It was only four months ago that plant-based and cell-cultured meat producers seemed giddy about their prospects. Impossible Foods was telling Forbes Magazine about a likely IPO in 2022 (see Digging Deeper, AgBizKC newsletter December 2021). Two years earlier, Barclays Bank was suggesting the market for plant-based and lab-made meat could climb to $140 billion by 2029 as innovators in the space capture 10% of the $1.4 trillion global meat market. But by late last month (February 2022), the fortunes of alternative-meat “meats” were taking a tumble. “After years of spectacular growth, the category has in fact stalled,” said Maple Leaf Foods, Inc., COO, Curtis Frank, on the company’s 2021 Q4 earnings call to financial markets last month.

Dennis McLaughlin, McLaughlin Writers LLC – Sources: Megan Poinski, Food Dive, February 28, 2022; Daily News, Food Industry Network, March 8, 2022; Joe Fassler, The Counter, September 2021; Forbes Magazine, November 2021; International Food Information Council, Food Insights, 2021.

Is Alternative Meat Over Cooked?

A slow fiscal quarter or even a disastrous one does not necessarily portend a bleak outlook for a company or an industry. But in the case of alternative meat makers, whose fortunes were flying high in 2020, when sales grew 45% over 2019, there is cause for concern. Earnings disclosures for Q4 2021 from industry players like Beyond Meat and Maple Leaf Foods showed flat or negative growth, reported Megan Poinski in Food Dive’s February 28 edition. “And no clear way to jumpstart sales,” she added.

In his February earnings call to Wall Street, Beyond Meat president and CEO Ethan Brown said, “The key question is whether this reduced-growth rate is an aberration or a harbinger of things to come.” Brown’s company wasn’t the only plant-based meat company with diminishing growth in Q4 2021. Maple Leaf Foods disclosed a sales decline of 3.7% for its Greenleaf Foods division, which includes plant-based meat brands Lightlife and Field Roast. Maple Leaf CEO Michael McCain said his company is reallocating capital to be consistent with a much smaller growth rate than anticipated.

Brian Holland, managing director and senior research analyst at Cowen, a New York-based diversified financial services firm, told Food Dive that while he found companies' “estimates to be aspirational, the slowdown has been much faster and more abrupt than expected.” The alternative meat segment, Poinski noted, was intended as a sustainable way for consumers to get meat-like protein without eating meat. But faux meat products serve a customer’s choice not a need. And, Holland said, their creators have failed to capture a majority of consumers.

Plant-based meat companies are bogged down. As growth in the category is decelerating, Holland maintains, competition is increasing. Beyond Meat is seeing both its market share and profit constricting. Add the overcast of inflation, supply chain difficulties and the aftermath of a global pandemic, and things are just getting more challenging.

How is Cell-Based Meat Doing?

In May 2019, about half a year before the COVID-19 outbreak, analysts at Barclays Bank determined the combined market for alternative meat (both plant-based and cell-cultured) had the potential to reach $140 billion (yes, billion) by 2029 or thereabouts. The projection assumed faux meat could capture about 10% of the $1.4 trillion global meat industry. “While lab-based meat is still likely several years away from hitting supermarket shelves,” Barclay analysts said at the time, “plant-based protein continues to gain ground versus its animal-based counterpart, and we expect this trend to continue for the foreseeable future.”

Earlier this month, March 8, 2022, CDN Newswire, a worldwide press release distribution platform, published an optimistic study, Cultured Meat Market, from India-based Data Branch Market Research (DBMR). Its bottom line is the global cultured meat market is growing at a Compound Annual Growth Rate (CAGR) of 15% in the forecast period of 2022-2029. At the same time, pioneers of lab-grown meat claim costs for cell-cultured are decreasing drastically – from close to $350,000 a pound to $11.36 a pound according to a recent study (Fall 2021) from CE Delft, a Dutch consulting firm. Cell-cultured meat could be on peoples’ plates in five years, ventured the BBC in a broadcast commentary last fall.

Is there something wrong with this cheery picture? There is: potentially monstrous, unseen, unreported and understated costs. A study released in September 2021 by The Counter, an independent, non-partisan, nonprofit news service investigating forces, trends and influences shaping how and what Americans eat, warned that confidence in the prospects of cell-cultured meats could be overstated. And enthusiasm for its potential to become humanity’s mainstream, predominant source of protein is probably ill-conceived. Entitled Lab-Grown Meat Is Supposed To Be Inevitable; Science Tells A Different Story, the lengthy piece states that “splashy headlines have long overshadowed inconvenient truths about biology and economics. Now, extensive new research suggests the industry may be on a billion dollar crash course with reality.”

At the risk of dismissing the astounding accomplishments and advances in bioscience, biochemistry, nutrition engineering et al that have created and cultivated meat in the laboratory, it should be noted that there seems to have been unrealistic assumptions in estimating the expense and complexity of designing and building bio-manufacturing facilities. So says The Counter. In its September 2021 article, it reported that the Good Food Institute (GFI), a nonprofit representing the alternative protein industry, earlier in 2021 had published a techno-economic analysis (TEA) that projected the future costs of producing a kilogram of cell-cultured meat. Prepared independently for GFI by Dutch research consulting firm CE Delft, and using data provided by 15 private companies, the document showed how addressing a series of technical and economic barriers could lower the production price from over $10,000 per pound at the time to about $2.50 per pound over the next nine years. A challenge-worthy 4,000-fold reduction in costs.

With TEA findings in hand, GFI lobbied for a huge public investment. It argued that forward-thinking governments should increase public funding to research and develop cell-cultured meat “to seize the opportunity and reap the benefits of becoming global leaders” in cultivated meat technology. In late April 2021 The New York Times published a piece – Let’s Launch a Moonshot for Meatless Meat.” Author Ezra Klein, a co-founder of Vox and a NYT columnist wrote that the U.S. government should invest billions to improve and scale both plant-based meat alternatives and lab-cultivated meat.

But Wait

There has been skepticism about the feasibility of this moonshot venture. Among dissenters, one voice has stood out. Paul Wood, who has a PhD in immunology and served as the executive director of global discover for Pfizer Animal Health, told The Counter that the idea of lab-cultivation of animal protein was “old news, no matter how science-fictional it sounded.” Drug companies have used a similar process for decades, and Wood knows it firsthand because he has been involved in it. He also explained the process is extremely technical, resource-intensive and expensive. Dr. Wood also noted he didn’t understand how costly biomanufacturing techniques could ever be used to produce cheap, abundant human food. Here’s what he and skeptics are pointing out:

With a projected price tag of $450 million, one hypothetical cultured meat factory would cost about the same as a traditional slaughterhouse – but produce a lot less meat. It’s a complex, precise, energy-intensive process, but the output of this single bioreactor train would be comparatively tiny. The hypothetical factory would need to have 130 production lines with more than 600 bioreactors all running simultaneously. Nothing on this scale has ever existed. So if the goal is to switch to cultivated meat by 2030, then construction better get started now. If cultured protein is going to be even 10 percent of the world’s meat supply by 2030, it will need 4,000 factories.
All of those facilities would also come with a heart-stopping price tag: A minimum of $1.8 trillion, according to Food Navigator, Europe’s leading outlet for news and analysis for the European food and drink industry.
Even GFI’s own numbers suggest that cell-cultured meat may never be economically viable, even if it’s technically feasible. Current costs are 100 to 10,000 times higher than commodity meat, according to the CE Delft analysts.
Paying off a $450 million facility in an investor-friendly term of four years, GFI’s analysts found, would mean adding $11.25 per kilogram to the cost of cultured meat. But with a repayment term of 30 years, the proposed facility could reduce its capital expenditure cost to about $1.50 per kilo of meat produced. The problem is that traditional investors are unlikely to relax their repayment terms so dramatically. They’re in it for the money. But the GFI report points out that investors concerned with social causes might be more patient. Their idealism might make them aware of potentially huge payouts down the road. And they may prove to be more flexible. If investor altruism proves to be in short supply, GFI makes clear that the remaining option is for “government bodies” and “non-profit funders” to shoulder the burden. This can be read as a concession: Cultured meat may never reach price parity on its own terms. It will likely need public or philanthropic support to be competitive.

There are signs that cultured meat startups have tempered their expectations, notes The Counter’s deputy editor Joe Fassler. “The industry’s early, heady days were flush with optimism. Co-founders spun visions of giant bioreactors effortlessly cranking out meat, and investors had dollar signs in their eyes—even displacing a modest fraction of the trillion-dollar global meat industry could mean making billions. Now, despite GFI’s soaring rhetoric, some companies are quietly—or overtly—planning for a much more modestly disrupted future.” The most animated cheerleaders of cultured meat would have you believe the required innovations have advanced forcefully and are available.

But the truth is this, says Fassler, “A sequence of as-yet-unforeseen breakthroughs will still be necessary. We’ll need to train cells to behave in ways that no cells have behaved before. We’ll need to engineer bioreactors that defy widely accepted principles of chemistry and physics. We’ll need to build an entirely new nutrient supply chain using sustainable agricultural practices, inventing forms of bulk amino acid production that are cheap, precise, and safe. Investors will need to care less about money. Germs will have to more or less behave. It will be work worthy of many Nobel prizes—certainly for science, possibly for peace.”

Editor’s Note: The Counter’s “Lab Meat is Supposed To Be Inevitable. Science Tells A Different Story,” September 2021, is a recommended read. It is an exhaustingly researched, non-partisan, balanced report. It is available at https://thecounter.org.