The Meat Industry vs Alternative Proteins - what gives?
Conventional food productions are now being challenged as there is a rapidly growing global demand for protein while climate change poses mounting threats to food production systems. Cue Alternative Protein, the darling of AgTech innovations, that touts a climate-friendly, healthier and more ethical alternative. To make sense of where the future protein production systems in Australia is heading towards, the team brought the online LinkedIn discussion in house with Paul Wood AO and Georgia Sheil, for a friendly debate discussion at SproutX’s Business of Agriculture Program and our first Rabbit Hole series, with Maxie Juang, Program Manager at SproutX, moderating the panel.
Paul Wood AO and Georgia Sheil (Vow) discussing alternative protein and the meat industry at SproutX’s rabbit hole series
Data doesn’t lie but it doesn’t tell the full picture as well
Maxie: With the negative impacts of traditional livestock farming, there is quite a huge amount of capital injection and high expectations for alternative solutions on nutrition access for the wider population. Could you set the scene for us and share a bit of your thoughts on this?
Data Source: FAO, Image Source: China Dialogue, Graphic: Harry Zhang
Georgia: In the past 50 years meat production has more than tripled so we're looking at roughly 340 million tons of meat produced globally in 2021 and we’re looking to see that demand for animal derived protein to double again by 2050. A lot of analysis has been done to show that meat production is accountable for roughly 14.5pc of global greenhouse gas emissions but it's important to consider that this is compounded by increased demand for animal-based protein and the intensifying pressure on land use. There’s also the halo effects of land use; conversion of what would otherwise be wild assets, forests, wetlands into agricultural lands. That’s why alternatives to animal production to complement what we’re already doing has become a high priority by way of exploring cellular agriculture.
Paul: I support the open marketplace and there’s a lot of alternatives around there. I probably disagree a little bit on some of the figures and we’ve got to be very careful when people make statements about agriculture as if there's one system and they're clearly not. For example, if you look at the figures for growth in meat, yes it’s meat but it's actually not in red meat so the actual figures on red meat consumption have been falling for several decades now in Australia and the US. There is a rise in cheaper meat like chicken in particular, in Japan most of the animal protein is fish whereas it’s mostly pork in China. Global figures really don't help a lot because the food systems are so different across the Globe. One thing we've got to remember, the reason we have food is primarily nutrition, and we need to talk about nutritional units to an environmental footprint and that environmental footprint is not just going to be greenhouse gas; it's going to be land utilization, water utilization, biodiversity etc.
Georgia: Agree with Paul’s take on the complexity of food systems and different nutritional needs.
Complimentary, Not Alternative
Maxie: Looking at the current alternative solutions in the market to meat protein do they make for good substitutes? Or is it a bit of a good intention but an impractical goal when we look at the fine print on infrastructure, pricing, and access etc?
Is meat really that bad? from Kurzgesagt
Georgia: Cellular agriculture isn't necessarily to be seen as something to come in and replace the need for meat Industries; it's to complement and provide an alternative that can produce meat anywhere. For example, Singapore where they're land constrained is really pro-cultured meat and for that market it's a great solution for them to be able to produce and have food security within their country. The promise of it (Alt Proteins) is that it's a solution for certain types of markets at certain times.
Paul: “Complementary” is a better term than “Alternatives” because “Alternatives” suggest we need this one and not that one and what we actually need is complementary. Growth in those markets was big but last year in the U.S it really capped out and it sort of flattened. Part of what fundamentally people got wrong was the fact that taste and texture is something consumers won't give up and taste and texture are really important. There's hundreds of (alt protein) products in supermarkets but generally they haven't met the consumer expectations. The total addressable market is a lot less than people were predicting. Price is another thing; if you look around, most of them (alt protein products) are higher priced than the cheaper cuts of meat.
Maxie: Can’t agree more with you there, my first and last Rebel whooper was a half finished burger that delighted the worms in my worm farm. Sorry V2! (Worth mentioning their recent partnership on the manufacturing of plant protein at commercial volumes through a recent $4.4M plant protein research with CSIRO and GrainCorp. Exciting to see common commodity ingredients turned into a higher valued export for Australia.)
Elephant in the room: The cost of alt protein technology
“Moore’s law has never been applied to biology, it’s an engineering concept”
Paul Wood AO
Cultured meat, graphic source: New Harvest
Maxie: Where is the science right now to support nutrition in alt protein, specifically around access, can we produce at scale today? Can the population this technology is “created for” even afford it?
Paul: To use an expensive technology to compete in a commodity market is a business 101 failure. The state of the art stainless steel, probes, gadgets, the media you use, growth hormones and not your twenty dollar an hour human resource to run these things are expensive. I don't believe it's actually ever going to compete with commodity products. If you can't scale, you're not an alternative nor a complimentary. People like to talk about Moore’s law and that the price of everything gets reduced, and my answer is Moore's law has never been applied to biology; it's an engineering concept. It doesn't apply to biology because biology has feedback; cells won’t grow in water, they won’t grow up at certain densities, they need certain nutrients so they’re fussy. I just don't think scalability is an issue and I think cost is an issue. So you've got to reconstruct your product and in the end, it means these will be high-priced products for niche markets.
Georgia: I can answer the question on how do you actually transition from lab to mass consumption of alternative protein, which is complementary to the meat industry as we’ve discussed. There are two ways: 1) one is the consumer and the brand, how do you actually scale from that aspect, 2) and the other is technologically, how do you scale to physically harvesting and producing products. Vow’s approach is creating something better than the alternative that consumers will choose selfishly. You've always got to be learning really quickly and iterating often in response to consumer insights so the market fit is really key. We know that our unit economics is going to be high and so we need to look for markets where our product makes sense, and where you can leverage exclusivity for a higher price point to enter a market. Agreeing with Paul’s point, the unit economics and the commercial aspect have to add up. You need to ask how you can evolve your customer and brand strategy in line with your unit economics and your technological innovation. From a technological perspective, our goal is to stabilize our process and then to continue to optimize for efficiency over time and continue to scale rapidly, continuing always to look at reducing unit economics so that we can enter new markets.
Opportunities
“...because it (alternative protein) is quite novel and niche at this point in time, a lot of VCs will choose one in a “pick one horse” approach and they’ll support and place their bet in an industry or in a subset of alternative protein, and watch that space evolve.”
Maxie: What funding opportunities are out there for alt protein space?
Georgia: Let's say we start with talking about the government; it's two clusters predominantly that we're seeing, one being the small resource-constrained countries. They are very proactive and very active. Only talking from the cellular agriculture perspective, there is definitely a lot of interest and definitely the availability of capital or resources to manufacture in those countries. On the other hand, there are bigger fish like the US and the EU.
In the US there's lots of capital but it's a really challenging political environment. It's absolutely a market that we would want to enter but we would have to enter it at the right time from a regulatory perspective which ultimately means we need to have a really stable, consistent, reliable process in order to get really good data behind any kind of submission to the FDA.
On the other hand, for EU, you need to demonstrate that you’ve sold elsewhere for at least three years. I guess our strategy at this point is really to focus on those “go with the path of least resistance” and work with the willing and in the markets where the unit economics make sense. From a VC funding perspective, there is a really strong momentum here for cellular agriculture but because it is quite novel and niche at this point in time, a lot of VCs will choose one like “pick one horse” and they’ll support and place their bet in an industry or in a subset of alternative protein, and watch that space evolve. It's about working with venture capital firms that believe in your particular strategy. They will ultimately be investing in your projected revenue and impact so you need to be able to demonstrate that you've got the capability, and the talent pool within your own team to deliver on the strategy.
Source: White Paper, Cellular Agriculture: An Opportunity to Diversify Australia’s Food System, Cellular Agriculture Australia
Maxie: Paul, what are the most promising or exciting opportunities in the alt protein space at the moment?
Paul: Obviously V2 has been a success; they're growing, they're building factories, they’re exporting to seven countries now, and they’ve actually met price parity. There's no reason why Australia shouldn't be a player in this space if we can use science to get the taste and texture right. If we look at aquaculture, we're a huge importer of fish feed; we import a lot of the food for salmon. So can we actually produce our own feed? We already make insect proteins for dogs and cats but in the long run, when you get to scale, we can get into feeding fish.There’s market looking at precision fermentation space but we lack a large-scale facility in Australia, so when we talk about precision fermentation, this is largely making a protein in yeast species. They’re also talking about using sugarcane as the carbon source. Nourish in Canberra is doing fat cells and I quite like the story because a lot of the taste in meat is actually in fat soluble compounds so it’d be interesting to see where they go. About 60 percent of the companies around the globe who are in the precision fermentation space are focusing on dairy because when you think about meat it's a lot more complicated.
Summary
Topics covered ranged from food waste to food export/import opportunities within Australia, and to how alternative protein can be scaled into developing markets.
Near the end of our journey through the protein rabbit hole, the cohort has arrived at the crossover where the meat industry and alternative proteins share the future of protein production with one goal in mind: better access to nutrition. A complementing over replacing alternatives, to address global food security and climate change challenges.
Georgia Sheil is the Business Operate associate at Vow, a cultivated meat company, founded and operated in Sydney, Australia. Vow has recently closed Series A with an industry record of $72.6M ($49.2M USD)
Paul Wood is the chairperson of Viridian Rewable Technology, Australia's first large scale Insect Protein Manufacturing plant, and member of advisory group for CSIRO future protein mission.
Georgia Sheil, Vow
Paul Wood AO, Diary Australia
Friends of SproutX in the alternative complementary protein space
Fern Ho, Leaf Protein Co. demonstrate the versatility of their ingredients by cooking live on stage at Asia-Pacfic Agrifood Innovation Summit
Skye Blackburn, Circle Harvest. is raising $100K seed round through Birchal
Stephanie Stubbe’s Anipal, featured in top 15 ecofriendly brands for dog lovers 2022
