For all of us talking about and making an effort, with cyclical success in my own case, to reduce our meat and dairy intake the prospect of lab-grown meat is an enticing one. We more or less accept it’s probably better for our health to eat less meat, especially red meat.
We don’t really understand the science and competing scientific theories, none of which seems to be genuinely backed up with sufficient data and studies to be conclusive. But the heuristic argument that throughout our evolutionary history, basically until about 40-50 years ago and only in the developed world, we’ve always eaten much less meat than we do today, seems to make sense.
We’ve also probably eaten much smaller quantities of ‘super foods’ like cranberries, goji berries and kale. But we also accept fruit and veg is innately good for us and, also usually cyclically, have a half-hearted stab at getting somewhere close to our ‘5-a-day’. I personally choose to ignore the new goalpost-moving 7-a-day research as a peak too high to hope to scale and lump it in with the ‘drinking 23-coffees-a-day reduces your chance of heart disease/dementia/something else terrible’ headlines.
But it’s the ‘sustainability’ aspect of reducing our meat and dairy consumption that probably makes the majority of us centrist would-be do-gooders feel most guilty when we periodically self-review our success at attempted meat parsimony. When we flip back through the pages of our dubiously accurate mental ‘meat diary’ and realise we’ve slipped back into old habits of consuming some kind of meat many days, it tends not to be the hazy concept of the impact on our health we feel bad about.
We feel like we’re letting the ‘sustainability’ side down. We know the statistics, or their gist, by heart. Farm animals are responsible for around 15% of greenhouse gas emissions. Around 65% of that total is contributed by the meat and dairy cows. The official committee on climate change recommends we all reduce our meat intake by a third if we want to help the UK meet its 2050 carbon neutral target.
A third doesn’t sound too onerous. But not everyone is as self-disciplined and responsible as we are, right?
In that context, the prospect of guilt-free, lab-grown meat is a welcome future. We will be able, except for the occasional nagging thought to our health, to have our cake and eat it. We can whip up that easy spag bol for the family on a Thursday night without having to spend half an hour at work surfing ‘quick and easy’ vegetarian recipes online or feeling guilty we’re going to miss our meat reduction target again. Lab-grown meat will be a win-win for the consumer and the planet.
Handily, it is also likely to be a win for the companies producing that meat. Or licensing the intellectual property that allows others to.
Meat is big business (worth an estimated $867 billion this year) but it is also a fractured sector made up of large numbers of small companies, a lot of mid-sized businesses, and a sprinkling of larger players.
Meat industry value worldwide in 2020 and forecast for 2021 and 2025(in billion U.S. dollars)
Source: Statista
Specific meat products, like the McDonald’s Big Mac, can be patented and protected. But the extent of what is protected is very limited. It’s more or less the brand name. Neither McDonald’s nor any other company can stop any other company from placing two similar beef burgers on a similar bun and adding some similar salad and sauces.
There is some intellectual property around selective breeding but, generally, not a lot in the industry. Which is why there are no ‘Big Meat’ conglomerates in the same way we have Big Pharma, Big Tech and huge agrochemicals companies like BASF, Bayer and Syngenta.
It’s also why so much money is being invested in developing commercially viable lab-grown meat. Investment into the sector grew by as much as 600% in 2020 to $360 million. Total investment in the sector is now well over $1 billion. Many of the largest protein producers have also invested in the space, with the investment arm of Cargill investing in Memphis Meats and Aleph Farms, and Tyson Foods’ venture fund investing in UPSIDE Food (formerly Memphis Meats) and Future Meat Technologies. Similarly, Brazil’s BRF announced a partnership with Israeli cultured meat start-up Aleph Farms to supply cultured beef to the Brazilian market.
From an investor’s point of view, the attraction of lab-grown meat is not so much its sustainability, though it is a very handy PR angle and also means there should be no shortage of ESG funds flowing into companies in the space. Rather, it is the patentability of intellectual property that will likely see a huge but fractured industry go through a major period of consolidation over the next couple of decades.
Today’s start-ups like Mosa Meat, Memphis Meats and Aleph Farms, and others like Finless Foods and BlueNalu developing lab-based seafood, have the potential to build brands like McDonald’s or Coca-Cola that so far haven’t been possible in the meat sector. They will be able to protect and market their “superior” technology, techniques and products.
Every butcher, supermarket and restaurant can sell Aberdeen Angus burgers and minced meat without paying anybody anything, other than an abattoir for the meat itself. That won’t be the case with a Memphis, Mosa or Aleph burger. They will own the IP to their own lab-cultured meat process.
That will allow brands to be built around lab-grown and IP-protected raw meat products in a way that has never been possible before. Which has certainly been the biggest motivator for investors, despite all the PR around the sustainability credentials of lab-grown meat.
Ultimately, however, a strong financial incentive to develop the science and technology around mass-produced lag-grown meat is something emissions-reduction targets should benefit from. Lab-grown meat, for all the unanswered questions that remain around start-ups achieving scalable commercial production of products good enough to convince shoppers, will be far more environmentally sustainable than farm-reared meat.
That the sector is also attractive for investors as a result of patentable IP should go a long way to accelerating its commercial viability.
Investing in the lab-grown meats sector
As a smaller private investor, opportunities for direct exposure in lab-grown meat start-ups are limited because they are all still private companies. However, it is possible to make investments in publically listed companies that are themselves major investors in the sector.
One example is Tyson Foods. The company is the second-largest processor of traditional farm-reared chicken beef and pork and the U.S.’s largest beef exporter. The fact Tyson is a major investor in lab-grown meat start-ups is itself an indicator the traditional industry is taking the threat the traditional meat industry seriously.
Tyson Foods owns major equity stakes in Future Meat Technologies, UPSIDE Foods and plant-based meat alternatives start-up Beyond Meat.
Another company that is not exclusively a cultured-meat play but offers exposure due to major investments in the space is Neto Group. Listed in Tel Aviv, Neto is an investor in Future Meat Technologies among others.
London-listed ‘clean meat’ venture capital vehicle Agronomics is a thematic investment play in the sector and a way to spread investment risk across a number of promising start-ups in the space.