The Exchanges

Q Very excited to have you and to talk about alternative protein with you. Okay, so let's start high level. Can you kind of orient us on the state of alternative protein today and how that's changed over the past, I don't know, five, 10 years?

A Yeah, so we've definitely seen an inflection point, and I, I feel like five, six years ago is when that really started to take off. Um, that's when I think, you know, probably sort of average consumer might have noticed the rollout of products like the Beyond Meat Burger and Impossible Burger that really sort of marked, um, the, the emergence of what we call sort of next-gen alternative protein or plant-based meat products. So not the sort of old school, uh, veggie dogs or, or, you know, black bean burgers of yore where, where, you know, they weren't fooling anyone into thinking they were meat, but really companies that are trying to truly mimic the full sensory experience of meat products, and, and the same thing is happening in the dairy sector. So this is a field that's still relatively small when you look at, um, share of market relative to conventional meat, um, Right now in the U.S., which is where we have the best, uh, the best market share data, plant-based meats are at somewhere around 1.5% of the total meat market, but plant-based milks are closer to 16 or so percent of the total fluid milk market. Slightly different numbers, of course, for things like cheese and, and, uh, cream cheese and things like that.

AI assessment note: “we've definitely seen an inflection point, and I, I feel like five, six years ago”

Q and what their strengths and weaknesses are. But let's first maybe just talk a little bit about what's driving this. Obviously there's some combination of factors that are creating all this demand right now, some portion of just consumer demand, there's climate change concerns, there's a push from the industry. So There's food security issues most recently. Like, what's your sense of the factors that are driving this inflection point?

A Yeah, so I think there's a number of factors. So in terms of the motivations, I think the strongest ones on sort of a global good level are certainly the climate and environmental benefits. Um, we're looking at basically 20% of contribution to global greenhouse gases coming from the livestock sector. Um, and that's, that's, of course, something that's worth Worth paying attention to. Um, there's also really, uh, substantial public health benefits associated with moving away from animal agriculture. Um, a recent UN environment report titled The Next Pandemic, or Preventing the Next Pandemic, identified, uh, intensive livestock agriculture and growing demand for animal protein as two of the seven biggest drivers for Risks of zoonotic diseases, um, which of course are, are viruses or, or other infections that emerge in animals and then make their way into human populations, um, which I think of course is more top of mind for all of us now than ever. Um, and then I think there's a lot to be said, uh, from a strict kind of market efficiency and, and resiliency, um, and food security perspective. We saw a lot of the The slaughterhouse shutdowns during COVID that really demonstrated how vulnerable these traditional animal agriculture supply chains are to those types of disruptions. And so there's, there's a huge economic advantage and market advantage to folks moving towards alternati…

AI assessment note: “I think there's a number of factors. So in terms of the motivations”

Q Right, so I guess you're saying there's more work to be done and much more improvement to be had, but I guess again my question is, why not just do that? Is the, is the idea that there is some limitation we're going to face in scaling up and improving plant-based Proteins such that we need to spend more time on things like fermentation and, and cultivated meat.

A Yeah, so it's, it's kind of a mix of, we don't quite know where the ceiling is. We don't know, you know, to what extent across every product category. Could plant-based products truly fool even the most discriminating consumer? Um, you know, cultivated meat, the, the advantage there is that it is essentially identical to animal muscle tissue, so those cells are producing The exact same suite of proteins, the exact same suite of lipids. Um, you can't get any closer to the real thing. It, it is the real thing. Um, and so we don't quite know what that ceiling looks like for plant-based. Um, in the fermentation realm, um, a lot of the advantages are really from this sort of enabling capacity, right? So producing some of these, these so-called superstar ingredients, um, like that, that heme protein, or there's other companies, Making specific dairy proteins, for example, casein proteins or whey proteins that just have really innate, um, high value functionality that's hard to find in the plant kingdom. Not to say it's not out there, but we haven't necessarily found proteins yet that perform quite as well in some of those applications. Um, so these are kind of hacks to get us closer to true sensory mimicry or Um, even surpassing the sensory quality of, of conventional meat products. Um, and then there's sort of the consumer element as well. You know, if you poll consumers and say, ar…

AI assessment note: “it's kind of a mix of, we don't quite know where the ceiling is.”

Q in the steady march toward alternative proteins. Maybe most notably, uh, places like Burger King, McDonald's starting to carry alternative proteins. That feels like it's all in the past couple of years, really, right? So it started to pick up maybe five years ago, but, but really, we seem to be hitting this kind of inflection point in the curve of Just in the last couple of years, it seems.

A Yes. And another really big trend that's been happening, again, I'd say probably last three-ish years, is the big major meat companies jumping into this space. And, and not sort of with curiosity or trepidation, but, um, launching their own plant-based meat brands under, under their flagship brands or creating new product lines, um, investing in or wholesale acquiring some of these plant-based meat companies. Making investments into the cultivated meat space as well, including just last year, a really huge hundred million dollar investment from, uh, JBS, the world's largest meat company, into a cultivated meat company from Spain to acquire it. And launch an innovation facility. So I know we'll get into sort of, you know, everything that's under the umbrella of alternative proteins, not just plant-based, but cultivated and fermentation. Um, but we're really starting to see that traction in terms of who's paying attention to this field. It's not just little startups and, and folks kind of tinkering anymore. There's, there's really big player involvement now.

AI assessment note: “Yes. And another really big trend that's been happening, again, I'd say probably last three-ish years”

Q the best known names in this category are Impossible of the Impossible Burger and Beyond Meat. Those are clearly the first two that hit the public consciousness, I think, and are really starting to gain mainstream adoption. So what is their technique? Like, what is their technology? Impossible Burger and Beyond Meat and all these sort of new wave of plant-based meats, what are they doing to produce their product?

A Yeah, I mean, a lot of it is just Kind of putting in the R&D dollars to, to figure out what are, what is that whole flavor palette in a meat product, and how are we recapitulating that sort of molecule by molecule from plant-based ingredients. You know, if you think about what meat is, it's really just a combination of, you know, proteins and amino acids, it's, it's got fats in there, it's got various, you know, biomolecules that contribute to flavor and aroma. And none of those are, are necessarily, um, kind of unique from a functional perspective or a sensory perspective to animal-derived tissues. We can find pretty good proxies for all of those types of ingredients in the plant kingdom. So it's really just, um, you know, going through, through the sort of optimization efforts, uh, to, to rebuild that sensory experience, kind of component by component or ingredient by ingredient, um, Into these newer products. Now, there are certainly, um, some innovations that kind of enable that. So the, the Impossible Burger, for instance, their sort of flagship ingredient is this heme protein that they're producing through fermentation. So that's, that's a nice kind of example of, uh, this, these hybrid products that are leveraging multiple of these alternative protein production platforms. Um, but a lot, a lot of the The sort of newer innovations that are, are kind of driving interest in…

AI assessment note: “their sort of flagship ingredient is this heme protein that they're producing through fermentation.”

Q know I'm simplifying it, but essentially that is true. Is this type particularly high-tech biomanufacturing? Presumably precision fermentation is more high-tech than It's scale biomass fermentation. I know there's cases where you, you have bigger issues with sterility and things like that, but like how far, how hard is that manufacturing channel? And will this otherwise just get solved by, as you said, traditional infrastructure investors just scaling up capacity?

A Yeah, I think one of the big opportunities for the alternative protein space is to make it as low tech as possible. Uh, and there's a few examples of, of companies doing that already. Um, so one example is The company Nature's Find, um, that I mentioned earlier, they're working with a really cool organism that actually emerged from NASA-funded research, uh, in looking at extremophiles, uh, in the hot springs of, of Yellowstone National Park. So the organism they're working with grows at incredibly high temperatures, which is, is not good from an energy perspective, but they don't require high temperatures. They'll grow at room temperature. But importantly, they tolerate, uh, super acidic environments. And so you can grow those organisms essentially out in the open, um, almost on cafeteria trays if you look at, at their production, uh, environment, um, and have no closed containment because you don't get contamination. These are kind of the only organisms that are just sort of out and about in the air. That will grow in that environment. So there's, um, examples like that of how we can make what used to be pretty, um, infrastructure and also kind of operationally intensive facilities, because you're, you're sort of fighting that uphill battle against contamination, and knock those back quite a few notches, uh, by working with organisms that lend themselves much better to sort of…

AI assessment note: “one of the big opportunities for the alternative protein space is to make it as low tech as possible.”

Q Okay, so talk me through what you think is going to happen over the next five or 10 years. Where are we going to see the most activity here? What are the big milestones that this industry is looking toward, and what should we be watching out for from a tech perspective?

A Yeah, so I think, um, I think we're starting to see a lot of traction, finally, after several years of plugging away at this, um, in getting more enthusiasm and more buy-in, um, on the public funding side of things, uh, to get research dollars flowing into this space in a way that's generating sort of an open access knowledge foundation, rather than all of the R&D Happening within the private sector, and frankly, a lot of duplicated efforts across different companies in this space. Um, so we're starting to see, you know, national governments, uh, start to prioritize alternative proteins. Um, in, in China's recent five-year strategy, they called out cultivated meat explicitly as, uh, as something that, that is a priority area. Um, just late last year, we, we saw the announcement of, Uh, the USDA investing into the very first National Institute for Cellular Agriculture. Um, so these types of, sort of, signaling events, um, is part of their power, but also just the, the raw research dollars flowing into the space is really starting to shine a spotlight from a talent perspective, uh, Um, onto the, the R&D challenges in this space. So if you could take, you know, even one percent of the bright minds out there who are focused on biomedical or biopharma R&D challenges and get them looking at the challenges in this space, that will have really, really massive consequences for the rate …

AI assessment note: “in China's recent five-year strategy, they called out cultivated meat explicitly”

Q Okay, so let's move on to the newest, fanciest, I guess in my perception, Uh, strain of alternative protein, which is cultivated meat or cultivated dairy. People probably heard about this one. I think the layman's term that is often used is lab grown meat. Uh, but what's, what's actually happening when we are cultivating actual meat or, or dairy in a lab?

A Yeah, lab-grown meat is sort of the, the term that causes folks in this industry to cringe the most. Um, but yeah, cultured meat, cell-based meats, um, are definitely terms that, that certain players are using. Um, cultivated is the one that, that's recently sort of emerging, um, as a term that, that both makes this process Familiar and approachable to consumers, but also kind of describes what's going on, which is really the process of cell cultivation or cell culture. So this is essentially growing all of the various cell types that comprise actual meat products, so predominantly muscle cells, fat cells, also, um, some, some cells that contribute to the connective tissue, so cells like fibroblasts may be in certain types of products, uh, and essentially assembling these cells into Into a spatial arrangement and getting that muscle fiber alignment such that you're creating a genuine meat product with, without the animal involved. And this is building off of decades of work in the biomedical engineering and tissue engineering realms, mostly for the purposes of things like organ regeneration, um, and testing of biopharmaceuticals. Um, so this is, is kind of building on all of those advances and now saying, Okay, what does it take to, to get to cost parity? Is that even possible? Um, and what does it look like to do this on the scale of millions of metric tons, rather than somewh…

AI assessment note: “this is essentially growing all of the various cell types that comprise actual meat products”

Q but it's not uniform. So I guess the three primary pathways, currently at least, for alternative protein, just listing them, there's plant-based, there's microbial fermentation, and then there's cultivated meat or cultivated dairy. So let's take them in that order. I'm starting with plant-based, which, as you've talked about, is sort of the most mature and biggest currently. Uh, I'm curious, actually, what portion of that 1.5% is currently plant-based?

A That's virtually all plant-based. So we'll talk about kind of technological maturity for these other categories, um, as we, we get through them, but you can basically count cultivated meat out in terms of market penetration right now. It is being sold in one market. Um, but almost all of, of that current product availability is on the plant-based side of things. There are a couple of products in, in fermentation, and we can chat about those, but, um, yeah, plant-based certainly has had the longest history, um, and here just to kind of define it, um, when, when we're using that term plant-based meat, we're really, again, talking about the types of products that are, are meant to serve as these sort of drop-in replacements, um, For actual animal products and, and are intending to serve that consumer sensory experience. So not things like tofu and tempeh, which, you know, are consumed by, by a certain segment of the population, um, but, but aren't really kind of making inroads with, uh, with true omnivores or folks who would consider themselves flexitarians, um, or reducitarians. So folks who like and want the taste of meat, but are looking for More sustainable or healthier choices as a couple of the main drivers here.

AI assessment note: “That's virtually all plant-based.”

Q if we're trying to scale this fermentation approach up to the size of the global food market, we need massive amounts of fermentation capacity, bioreactors that are in the tens of thousands of liters, and we need, I don't know, thousands of them, millions of them. But it seems like, at least at the moment, that's a bottleneck on growth. Does that ring true to you? And if so, why?

A Absolutely. Yeah, and I think the, the industry is kind of waking up to this as a pretty severe bottleneck. There, there have been sort of a flurry of companies that are in, um, I would say R&D into sort of early pilot scale phase, uh, and then relatively few partners or co-manufacturing facilities to go to once these companies are ready to go to scale with their ingredients. We have seen, you know, new facilities being launched not quickly enough, but Um, I think by our count, there were 11 new facilities that came online, uh, in, in twenty-twenty-one. Um, a majority of those actually were for biomass fermentation, um, so it's exciting to see additional scale, uh, happening on that front. But this will definitely be a crunch for the industry, um, and, and one where, you know, there may be some R&D approaches to sort of mitigate this infrastructure shortage in the near term. For example, um, If you can, you know, double your cell density of how closely packed these cells will, will tolerate being in a bioreactor, then that's, that's essentially equivalent to doubling your infrastructure. Um, so there's a couple of hacks, kind of more on the biology side of things that can, Help make up for this shortage in the near term, but I think this really speaks to a need for the alternative protein industry to be reaching out to deep-pocketed, more kind of infrastructure institutional in…

AI assessment note: “Absolutely. Yeah, and I think the, the industry is kind of waking up to this”

Q mimics it closely enough Uh, and then to your point, maybe surpasses it using plant-based meat or microbial fermentation or some combination of those two. Like what's the overall thesis behind the cell-based meat industry that is quickly emerging? Is it that really the only way this is going to scale to a global impact is if we just sell the same exact thing, albeit produced in a different manner?

A So I think there's enough evidence that a significant fraction of consumers do want the, again, quote unquote, real deal, uh, that it's worth pursuing. It's worth having in this portfolio. Um, if you talk to folks who are looking kind of long-term future, I feel like I meet as many people who feel, um, one, one inclination of like, what does 2100 look like in terms of, of our meat source, um, Um, versus others who feel the exact opposite. So some people think, you know, plant-based is really kind of a bridge to get us to a totally cultivated meat future because there's just some sort of evolutionary X factor that really drives us to crave meat, uh, as, as humans. Uh, and then you'll hear other folks who think that cultivated meat is simply a bridge to get us to a plant-based future. We all grew up eating conventional meat, uh, Um, that flavor profile is, is kind of imbued in our culture and, and in sort of our ingrained taste preferences, uh, but that eventually as we get closer and closer facsimiles to meat from the plant-based world, or even just kind of move past this concept of mimicry altogether, uh, That cultivated meat won't be necessary. Um, I tend to, to think that all, that both of these approaches will be, um, will continue to be attractive to different groups of consumers for different reasons going forward. Um, and particularly for, you know, some of the more nuanc…

AI assessment note: “a significant fraction of consumers do want the, again, quote unquote, real deal”

Q They're pretty good already. They seem to be getting better. There's all this work on texturizing them more like traditional meat. Presumably that will continue to improve. What's the ceiling on these plant-based approaches? What, in other words, you know, we're about to talk about some more new approaches in microbial fermentation and cultivated meat. Um, why even go down those roads? Why not just stick with improvement on plant-based?

A Yeah, so plant-based products, actually there's a lot of, of low-hanging fruit still and, and, um, unexploited territory from an R&D perspective. Um, one of the things you'll find pretty quickly if you look across ingredient labels for these products is, Almost all of them are working with a pretty limited ingredient stack in terms of where those primary proteins are coming from. So almost all of them are either soy protein-based or wheat protein-based, or a fair number in this sort of latest generation of products are pea protein-based, but that's just a small number of all plant proteins out there. Um, and those are the proteins that tend to be, you know, available as, As concentrates or isolates, which tend to perform pretty well in these sort of structuring processes. Um, but they're not necessarily the best ones for this application. They're just out there available at commodity scale. And so there's a fair bit of work to be done, um, on, on sort of that crop selection and crop optimization side of things to just, um, identify either cultivars of these major crops or Or newer crops or more, more niche crops, like, uh, members of the pulse and legume family that might provide better innate functionality, by which I mean sort of the food science properties, like how well do these proteins bind water and fat so that you can have a nice juicy product rather than something that…

AI assessment note: “plant-based products, actually there's a lot of, of low-hanging fruit still”