Get ready, the meat alternative revolution is not only possible but imminent.

3rd May 2019  

You’ll see it happening in your plate sooner than you expect. by Eugenio Niccolini, Associate at @U-Start

What follows are some thoughts from a curios Italian that had the chance to dive into the fascinating Silicon Valley’s food tech environment. What is clear to me is that food can play a key role in terms of future World sustainability. Today meat consumption is one of the main causes of environmental pollution and there is the need to reduce it.

Before I get into this topic, let’s make something clear. I’m from Florence, I love the Fiorentina and I’m pretty sure I will never renounce to it. However, I also love my planet and I am aware about how inefficient and unsustainable the current meat supply chain is.

The equation is simple. On one side, we have an increasing demand driven mainly by the world population growth and the Asian market (with an increasing purchase power Asians are shifting from a vegetarian to an animal-protein diet). On the other side, we have a limited supply. To meet the demand more cows are bred, causing several side effects such as de-forestation and gas emissions (more damaging than the entire automotive CO2!). And with respect to the fish market, oceans are already over-drained and fish farming is bringing on the market products full of antibiotics. Those of you that would like more information and data on the matter, I suggest visiting the Good Food Institute webpage.

Aware of all of this, last two years I’ve been studying the VC food tech market deeply and with passion. I consider working in VC a privilege since it enables you to have a preview on the future if you are curios enough. Last month I had the chance to participate at the Future Food Tech in San Francisco. It has been inspirational, and now I am certain that we are on the brink of a revolution: “what will eating be like in 100 years from now?” I will come to this later, now let’s understand better what food tech is about and its two main trends: clean meat and plant based.

Clean meat is the most audacious and long-term play. This technology is based on the cell cultivation, a process that is already used in the medical space and that now is being tested in food production. The first time the world saw a cell-cultured meal was in ’13, when Mark Post CSO at Mosa Meat produced the first cell-based burger at a €250k cost. After that several other companies, such as Memphis Meats and Finless Foods, started focusing on such technology and the term Clean Meat was coined.

Last month, I had the opportunity to participate at a round table on Clean Meat led by Bruce Friedrich, co-founder of the Good Food Institute. It was argued that, after the first - not trivial - step of developing an optimized process and a valuable product, the main challenges will be scaling production and regulations. The first will require large investments in production plants, it will not be conceivable for each company to build its own facility, but it is most likely that they will sell licensees to third party cell-based producers. The second will require FDA and USDA approval, in this case companies focusing on fish products will have an advantage since they will require only FDA approval. On this topic, Eric Schulze, Vice President of Product and Regulation at Memphis Meats and former FDA (6 years), is positive and confirms that the FDA is working very well: “it listens, and it is doing its job as it is supposed to do”.

Despite being at a very early stage, Clean Meat has reached great interest and several skeptics are pointing out a “Clean Meat bubble”. To them, Arvind Gupta, Founder at Indie Bio (the accelerator that invested in both Memphis Meats and Finless Foods), debates that the cumulated amount raised by Clean Meat startups is less than $150M. Which equals to an average single Series D round in the US. Moreover, it is interesting to outline who invested: not only big names such as Bill Gates, Richard Branson and Leonardo di Caprio (that could entail to personal branding or simply another form of environmental sustainability investment), but also highly strategic players such as Tyson Foods and Cargill are proving strong interest in this product and its future distribution.

In my opinion it is not a matter of IF, but a matter of WHEN this will happen. In the case of Clean Meat, I would not expect these products to cover a relevant market share in the next 6 years. However, it is an extremely easy guess for plant-based. Yes, because plant-based is happening today!

First, let’s understand what Plant-based food is about. It is not the typical vegan or vegetarian food we are used to. The scope here is not to bring another tofu-burger to the market, but to offer the final customer a meal which could be comparable to real meat in terms of texture, taste, and nutritional value. This can be done by selecting and combining specific plant-based proteins.

The plant-based space is extremely hot  now and we can already identify some early “winners”. Founded in 2009, Beyond Meat generated $88M in revenues in ’18 and it filed for IPO yesterday. According to Bloomberg, despite a $1.4Bn valuation (15.9x on revenues) it has registered the biggest start for an IPO since the financial crisis. Beyond has been the first mover by bringing to the market its plant-based chicken in ’13, and by launching the Beyond Burger three years later. Today Beyond’s products are distributed by Whole Foods in the US and by Tesco in the UK. At the same time, other players are hitting the market impetuously: Impossible Foods just signed a partnership with Burger King, while Nestlé announced it will launch its Incredible Burger in April ’19.

These companies are targeting to become large global players and to have a strong impact in terms of sustainability. It is crucial to understand that these are not products targeting vegans or vegetarians, but “flexitarians”, people who occasionally eats meat or fish. Considering that nobody has a “meat-only” diet, they are basically targeting all of us. And the only way they could succeed on the long term is to be able to offer a tasty and affordable meal.

Considering that meat production has been proven to be unsustainable, there is a strong need in the market today to consume less meat globally. I think that the meat-alternative industry represents an enormous opportunity not only as a financial return, but also to strongly impact our planet. These companies will give each of us the opportunity to have a real impact on our planet without renouncing to our favorite meals. In the end, it is easier to change the world than customer behavior!  

So, what will eating be like in 100 years from now? I do not see a world without “conventional meat”, but a I see a world with several different type of products offered with plant-based covering a huge part of it. In my opinion, in 100 years from now we’ll have high-end segment served by a selection of best in the world cattle farming, a mid-end segment covered by clean meat and a low-end segment covered by plant-based. The rise of this industry and the increasing awareness on our Planet’s critical situation, gives me strong hope for the future.