Alternative protein investment: what you need to know

Although the World Economic Outlook has predicted a global economic slowdown from 3.4% growth in the previous year to 2.8% this year, the alternative protein sector is experiencing a surge in innovation.

Investing in plant-based, fermentation, and cultivated companies during this downturn could be advantageous because there will be less competition for talent and resources. This can allow for the establishment of strong foundations and position the companies for long-term growth as the economy inevitably improves. However, alternative protein investment can be challenging without proper knowledge of the market and industry trends.

In this article, we will provide an overview of the plant-based, fermentation, and cultivated food markets, discuss the current trends and challenges, and offer tips for investors considering investing in alternative proteins.

A positive perspective on the plant-based food market

Despite recent negative perceptions and a temporary dip in demand for plant-based meat, the alternative protein industry remains resilient and promising. Companies in this sector, like in any other industry, may face difficulties in launching products that resonate with consumers. The success of plant-based food products relies on multiple factors, encompassing product quality, pricing strategies, go-to-market strategies, and evolving consumer preferences, among others. It extends beyond mere demand.

While food industry leaders such as Beyond Meat and Heck have encountered significant challenges, it is crucial to recognize the intricate dynamics of the market and consider the broader industry landscape, along with the prevailing financial climate. By acknowledging these complexities, investors and businesses can make more informed decisions and navigate the plant-based food industry with greater insight and adaptability.

It’s important to note that there are many plant-based food companies undergoing expansion and attracting substantial investment. For example, THIS™, a prominent plant-based meat brand, demonstrated remarkable growth within the chilled meat-free sector, contributing nearly £1 million to the expansion of the category in the first 13 weeks of this year. Moreover, THIS™ has emerged as the fastest-growing food and drink brand in the UK, boasting an impressive two-year annual growth rate of 246%. This surpasses major fast-moving consumer goods (FMCG) brands like Little Moons, Huel, and Gousto, further cementing the brand's position as a frontrunner in the plant-based food industry.

Taking a broader perspective beyond individual brands, it is evident that the market for plant-based foods exhibits robust demand and continues to undergo growth and evolution. Major retailers, such as Sainsbury's, forecast a significant rise in the number of individuals adopting meat-free diets. This growing trend is driving increased demand for vegan food products and contributes to the projected compound annual growth rate (CAGR) of 9.1% for the global vegan food market between 2023 and 2031.

The demand for plant-based foods remains strong and continues to grow and evolve

What’s more, while hype often creates short-term inflated expectations, the value of transformative technologies is proven over time; innovations like precision fermentation and cellular agriculture show promise for further sustainable and nutritious alternatives.

Undeniably, there is still ample room for improvement within the alternative protein industry, making it an exciting and dynamic space to watch - make sure you read our article for the bigger picture of the alternative protein industry.

The existing state of alternative protein investments

A recent GFI analysis revealed that, over the past decade, the alternative proteins sector has witnessed substantial private capital investments, with annual funding nearly doubling on average. Investments surged in recent years, peaking at a record $5.1 billion in 2021. However, 2022 saw a decline of 42% in funding, returning to pre-2021 levels.

The decline in funding aligns with broader market trends and economic conditions, including a reduction in global private funding and the impact of factors such as interest rate hikes, climate events, the pandemic, and geopolitical tensions.

Despite the slowdown, the alternative proteins sector remains dynamic and investor appetite for plant-based foods remains strong, with optimism about the industry's long-term potential and plans for continued investment in 2023, particularly in novel categories like fermentation and cultivated dairy. What’s more, while overall investment decreased, specific regions, particularly the Asia-Pacific and Europe, experienced notable growth.

Adding further momentum to this excitement, 2022 witnessed a notable de-risking event when UPSIDE Foods received FDA approval for its cultivated chicken. Several precision fermentation-derived products were also introduced in the US market. These developments indicate a maturing regulatory landscape and enhanced commercial viability for alternative proteins. Additionally, they pave the way for the creation of hybrid products that blend technologies from cultivated, fermentation, and plant-based sectors. These advancements are particularly appealing to investors looking for opportunities in diversified portfolios and long-term growth prospects.

UPSIDE Foods obtained FDA approval for its cultivated chicken, paving the way for the development of hybrid products blending various technologies

Trends and challenges in the market

From shifting consumer preferences to regulatory complexities and market competition, these factors play a significant role in determining the success of plant-based, fermentation, and cultivated food companies and influencing investor decisions:

1. Diversification and optimization

Consumer preferences have shifted towards more diverse and innovative product offerings, including plant-based seafood, mycoprotein-based products, and plant-based ready meals. There is a growing emphasis on clean labels, natural ingredients, and minimally-processed products. Moreover, consumers are increasingly looking for alternative protein foods that not only mimic the taste and texture of animal-based products but also provide additional health benefits, such as being lower in saturated fat and cholesterol.

By investing in companies that utilize a range of alternative protein technologies, investors can tap into various segments of the growing market and capture opportunities arising from changing consumer preferences. Furthermore, hybrid products that combine different technologies demonstrate considerable potential, allowing investors to access the synergies and benefits of multiple approaches in a single offering.

For more information about consumer expectations, make sure you check out our analysis of the plant-based trends to watch out for in 2023.

2. Differentiation through unique value propositions

One notable trend is the intensifying competition among various players, including plant-based start-ups, established conventional meat companies, and supermarket own brands. As the popularity of alternative proteins grows, more companies are entering the market to capitalize on the opportunities.

To stand out in the face of increased competition and capture significant market share, companies in the alternative protein industry, particularly in the plant-based sector, may need to differentiate themselves by offering unique value propositions. This could involve emphasizing attributes like superior taste, health benefits, or sustainability credentials.

To thrive amidst growing competition, plant-based food companies must differentiate themselves through unique value propositions

3. Navigation of regulatory hurdles

Regulatory issues pose another challenge for alternative protein companies and may act to deter those interested in investing in alternative proteins.

Investors are more likely to be drawn to companies that have positioned themselves in markets with supportive regulatory frameworks as it reduces uncertainties and potential obstacles. This strategic decision showcases a proactive approach to navigating novel food regulations, which instills confidence in the company's ability to execute its business plans effectively.

Furthermore, a favorable regulatory environment can facilitate faster market adoption and expansion, resulting in stronger financial performance and increased potential returns for investors.

4. Establishment of a reliable supply chain

Sourcing sustainable and high-quality plant-based ingredients at scale can be difficult, necessitating collaborations and strategic investments. Companies with resilient and efficient supply chains will be better positioned to meet market demands and maintain product consistency, which can positively influence investor confidence.

How to invest in plant-based foods and other alternative proteins

Investing in plant-based meat and other alternative proteins can be an attractive opportunity for institutional investors looking to capitalize on the growing demand for sustainable and alternative protein sources. However, finding the right startups or established companies with substantial growth potential requires astute scouting and evaluations. Bright Green Partners excels in this regard, offering expertise not only in technical assessments but also in evaluating the commercial viability of potential investments.

When it comes to plant-based stocks, it's worth noting that some prominent names, such as Beyond Meat and Oatly, have faced recent challenges in the market. Nevertheless, these setbacks don't overshadow the overall positive trajectory of the plant-based food industry; this sector continues to exhibit strong growth potential. Investors seeking to select plant-based stocks should consider factors like company performance, market share, sustainability efforts, and competitive advantage. Thorough research or advice from experts is essential for informed investment decisions.

Still unsure?

For assistance in evaluating the latest trends and projections in the alternative protein industry, feel free to contact us at Bright Green Partners. We can help you make informed investment decisions by objectively assessing cultivated, fermentation, and plant-based companies and providing valuable insights into the investment landscape.

Disclaimer: Please note that the content of this blog post is intended solely for informational and educational purposes and should not be construed as investment advice or recommendation to buy or sell any securities or engage in any investment strategy.

The clean meat conundrum: navigating consumer acceptance

When you hear the term 'clean meat', what springs to mind?

Do you imagine chlorine-treated chicken or a bioprinted steak that’s free from harmful chemicals, hormones, and antibiotics? Is the use of the word ‘clean’ confusing and ambiguous or does it make you think of a healthier and more sustainable meat production process?

Also known as cell-based, cultivated, or lab-grown meat, clean meat is produced in a controlled environment without exposure to harmful bacteria or contaminants and without the need for animal slaughter. But despite the potential benefits, the topic of clean meat has sparked a heated debate, with concerns ranging from the safety of the product to the ethical implications of its production.

Much of the confusion stems from the terminology used to describe it; some argue that the term ‘clean’ is misleading and could be seen as inflammatory by those working within the animal agriculture industry, while others argue that it accurately represents the environmental and ethical benefits of this new technology. It’s evident that consumer acceptance remains a significant challenge.

In this article, we will explore the concept behind calling the meat 'clean', what clean meat is made of, how it's made, and most importantly, how we can navigate consumer acceptance to ensure the success of this groundbreaking technology for a more efficient and resilient food system.

What is clean meat?

Clean meat refers to meat that has been cultivated in a controlled environment using a small sample of real animal cells as a starter. It’s a form of cellular agriculture, which is where cells are cultivated using various techniques such as bioreactors and tissue engineering to create genuine meat, seafood, and other animal products without the need for traditional animal agriculture.

Clean meat is cultivated in a controlled environment to make genuine meat, seafood, and other animal products

One other pioneering method in the field of cellular agriculture is precision fermentation, which employs microorganisms to produce specific proteins, fats, or other compounds.

How is clean meat made?

Meat cultivation involves harvesting stem cells from animal tissue samples, which are then stabilized and stored to establish stem cell lines. To increase their biomass to a point that they can be used to create end products, the cells are cultivated in bioreactors with an oxygen-rich cell culture medium containing the nutrients and growth factors required to grow cells outside of an animal’s body.

Cell differentiation into mature meat cells (skeletal muscle, fat, and connective tissue) is stimulated by various factors, and the differentiated cells are isolated and processed into clean meats like chicken nuggets, 3D-printed steaks, or burgers.

GFI has cleverly likened this process to the cultivation of plants, whereby cuttings are taken and grown in nutrient-rich environments; a narrative that most people can easily understand and relate to.

The cultivated meat production process can be likened to the cultivation of plants in greenhouses

The ‘clean’ meat concept

The concept of 'clean' meat emerged as a way to differentiate it from conventional meat, which is often associated with health risks, environmental issues, and animal welfare concerns. Clean meat is considered a more sustainable, efficient, and ethical alternative because it is produced using cellular agriculture, which does not require the rearing, feeding, and slaughtering of animals.

The term 'clean' also refers to the fact that it does not contain any antibiotics, hormones, or other contaminants that may be found in conventional meat. Additionally, clean meat is produced in controlled conditions, meaning that it could have a lower risk of foodborne illness.

However, the use of the term 'clean' has been a point of contention for many, as we’ll explore in more detail below.

The nomenclature debate

Depending on who you ask, the terminology used to describe meat produced through cellular agriculture can vary. Some proponents of the technology prefer the term ‘cultivated meat’, while others prefer ‘lab-grown’, ‘cell-based’, or ‘cultured meat’.

As we’ve touched upon, the term ‘clean meat’ itself is often used to emphasize the potential benefits of the technology, such as enhanced health and nutrition, reduced environmental impact, and improved animal welfare.

However, some have criticized the term as being misleading or inflammatory. It could be argued that the use of the word ‘clean’ implies that conventionally produced meat is 'dirty' or unsafe, which has the potential to generate animosity. Whilst clean meat does offer numerous advantages over conventional meat, it’s important to foster good relations and promote collaboration in the pursuit of a more sustainable and resilient food system.

In September 2021, GFI reported a significant shift towards the use of ‘cultivated meat’ as the primary nomenclature used by companies. Based on a thorough consumer research study they conducted in collaboration with Mattson and UPSIDE Foods, GFI also revealed that ‘cultivated’ stood out as the most appealing and consumer-favored term.

Clean meat, cultivated, lab-grown…what difference does it make?

Veggie burgers, veggie discs. Soy sausages, soy stuffed cylinders. Seitan steaks, slabs of gluten. Avocado toast, alligator pears on warmed bread.

As you can see, words matter. Particularly when it comes to the nomenclature of food.

The different terms used to refer to clean meat may seem interchangeable, but they can carry different connotations and implications. When the ultimate goal of these different terms is to promote the acceptance and adoption of clean meat, understanding and effectively communicating the nuances between them can help us better navigate this complex and rapidly evolving field.

Consumers may feel uncomfortable or hesitant about eating meat that has been created using scientific processes they are unfamiliar with

Since it illustrates the parallel between familiar food production (e.g. the cultivation of plants in greenhouses or the cultivation of microbes to produce beer) and clean meat production, ‘cultivated meat’ may serve as the best way to communicate a narrative to introduce this new form of meat production to the lay public.

Nevertheless, as Stephen Fry pointed out on Twitter, the history and nature of language development will ultimately decide.

Navigating consumer acceptance

Deciding upon the most appropriate and appealing nomenclature (and then satisfying novel food regulators without antagonizing the conventional meat industry) is just one of the challenges of navigating consumer acceptance.

Regardless of what we choose to call it, some may feel uncomfortable or hesitant about consuming a product that is created using scientific processes they are unfamiliar with. Transparency and education are two approaches clean meat companies might focus on to mitigate this; consumer education campaigns, transparent labeling, and collaborations with food industry stakeholders can all help build trust and increase acceptance of clean meats.

Admittedly, it will take time and effort to overcome the initial reluctance of some consumers. However, as more people become aware of the benefits of clean meat, it's likely that consumer acceptance will continue to increase.

A clean and bright future for meat production

Navigating consumer acceptance of clean meat is a complex challenge; while some consumers are excited about the prospect of a more sustainable and ethical meat industry, others are hesitant to embrace meat grown ex vivo.

Developing suitable nomenclature and appealing, accurate, and accessible terminology is crucial to the narrative and subsequent continued growth of the clean meat industry. In addition, clean meat companies must educate consumers about the science behind their products and address any concerns they may have to establish consumer trust and acceptance.

Ready to learn more?

If you're a clean meat company looking to navigate the complex challenge of consumer acceptance, reach out to us at Bright Green Partners. We can help you develop a progressive framework that meets the demands of increasingly conscious consumers while staying up-to-date with the latest cultivated industry developments.

Unlocking cultivated meat's potential with stem cell lines

Cultivated meat production is on the rise, and one of the key requirements is finding the optimal starting cell source. To achieve this, stem cells are the strongest candidate for the job. Adult stem cells and pluripotent stem cells possess the necessary abilities to self-renew and differentiate into mature cell types.

Join us as we explore the exciting world of stem cell lines for cultivated meat production. We'll delve into the key characteristics of an optimal stem cell line, existing cell sources, and the challenges we still need to overcome to achieve scalability.

Through this exploration, we aim to provide insights into the current state and future of cultivated meat production. We hope you find it an informative and engaging read!

What is a stem cell?

Stem cells are cells that have the unique ability to differentiate into various animal cell types, such as muscle cells, fat cells, or blood cells. They can also self-renew, meaning they can divide and make more copies of themselves, which makes them incredibly useful for many different types of medical research and treatments, as well as for the alternative protein industry.

Stem cells can be found in embryos and fetal tissue. They are also present in small numbers in various tissues and organs throughout the body (known as adult stem cells), such as bone marrow, skin, and brain.

Adult stem cells are found in various animal tissues and organs, such as the skin and bone marrow of cows

In their natural environment, stem cells derived from embryonic and fetal tissue are essential for the normal development of a fetus. Adult stem cells are involved in tissue regeneration and help to replace cells that have been lost due to everyday wear and tear, injury, or disease.

In a lab environment, culturing stem cells under specific conditions can encourage them to divide and differentiate into all sorts of mature meat cells, which can then be used to create a variety of meat products.

Establishing stem cell lines for cultivated meat

Cultivated meat requires large quantities of different animal cell types to be grown in a controlled environment, which makes stem cells an ideal source for scaling up production. But to ensure a consistent and sustainable source of cells, one must first establish a stable stem cell line, meaning a population of stem cells that can divide and multiply indefinitely.

To establish stem cell lines for cultivated meat, stem cells need to be isolated from an animal source and maintained so that they can grow in a lab indefinitely. Growth factors and nutrients can subsequently be used to induce the stem cells to develop into different cell types.

The characteristics of an optimal stem cell line

An optimal stem cell line for cultivated meat should demonstrate several characteristics:

1. Appropriate potency

Stem cells have varying degrees of potency; in other words, the ability to differentiate into various cell types. Since we require specific cells to create lab-grown meat products, it’s important to source a stem cell line that can differentiate into the cell types that make up meat tissue, such as skeletal muscle cells, adipocytes, and fibroblasts.

Pluripotent stem cells, which are commonly used in cultivated meat production, can differentiate into cells from all three germ layers (primary layers of cells that form during embryonic development, which give rise to the different tissues and organs in animals), including the cell types that make up muscle tissue. There are two types of pluripotent stem cells: embryonic stem cells (ESCs) and induced pluripotent stem cells (iPSCs).

iPSCs are reprogrammed primary cell types, which have been returned to a pluripotent state

Adult stem cells, also referred to as multipotent, have a more restricted ability to differentiate compared to pluripotent stem cells. They can only transform into multiple cell types that belong to the same germ layer as the tissue from which they originated. The pros and cons of using pluripotent as opposed to multipotent stem cells will be discussed below.

2. Self-renewing

The ability of stem cells to self-renew is essential for the production of cultivated meat because it allows for the production of large quantities of cells from a small starting population. Without this ability, it would be necessary to continually obtain new cells from an animal, which would be expensive, time-consuming, and may require the continuation of unethical practices.

When stem cells divide, they can produce either two identical stem cells or one stem cell and one differentiated cell. Stem cells that are able to divide indefinitely while maintaining their undifferentiated state are said to have self-renewal capacity. This allows a small number of starting stem cells to be expanded into a large population of cells for use in cultivated meat production.

For example, to produce a single breast of lab-grown chicken, millions of cells are needed, and this number increases exponentially as the production scale is increased. A stem cell line with a high self-renewal capacity can provide the large number of cells required for cultivated meat production.

3. Genetically stable

When cells replicate, their DNA is also duplicated, and errors can occur during this process, leading to genetic mutations that can affect the quality and safety of the meat produced. Genetic instability can cause unintended changes in the cells' characteristics and properties, leading to inconsistent results in the meat's texture, flavor, and nutritional content. Therefore, a genetically stable stem cell line is crucial to ensure the consistency and safety of the cultivated meat product.

Additionally, ensuring genetic stability is important for regulatory compliance and maintaining consumer confidence in the safety and quality of the product.

4. Scalable

Finally, stem cell lines should be scalable, meaning they can be rapidly expanded to produce large quantities of cells for commercial production. If a stem cell is not viable for scalability, it would be challenging to meet the demand for cultivated meat and could limit the potential for this technology to become a viable alternative to traditional animal agriculture.

In addition to the aforementioned traits, resilience to environmental variations and process fluctuations, compatibility with cryopreservation, cost-effectiveness, and rapid proliferation rates are all key factors influencing the scalability of a stem cell line.

Existing cell sources for cultivated meat production

90% of the meat we consume is made up of muscle fibers. The remaining 10% is a combination of fat, connective tissue, and blood. When we break these components down further, the primary cell type is skeletal myocytes, with fibroblasts, adipocytes, chondrocytes, and hematopoietic cell types playing integral supporting roles.

Meat is composed of a complex network of different cell types, with skeletal myocytes being the predominant cell type

There are three main cell sources that possess the necessary capacity to produce these cell types: pluripotent stem cells, adult stem cells (multipotent), and primary cell types.

1. Pluripotent stem cell lines

In addition to having the ability to differentiate into any animal cell type, pluripotent stem cells (including ESCs and iPSCs) can theoretically self-renew indefinitely under optimal conditions.

However, embryonic stem cells are obtained from the inner cell mass of a blastocyst, which is a structure that forms a few days after fertilization of an egg. This naturally raises ethical concerns since it requires the destruction of the embryo. Additionally, obtaining, stabilizing, and culturing pluripotent stem cells can be more technically challenging and expensive. As a case in point, embryonic stem cell lines for agriculturally-valuable bovine species were only successfully derived in 2018.

iPSCs, on the other hand, are generated by reprogramming primary cell types, such as skin or blood cells, back into a pluripotent state (typically via viral-mediated genetic modification). They share many characteristics with embryonic stem cells and offer the advantage of mitigating some of the ethical, technical, and financial issues regarding cell sourcing.

However, reprogramming can increase the risk of genetic abnormalities; companies should carefully consider the risks and benefits of using such methods and ensure that they comply with any relevant regulations. In addition, companies may choose to explore alternative reprogramming technologies that avoid genetic modification.

2. Multipotent stem cell lines (adult stem cells)

Adult stem cells are generally considered to be more ethically and easily obtained than pluripotent stem cells since they can be harvested from a variety of sources, such as muscle tissue or fat tissue, with minimal harm to the donor animal.

Muscle tissue has two main types of stem cells that can develop into the mature meat cells required for the production of cultivated meat, including:

Mesenchymal stem cells

Mesenchymal stem cells (MSCs), otherwise known as stromal cells, are a type of adult stem cell that can be obtained from numerous sources, including bone marrow, adipose tissue, umbilical cord, dental pulp, and placenta. Their multipotent nature means that they can be used to produce several principal mature meat cell types, including osteoblasts (bone cells), adipocytes (fat cells), chondrocytes (cartilage cells), and myocytes (skeletal muscle cells). However, their ability to differentiate into the latter may be restricted and influenced by the source of tissue.

Myosatellite stem cells

Myosatellite cells are a type of adult stem cell found in skeletal muscle tissue, responsible for muscle growth and repair. They hold significant potential as a cell source for cultivated meat production because they are among the most prolific tissue-specific stem cells in the body.

A minor tissue biopsy is all that is required to obtain myosatellite cells, which can be performed under local anesthesia. MSCs are the preferred adult stem cell type for obtaining and culturing skeletal muscle tissue in vitro but further research is needed to support their growth outside of their natural muscle environment.

3. Primary cell types

In addition to stem cells, it’s also possible to use primary cell lines to produce cultivated meat. Obtained from specific organs or tissues, primary cell types are better suited to more specialty ingredients, such as foie gras, since they have a finite lifespan for differentiation.

Nevertheless, an advantage of using primary cell lines is that they can be directly converted into desired cell types, which mitigates the complexities of maintaining stem cells in a pluripotent state. For example, reprogramming techniques have been employed to turn fibroblasts into skeletal muscle progenitor cells.

The future of stem cell lines

Stem cells have the unique ability to self-renew and differentiate into various animal cell types, making them ideal for producing large quantities of cells needed for meat production. Therefore, establishing stable and reproducible stem cell lines is essential for the continued growth of the cultivated meat industry.

An optimal stem cell line for cultivated meat should be self-renewing, genetically stable, scalable, and demonstrate appropriate potency. Existing cell sources include embryonic stem cells, induced pluripotent stem cells, adult stem cells, and primary cell types, each of which has distinct advantages and disadvantages.

Nevertheless, significantly more research is required to increase the amount of publicly available cell lines isolated from agriculturally-relevant species for cultivated meat production, the current lack of which highlights the need for the creation of biorepositories. This is partly being addressed by the Good Food Institute's "Frozen Farmyard" project in partnership with Kerafast.

The availability of diverse cell lines will be crucial in advancing research for the cultivated meat industry.

Want to learn more about stem cell lines?

We can help you achieve clarity regarding the entire value chain for cultivated meat products, from specific support in establishing stem cell lines and cultivating subsequent mature meat cell types to navigating complex food regulations and developing your go-to-market strategy. Get in touch with Bright Green Partners today.

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