meat is always the main theme on people’s dining table. According to rough statistics, about 30% of the calories consumed by the global population comes from meat products, including beef, chicken and pork. But with the rapid growth of food demand for meat, the meat industry has developed into a complex global business involving multiple links such as farms, feedlots and meat middlemen.
As of the beginning of 2019, the total market value of the six largest meat companies in the world reached US$60 billion, with the largest of which, Hormel, has reached US$23 billion.
The entire meat industry is now undergoing large-scale integration. Although there are many high-profile acquisitions, the industrial meat industry has more and more challenges to deal with in terms of business, ethics and environmental protection. Using technology to produce artificial meat or vegetarian meat in the laboratory came into being.
In the future, the value chain of meat products will be greatly simplified as the "artificial meat" laboratory replaces farms, feedlots and slaughterhouses. The former steps of farming and slaughtering will be transformed into two steps: live fiber sampling and cell culture.
This report is based on CB Insights data, delves into the main development trends of the "meat-free food industry" and summarizes content involving startups, major investors, as well as future trends and challenges.
Environmentally friendly but high cost
At present, startups are trying to subvert the entire meat production value chain by developing high-tech protein products, and have even posed a threat to the status of well-known old meat companies such as Tyson. Startups that replace meat not only produce preprocessed and frozen meat, but also produce vegetarian meat snacks, such as "Beyond the Shoreline" kelp jerky.
Although in the production process of artificial meat in the laboratory, water use, land occupation and greenhouse gas emissions have brought huge benefits to the environment compared to traditional feeding and other links; however, the cost per pound of meatless products is still much higher than that of traditional meat products. The figure below is a comparison of specific data:
Figure | Detailed comparison data (Source: CB Insights)
Even from the perspective of production cost, "meat-free food" is still a bit expensive; but its advantages still attract investors' attention, thus promoting the birth of "meat-free food" startups in the market.
At present, the meat products cultivated in laboratories are mainly divided into two categories: one is "plant protein meat " (commonly known as vegetarian meat), that is, using plants to make simulated meat; the other is "clean meat" (commonly known as test tube meat), which cultivates real meat through the self-propagation of cells.
The current market status of plant protein meat
Application The most common use of plant protein meat is the vegetarian burger that has become increasingly popular recently. In order to provide vegetarians with more choices and also use the "flavor of meat" to attract meat eaters to experience "environmental protein", startups that produce vegetarian burgers are vigorously developing vegetarian foods and meat foods.
"To this day, people are still using primitive technology to produce meat - feeding animals with plants and then making animals into meat. But for consumers, the value of meat has nothing to do with whether it comes from the animal itself. So, we think there must be a better way to produce meat," said Pat Brown, CEO of Impossible Foods.
Impossible Foods is one of the leading American "artificial meat" manufacturers. The main ingredient of artificial meat in its main product is soy hemoglobin. At the same time, it uses a heme-like substance in animal protein to add a "meat flavor" to its vegetarian products. At the same time, the texture is similar to ordinary beef and can release a blood-like color.
Burger King’s first meatless burger, “Impossible Whopper”, uses vegetarian meat made by Impossible Foods, which claims that “the burger is almost no different from real meat.”
Picture | Burger King’s Incredible Castle (Source: Impossible Foods)
From the perspective of market strategy, Impossible Foods has not directly promoted its meat-free products to consumers, but has targeted the B-end market - catering stores.In 2017, the “Impossible” brand artificial meat pies were available in just 40 restaurants in the United States. In just one year, the number of restaurants selling the company's artificial meat food has grown to more than 3,000. In early 2019, Impossible Foods reached its largest catering project collaboration to date—the above mentioned launch of the “Impossible” Castle with Burger King.
In addition to its main artificial beef products, Impossible Foods is also developing other artificial meat products, including meatless sausages launched in cooperation with major American chains of pizza restaurants, and plant-made pork products planned to be launched in China. Just at the China Import and Export Expo held in Shanghai in November 2019, the company brought the "Impossible" brand lion head and shabby to take the opportunity to showcase and discuss business to restaurants in China.
Figure | Beyond Meat’s simulated meat products (Source: Beyond Meat)
Beyond Meat is another leading company in this field, which mainly produces vegetarian burgers and simulated meat products, such as plant-made chicken and sausages. Beyond Meat once received a total of US$164 million in public equity financing and was listed on the U.S. stock market in May 2019, becoming the first "artificial meat" stock.
After the IPO, Beyond Meat's stock price soared, with its market value growing by more than 8 times in a few months; but then fell below $5 billion.
Beyond Meat’s sales are mainly direct to consumers through grocery stores and are currently mainly engaged with Dunkin’ Donuts retailers. It launched a breakfast product for plant-made sausage sandwiches in 2019. In addition to the U.S. market, Beyond Meat has stated that it plans to bring its vegetarian meat products to the Chinese market by the end of 2020.
Beyond Meat Executive Chairman Seth Goldman said to Reuters that they will launch pea proteogenic meat in China for the Chinese market, so that Chinese consumers can eat this pea vegetarian meat bun or dumpling.
At present, China's simulated meat industry is still in its infancy. However, according to Tmall's sales statistics on the day of the "Black Friday" promotion, the artificial meat product "Omnipork New Pork" under Green Commons sold 4,000 pieces within two days of its launch; while another artificial broiler nuggets, all 1,500 bags of inventory were stolen on the first day of its launch. Consumer group portraits show that buyers born in the 1980s and 1990s account for nearly 80%. The market situation of
"clean meat"
For another "clean meat", although it started a little later than the launch of plant protein meat, it is not bad for the market to gain popularity.
San Francisco-based Memphis Meats has grown meat using self-propagating cells, so that the animal's meat can be obtained without breeding, raising and slaughtering a large number of animals. The company first launched a synthetic meatball in 2016, and then successfully launched the world’s first cell-grown chicken and duck meat in 2017.
Memphis Meats is designed to reduce the cost of lab-grown meats in order to compete with commercial meats. While the initial incubation cost was $18,000, in January 2018, Memphis Meats had reduced the cost to $2,400 per pound. The company claims that “the cost of land and water needed to cultivate this artificial meat is only 1% of that of meat producers.”
In addition, Memphis Meats announced in March 2018 that it had planned to bring clean chicken and duck to market by 2021. Also in 2018, the company raised $17 million in its Series A financing, led by DFJ; investors including Bill Gates and Richard Branson (Richard Branson) participated.
Figure | Preparation process (Source: Mosa Meat)
Memphis Meats is not the first company to develop laboratories to cultivate meat products. In 2013, Dr. Mark Post, a Dutch researcher at Dutch , developed the world's first laboratory-grown burger. This study was originally funded by Sergey Brin, co-founder of Google . Through this study, Mosa Meat, a company that also wants to bring test tube meat to the market.
Vegetarian meat products and laboratory-grown "clean meat" have attracted many famous investors, including some top venture capital firms (Khosla Ventures, Kleiner Perkins Caufield Byers), meat companies (Tyson Foods, Cargill), etc.
The following figure shows the investors of three meat alternative companies, Beyond Meat, Impossible Foods and Memphis Meats. As can be seen from the picture, Bill Gates has invested in all three companies; many large institutions have also entered the market, expressing their optimism about the potential of the meat substitute industry.
Figure | Meat substitute company investors 2013-2019 (Source: CB Insights)
There are also companies in the meat industry related fields involved in this meatless revolution, but the future supervision of laboratory-cultivated meat still needs to be explored, and its regulatory ownership is not yet clear.
The US Department of Agriculture (USDA) is mainly responsible for the regulation of meat production and advocates for agricultural development, but the U.S. Food and Drug Administration (FDA) and the U.S. Department of Agriculture currently have the right to regulate this meat alternative because of potential conflicts of interest caused by laboratory-grown meat.
While many startups are planning for "clean meat", some are also promoting "open source projects" for clean meat.
Yuki Hanyu, the founder of Tokyo Integriculture company and non-profit project Shojin meat, is taking a different approach and trying to adapt to a meatless future through "open source technology". Yuki provides Japanese high school students with specially designed heating boxes that allow them to cultivate animal cells at home to obtain meat-like products.
Although this concept may seem out of reach, the Shojin meat project is committed to creating a “bottom-up” promotion method that allows people to experience how to cultivate artificial meat and ultimately incorporate it into their diet.
Figure | Integriculture Company official website (Source: Integriculture)
Meal replacement food and dairy products substitutes
Not only meat substitutes are trying to subvert the traditional food market, but the development momentum of meal replacement food is also strong.
Among startups in this field, Soylent (food technology companies such as meal replacements such as energy bars, powders, etc.) ranked first in public equity financing, earning $71 million. Its investors include institutions such as Andreessen Horowitz, Lerer Hippeau Ventures and Google Ventures.
Soylent The beverage market is expanding steadily. It mainly adopts the D2C model, but it is also sold in some stores in the United States. The company's products entered the UK market at the end of 2018. However, there may be some problems with catering alternatives, such as the Canadian regulator has issued a ban on Soylent, which said “the drink does not meet its specific requirements for meal replacement foods.”
San Francisco-based startup Ample Foods raised $2 million in its seed round in 2018 and completed an angel round in mid-2019, eventually raising nearly $3 million in public equity financing. Ample has targeted the vegetarian industry and has begun offering some meal replacements, including vegan products and products targeting ketogenic diets.
As consumers continue to pay more attention to plant-based foods and protein alternatives, dairy alternatives have gradually gained the attention of large investors and consumers.
For example, pea protein milk maker Ripple Foods completed a $65 million Series C funding round in early 2018, led by Euclidean Capital, with a total fundraising of $120 million. Another maker of “vegetarian milk”, Perfect Day, is trying to produce artificial milk using genetic sequencing and 3D printing. The company completed its Series B round in February 2019, raising nearly $35 million from Horizons Ventures, Temasek Holdings and ADM companies, bringing its total fundraising to $61.5 million.
In addition, in March 2019, NotCo, a vegetarian mayonnaise producer powered by artificial intelligence, raised $30 million from investors including Amazon CEO Jeff Bezos (Jeff Bezos).In September 2019, plant cheese startup KiteHill raised $15 million from General Mills, CAVU Venture Partners and New Crop Capital, bringing its total fundraising to $80 million.
Figure | Major manufacturers (Source: CB Insights)
Eyes have returned to China. Affected by the above changes, China's meat alternative food industry is gradually emerging. After Beyond Meat went public, China's A-share concept stock Shuangta Foods (002481) performed well and in June 2019 it claimed that the protein raw materials it produced were being supplied to Beyond Meat through its distributors. It also issued an announcement in September stating that it had signed a "Strategic Cooperation Framework Agreement" with Zhenru (Beijing) Food Technology Co., Ltd., and developed some products such as pea protein vegetarian mooncakes and pea protein vegetarian meat fillings.
According to Euromonitor, China's meat-free food market (including meat alternatives) has grown by 33.5% since 2014, with a market size of US$9.7 billion last year. It is estimated that China's meatless food market will reach around US$11.9 billion in 2023.
Insect protein may become the mainstream
According to data released by the United Nations Food and Agriculture Organization , about 2 billion people and 80% of countries around the world consume more than 1,000 insects. Foods made with insects have gradually become a nutritious and sustainable meat alternative, and we can also see consumers' attitudes towards eating foods made with insects are gradually changing.
Food manufacturers are making flour with insects such as tripeworms and crickets and , which can be raised on a large scale. The total amount of greenhouse gas emissions from raising crickets is only 1/100 of that of beef cattle, and the protein content of crickets is higher than that of beef and chicken. In addition, crickets require less feed proportionally than livestock, so they are more productive.
There are also companies using insects and worms to make snacks, protein bars, and even pasta. In order to make insects taste more delicious, making insects into alternative ingredients has become a new development trend.
For example, Oklahoma startup All Things Bugs was founded in 2011 and is developing a powder that is finely ground from crickets that can be used as a basic ingredient in a recipe. As a food supplier of cricket products, Exo, a downstream producer of All Things Bugs, has used its "cricket powder" raw materials to produce protein bars.
Exo, a company that received $5 million in financing, was acquired by Aspire Food Group as a sub-brand in March 2018. Aspire Food Group is a company that develops edible insect products, operating in Ghana and the United States.
In addition, there is a San Francisco-based Bitty Foods company that has raised $1.2 million in public funding. It has a range of snack foods made from insect powder, one of which is made from crickets specially provided by American farms that specialize in edible insects.
These low-cost, delicious and delicious insect products have attracted the attention and investment of major foundations and companies. Insect protein foods may replace meat snacks in the future and become a healthier and more sustainable food.
Figure | Insect Protein Brand (Source: CB Insights)
expands tentacles to seafood market
In addition to looking at animal meat on land, some companies have adopted similar methods to produce "sustainable" seafood alternatives.
Nearly 90% of fish are overfished due to the growing global demand for seafood. Related startups are trying to find a way to meet consumer needs without completely exhausting the global supply of fish.
Pennsylvania-based startup Good Catch Foods raised $8.7 million in a Series A round in April 2018 to develop vegetarian tuna, crab cakes and fish cakes made from beans such as lentils, chickpeas, broad beans, etc. The company raised another $10 million in 2019, bringing its total public fundraising to nearly $19 million. It plans to use funds to expand production and launch its products at Whole Foods, Fresh Direct and Thrive Market stores.
Some startups are also developing seafood alternatives. Finless Foods, which has raised $7 million, has grown fish using cell agriculture technology; New Wave Foods, invested by Tyson Ventures, is developing pea protein and algae-based shrimp alternatives; Wild Type, a lab-grown salmon startup, received $12.5 million in Series A funding in October, bringing its total fundraising to $16 million.
China, Green Common, a Hong Kong company, currently produces vegan fish fillets, crab meat pieces, etc., and has been sold on Tmall platform.
Although seafood alternative products are still in the early stage of research and development, seafood products without fish have brought more possibilities to the "meat-free future" and have also greatly simplified the production value chain of seafood food.
Figure | Financing of artificial seafood industry (Source: CB Insights)
The above are the developments of various branches of the "meat-free" industry. The following will introduce the investment direction, necessity, future development and challenges of meat substitutes from the perspective of capital.
Major companies are planning "new protein" source
In addition to emerging startups, large companies in the meat industry are also investing in innovative meat technologies through outsourcing R&D. Food trading giant Cargill participated in Memphis Meats’ Series A funding round, while Nestlé, which owns a large number of frozen meat brands, acquired vegan food maker Sweet Earth in September 2017.
In addition, funds under major companies are paying more and more attention to the production and innovation of meat alternatives, such as Tyson New Capital, an investment company affiliated to Tyson Ventures. It made its first investment in Beyond Meat as early as October 2016. In 2017, Beyond Meat received $55 million in its Series G financing, and Tyson New Capital is one of the participating institutions.
Since then, it has invested in other companies in the same field, including Memphis Meats, Israel-based Future Meat Technology, Myco Technology, and New Wave Foods. With the launch of the "Internet of Food" fund, Tyson is seeking to transform his target from meat producers to broader protein manufacturers. This situation also reflects to a certain extent the expectations of meat producers for the possibility of a "meat-free future".
Figure | Tyson Capital’s key investment direction (Source: CB Insights)
In addition to food companies, venture capital companies and accelerators are also in the field of high-tech food research and development.
Biotech Accelerator IndieBio invests in many manufacturers of artificial meat products, including Memphis Meats, New Wave Foods and Finless Foods. It also invests in startups that focus on producing dairy, as well as gelatin alternatives.
Figure | IndieBio’s artificial meat investment from 2015 to 2019 (Source: CB Insights) Why did
turn to artificial meat?
Non-profit plan Meatless Monday and US food delivery platform GrubHub jointly prove that the popularity of meat alternatives is growing. According to analysis, people's demand for artificial meat dishes is growing every day, not just on weekdays.
Figure | Vegetarian demand rises (Source: CB Insights)
From a macro perspective, there are the following reasons why humans need to turn to a "meatless future".
Urbanization, population growth and the expansion of global middle class groups have led to an increase in meat demand: the global population is expected to reach 9.6 billion in 2050, while demand for food production will increase by 61% accordingly. With the continuous growth of human demand for meat, how to solve the problem of food and clothing for the new population in the future will be a major challenge.
Artificial meat companies are working hard to fill this market gap. According to UN data, the global urban population accounted for about 55% in 2016, and this proportion is expected to grow to 60% in 2030. Especially in China, which has the largest meat consumption in the world, protein consumption is expected to grow by about 4% each year as the proletariat population expands.
Developing protein alternatives can reduce the negative environmental impact of meat production: reducing livestock can release global arable land, reduce soil erosion, and alleviate global water supply pressure. As the global obesity rate grows and consumers' growing interest in "environmentally friendly" meat alternatives have driven demand for non-meat protein.
Meat alternatives can reduce pollution in the production process: Cultivating meat in a sterile laboratory environment can reduce pollution in the meat production process and also avoid antibiotics. This helps reduce global health problems that may arise from the current food production chain.
With the development of agricultural technology and synthetic biology, high-tech artificial meat products have become possible: advances in cellular agriculture and molecular engineering are constantly promoting the development of high-tech meat alternatives, which will allow them to surpass traditional animal meat in flavor and texture.
Artificial meat may solve the moral problems of meat consumption: meat production activities have always been controversial, and the meat industry has been plagued by moral issues. The development of high-tech meat alternatives may calm these disputes.
The world is launching a "meat-free" revolution
Due to the above advantages, meat substitutes are currently in a hot stage around the world. The following figure shows companies that have changed the rules of the game in artificial meat in all directions:
Figure | Startups that have changed the rules of the game in artificial meat (Source: CB Insights)
At present, the transactions of meat substitutes are mainly concentrated in the United States, where the catering industry is highly developed. But the artificial meat market in Europe and Asia is also developing rapidly.
In September 2017, China announced a $300 million investment in three Israeli companies: SuperMeat, Future Meat Technologies and Meat the Future import labs to cultivate meat; this is one of China's plans to reduce domestic meat consumption by 50%.
Figure | China's meat import value (Source: International Trade Center)
Also, we must consider the power of supervision, and regulators will gradually play a greater role in the growing "meat-free industry". At present, relevant U.S. regulators are exploring whether cell agriculture can be used as a food source in the future. Among the states in the United States, especially meat-producing areas, it is also taking measures to deal with the economic forces behind the artificial meat trend.
As of now, about half of the states in the United States are passing legislation prohibiting the label of vegetarian meat products as "meat" or "beef"; several states with high meat production have passed relevant bills. But the current regulation of artificial meat is still in its early stages. In this animal-free ecosystem, regulatory responsibilities may fall on multiple agencies: because food biotechnology involves multiple regulatory systems.
In the future, it is also possible to set up a special regulatory agency to deal with the special challenges of artificial meat supervision.
The challenge to overcome to achieve a true "meat-free future"
The market for vegetarian meat products and other protein sources is expanding, and compared with the more easily accepted former, laboratory-grown meat faces some obstacles in its promotion.
"Fake meat" sounds offensive. Many consumers have psychological barriers when eating lab-grown meat foods, and they may prefer the familiar taste of traditional meat products. Although the Shojin meat project mentioned above and other similar groups are working to adapt the new generation of consumers to lab-grown meat, it is also very difficult to achieve this socialization globally.
In addition, the price of high-tech meat is relatively high, and the cost issue is a huge obstacle to the market. One of the reasons for its expensiveness is that most of these products use fetal bovine serum (FBS). Fetal bovine serum is extracted from the bovine fetus and is a core component of laboratory-grown meat and is very expensive.
However, startups are also constantly looking for ways to not use fetal bovine serum to reduce costs. There are reports that there has been some progress in this direction: Memphis Meats is verifying methods for not using fetal bovine serum to produce artificial meat.
is closely related to cost, which is the problem of large-scale production of "clean meat". Although many artificial meat startups have said that their products will completely change the meat consumption structure, whether "clean meat" can achieve large-scale production will determine whether it will meet the meat needs of the new population or only make waves among niche molecular food lovers.
. There are also many people who question the claim that artificial meat products can bring positive factors to the environment: because the technology of lab-cultivating meat consumes a lot of electricity, heating and other resources.
The automated production of artificial meat may also have an impact on employment in the agricultural field. Taking American agriculture as an example, the meat industry brings the most jobs; once artificial meat consumption becomes mainstream, it will significantly reduce employment opportunities. Therefore, promoting the automated production of artificial meat may put meat producers, sellers and other institutions at greater risk.
In short, a battle without gunpowder has begun; but if you want to let meat products enter the daily consumer market, the cost and large-scale production problems facing them must be solved. From a long-term perspective, no matter how many obstacles the artificial meat will face in the future, meat substitutes will inevitably continue to develop and become more diversified, and will continue to attract the attention of investors and the public.
