Precision fermentation is a revolutionary technology that builds on the ancient technique of fermentation. It’s typically been used to produce enzymes and vaccine components but its advantages have more recently been enjoyed by the alternative protein industry.
However, if you’ve read our article on the evolution of precision fermentation and cellular agriculture, then you’ll know that there are some key differences between the technology’s conventional and novel food applications. Therefore, while the market is not necessarily new, the technology - and the companies utilizing it - must evolve further to successfully scale and change the future of our food system.
As the precision fermentation industry continues to develop rapidly, partnerships offer a promising avenue for companies to adapt and thrive. This article will explore the challenges and possibilities presented by this promising technology and suggest three key partnership strategies for companies to leverage the opportunities offered by precision fermentation.
Precision fermentation can be a way for your company to enter into the business of alternative proteins, or to improve the offering you already have.
Alternative protein products remove animals from our food production process. They replace traditional meat, dairy, and eggs and encompass traditional substitutes such as tofu, as well as modern alternatives like plant-based milks and meat analogs.
There are four major benefits that alternative proteins, such as those derived from precision fermentation, could potentially provide for corporates:
In addition to this, with the global B2B alternative protein ingredient market projected to reach $15 billion by 2025 and significant investments in precision fermentation companies and start-ups, this is an exciting industry to be a part of.
Precision fermentation is a complex process that involves several steps. First, the target molecule must be selected based on the desired end product. Once the target molecule is chosen, strain engineering is used to modify microorganisms to produce the target molecule. Substrate selection and bioprocess design are then optimized to create the ideal conditions for the microorganisms to grow and produce the target molecule. Finally, the ingredient application involves incorporating the precision fermentation-derived ingredient into a final product.
Companies that specialize in precision fermentation include biotech and biopharma companies, as well as equipment providers. However, the end markets for precision fermentation-derived ingredients are served by distinct ingredient and food and beverage companies. While biotech companies might not have experience in using precision fermentation for food applications, food and beverage companies may not have the knowledge to formulate products with precision fermented ingredients. Therefore, collaboration across industries and companies operating at different stages of the value chain is important for successful product formulation and market launch.
An overview of the precision fermentation process and the involved companies can be seen in the figure below:
Over the past decade, pioneers like Impossible Foods have developed alternative protein products using precision fermentation by keeping the full value chain in-house, which delivered a proof of concept of the technology. However, without having first-mover advantage, this business model is likely too slow and costly for existing corporates to apply.
Therefore, to win in this rapidly developing industry, partnerships are the key to success. There are three main approaches to partnerships:
A strategic partnership is a collaborative agreement between two companies with complementary strengths or expertise. In the context of precision fermentation, a strategic partnership could involve two companies working together to develop and bring to market new products that incorporate precision fermentation-derived ingredients.
Strategic partnerships are a popular approach because they require the least investment and can be implemented quickly. By combining their resources and expertise, companies can develop products faster and more efficiently than they would be able to on their own. This can be particularly useful for larger, more established companies that want to capitalize on the precision fermentation trend but do not want to invest heavily in research and development.
Strategic partnerships can take many forms. For example, one company might provide the raw materials or expertise needed to produce a precision fermentation-derived ingredient, while the other company might have the distribution channels and marketing know-how to bring the product to market. Or, two companies might collaborate on research and development to create entirely new products that are more effective or sustainable than existing offerings.
Corporate investment is a strategy where a company invests in a start-up or scale-up that is working in a field relevant to its core business. In the case of precision fermentation, a large company can invest in a start-up that is developing precision fermentation-derived ingredients or products, with the goal of expanding its own product portfolio or enhancing its supply chain capabilities.
Corporate investment can take the form of venture capital, which involves investing in start-ups or early-stage companies with high growth potential. Venture capital firms can provide expertise and support to their portfolio companies to help them grow and succeed.
Another form of corporate investment is mergers and acquisitions, where a company acquires another business to expand its product portfolio or to gain access to new markets or technologies. This can provide a quick way for companies to enter the precision fermentation space without having to build the capabilities in-house.
Joint ventures involve two established companies pooling their resources and expertise to create a new entity. This new entity is separate from the existing companies and has its own management structure, ownership, and financing.
Joint ventures offer several advantages, such as combining the complementary skills and resources of two companies, sharing risks and costs, and gaining access to new markets or technologies. Additionally, the joint venture can leverage the established brand and customer base of both companies to drive growth and generate new revenue streams.
However, joint ventures also require significant time, resources, and strategic planning. Companies must negotiate and agree on the terms of the joint venture, including ownership and control, governance structure, financing, and operational details. Additionally, companies must work closely together to ensure the success of the joint venture, which can be challenging if the companies have different cultures or goals.
Partnerships are a powerful way for companies to leverage the strengths of multiple organizations, stay competitive, access new technologies, accelerate growth, and capitalize on precision fermentation opportunities.
If you are ready to seize these opportunities and require assistance in this area, Bright Green Partners can help you develop custom solutions and make informed business decisions. From defining facility capabilities and commercial strategies to recommending partnerships, we have the knowledge and connections to accelerate your growth.
Reach out to us today to see how Bright Green Partners can help you create effective partnerships and achieve success in the precision fermentation industry.