Lab-grown meat is coming to your plate soon

Our current meat consumption has an impact on our health, the environment and animal welfare. Major efforts are therefore being made to find alternatives. One possible alternative is lab-grown meat, also known as cultivated meat or cell-based meat: meat grown in a laboratory from a small batch of animal cells. But are we ready to change our diet for a more sustainable planet? Will innovative cell culture disrupt the traditional food industry?
Dea Shehu, a financial analyst at KBC Asset Management, explains what we might be seeing on our plates in the future. 

Meat is ingrained in our food culture

Most of us just expect our meals to contain a piece of meat. Key reasons for this are the taste and the view that we need meat for a balanced diet. However, research by the United Nations Food and Agriculture Organisation (FAO) shows that the global meat industry is responsible for 18% of greenhouse gas emissions, 30% of land use and 8% of water consumption. Moreover, we slaughter 65 billion animals worldwide every year. 
Could plant-based meat substitutes offer a solution? It’s true that they are getting better and better, though in practice they are not able to compete convincingly with animal-based meat. Lab-grown meat could therefore be a valid alternative. Last June, US regulators for the first time approved the sale of chicken made from animal cells and grown in the laboratory. But what exactly is lab-grown meat? And how is it made?

Two Californian companies, GOOD Meat and UPSIDE Foods have submitted data on the nutritional profile of their lab-grown chicken. The US Food and Drug Administration (FDA) concluded that the product is safe to eat. That opens up opportunities to benefit the environment, people and animals.

Dea Shehu, Equity Analyst at KBC Asset Management

Lab-grown meat protects the environment, people and animals

Although lab-grown meat is artificial, it is actually real meat that is cultivated from animal stem cells. On a microscopic level, it is indistinguishable from traditionally farmed meat. What differs is the final shape and the method of production. Lab-grown meat does not require the breeding and slaughter of animals.   

So how does it work? The process starts with the collection of animal stem cells by means of a biopsy taken from an animal, a fresh piece of meat or a cell from an egg.  
The best cells are then selected with a view to producing safe, high-quality and tasty meat, consistently and efficiently. These cells are then placed in bioreactors, where the perfect environment is created for cell division to take place. 
After three weeks, the meat is ready to be harvested. It is separated from the cellular nutrients and shaped, for example into chicken nuggets.   

Thanks to innovative developments, lab-grown meat is becoming cheaper, and the taste and texture are improving. Numerous scientific reviews have declared it safe for human consumption. Strict food safety standards and regulations are applied in the production process. Close adherence to these standards and regulations means that epidemics and viruses are less likely to break out among humans and animals, since the mass gathering of animals in potentially unsanitary conditions can be eliminated. The environment can also benefit: the reduced need for land for grazing livestock means less deforestation, something that also benefits biodiversity. And who knows, lab-grown meat could potentially contribute to a world in which there is less hunger in the future. To achieve this it would be essential to design and build enough stainless steel bioreactors in locations with less access to natural resources such as water and land. The most challenging aspect is that these reactors have to be able to handle huge volumes. Only then can more people be given access to high-quality protein in the form of lab-grown meat.

Give farmers a laboratory in addition to their animal stalls. A major requirement for making this possible is to design and build stainless steel bioreactors that can handle huge volumes. We are not there yet, but the awareness is there and at least it is being talked about.

Dea Shehu, Equity Analyst at KBC Asset Management

Is disruption of the traditional meat industry on the menu?

Whether consumers will be willing to change their diet for a more sustainable world depends on several factors. The most important is to address any safety issues and potential risks. The Food and Agriculture Organisations of the United Nations (FAO & WHO) suggest that the risks associated with lab-grown meat are similar to those for traditionally farmed meat. One argument in favour of lab- grown meat is the reduced use of antibiotics. On the other hand, epigenetic cell abnormalities resulting from constant cell culture are a possible source of increased risk, along with the use of additives such as soy protein and wheat to achieve the desired structure, texture and shelf life. 

For consumers to accept an alternative to traditional meat, the taste and nutritional profile must be at least as good. With plant-based products, that is still not always the case. Plant-based proteins do feel and taste like real meat, but they often have artificial ingredients added. Animal proteins are much closer to our own DNA and are absorbed by our bodies much better. As a result, lab-grown meat is in a better position to disrupt the traditional meat industry. However, total disruption is not on the cards at this juncture. Current lab-grown meat production is not scalable and is extremely expensive: up to 10 000 per kg. The ultimate goal of the companies involved is to achieve a level playing field, but that is currently still a long way off.

Laboratory meat production technology was first explored in 2013. Now, ten years later, there are 156 companies around the world which together have raised a total of 2.6 billion dollars.

Dea Shehu, Equity Analyst at KBC Asset Management

A foretaste for investors

It may take some time for people to overcome the stigma of eating lab-grown meat; that might take a generation or two. But once the technology has been embraced, the growth could be exponential, even at a higher price.  

Small-scale distribution of lab-grown meat has started in top-class restaurants, but these are mainly promotional initiatives. Upside Foods, for example, is working with three-Michelin-star chef Dominique Crenn to introduce lab-grown meat at her Atelier Crenn restaurant in San Francisco. In addition, Eat Just is working with celebrity chef and humanitarian José Andrés to raise awareness of chicken grown in a laboratory.   

For the time being, consumers probably feel more comfortable feeding cultivated meat to their pets. Good Dog is the only company in Europe dedicated to producing lab-grown meat for dogs. The company has made progress in cutting costs and is targeting the higher-end (and higher-priced) dog food segment.     

Religious acceptance could also be important. In January, Israel's Chief Rabbi declared Aleph Farm's cultivated steak to be kosher. The Good Meat company is also looking into obtaining halal certification to enable it to expand its lab-grown chicken distribution in the Middle East.   

Food technology is dominated by private companies, both large businesses and start-ups. The most visionary companies are keen to gain some name recognition in this field, generally achieved through partnerships or acquisitions. Danone has a venture capital-backed arm called Manifesto Ventures that focuses on new food technologies. Another excellent example is Tyson Foods, a major player in the meat industry, which has invested in Upside Foods and Believer Meats. Similarly, JBS has acquired BioTech Foods and Nestlé is forging a partnership with Believers Meats. 
There are many collaborations, not only focused on lab-grown meat, but also on other food technologies for the future based around lab-grown meat. Examples include companies specialising in optimising growth factors for cultured cells, reducing meat production times and aiming for precise fermentation.   

With so many companies focusing on food technology, it can be a challenge to identify and track new trends from the start. ‘In the context of thematic investing, it is therefore essential to attract companies that offer sustainable concepts with high brand potential within the food theme. KBC Asset Management is happy to help investors make a well-considered choice,’ Shehu concludes.

Lab-grown meat production is still in the pilot phase. But the introduction of music streaming and electric cars both show that once the technology has been embraced, the subsequent growth from can be exponential, even at a higher price.

Dea Shehu, Equity Analyst at KBC Asset Management

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This article is informational only and should not be considered investment advice.