country’s new cellular agriculture support center. Countries like Italy though are moving in the opposite direction as Italian’s government proposed a draft law that if approved could?ban completely cultivated meat ?there, with fines up to €60,000.

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Conclusions

Despite the relatively early point in time for the cellular agriculture field, the emergence of acquisitions in the cell-based meat industry highlights that the field is starting to mature. As more companies grow, there may be more acquisitions by both traditional food players as well as larger startups within the field.

Similarly, as more companies and startups continue to scale production, there will likely be more partnerships between traditional food and agricultural players and startups producing cell-cultured meat.?

From ingredient development to product distribution, there are plenty of areas that the field will need to address to commercialize, and more traditional food players will need to enter the ecosystem to support it.

We may also see more partnerships from startups within the field, similar to the one between CellX and Bluu Seafood, to support global commercialization efforts.

All in all, some challenges remain such as the aforementioned Italy ban on cultivated meat and companies like?New Age Meats failing ?to secure additional funding. More work had to be done in terms of the F&B recognizing cellular agriculture as an alternative way of producing food, technological development to make it more viable and more countries speeding up the regulatory pathway to foster a wider commercialization. Additionally, the example of Steakholder Foods closing down its acquired Peace of Meat though is a clear signal that the acquisition strategy has to be carefully thought out given that with no revenue streams the economics become ever so important. Overall though the outlook remains positive and a consolidation path could still prove to be the natural evolution to overcome this industry’s hurdles.

This article has been written in collaboration with Ahmed Khan, founder of CellAgri?Ahmed Khan is a cellular agriculture consultant and the founder of CellAgri, a news and market insights startup focusing on the future of food with cellular agriculture. Ahmed is the author of the first cellular agriculture eBook, ‘An Introduction to Cellular Agriculture,’ an easy-to-read introduction to the field and has organized a range of virtual events for the ecosystem?– learn more about their activities?HERE.

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