$33 Billion Food Giant Bets Big on Lab-Grown Meat
We know that Big Ag and Big Food are in bed with the cultured meat industry.
This first came to my attention about 8 years ago, when I attended a cellular agriculture conference in Boston and found myself breaking bread with some suits from a family office who schooled me on how deep companies like Tyson (NYSE: TSN), Cargill, and JBS (OTCBB: JBSAY) were already in.
Of course, it makes sense.
If these behemoths can produce meat in labs, with lower production costs and fewer environmental burdens, certainly they will.
Still, some folks don’t get it.
I’ve talked to a number of investors who are quick to eschew cultured meat because they see it as competition with the big dogs, which are swimming in government welfare and are in no way at risk of going out of business.
But these big food producers have no loyalty to conventional agriculture and food production. They just need to deliver for shareholders. And if they can produce meat and fish at a fraction of the cost of conventional food production, why wouldn’t they?
It doesn’t take a rocket scientist to figure this one out. And while cultured meat is still not cost competitive, it will be.
In 2013, the first hamburger produced from cow stem cells cost $325,000 to create.
Fast forward to today, and we’ve seen costs plummet to about $10.00.
That’s a 96% decrease in price in about ten years.
And there’s still a lot of room for improvement on those costs.
As I’ve written in the past, the most expensive part of the cultivated meat production process is the growth supplement required for cell attachment, growth, and proliferation.
Today, the primary growth supplement used in the production of cultivated meat is fetal bovine serum, and this stuff ain’t cheap.
In some cases, fetal bovine serum can represent as much as 80% of production costs.
Now, last month we got word that a biotech company called Dyadic International (NASDAQ: DYAI), announced positive results from a third-party analytical testing of the company’s animal-free recombinant serum albumin.
Using a fungal-based microbial protein production platform, the company was able to successfully develop stable cell lines to produce animal-free bovine serum that is structurally equivalent to commercially available animal-derived bovine serum, which could ultimately prove to be far cheaper to produce than fetal bovine serum.
And just two weeks ago, Saint-Gobain (OTCBB: CODYY) announced a joint development agreement with a bioprocessing company called CellRev, that has the two working together to rejuvenate spent cell culture media for the cultivated meat sector.
Certainly being able to reuse cell culture media would enable a significant opportunity to reduce costs. But according to Dr. Ajay Tharakan from CellRev, cell culture media isn’t currently reused because there are toxins that are secreted by cells into the growth media.
So CellRev and Saint-Gobain are looking to remove those toxins and replenish spent media using a special solution the two will co-develop.
Understand, this isn’t just some small startup here.
This is Saint-Gobain, which in 2022 did in excess of $54 billion in sales, and currently boasts a market cap of more than $33 billion.
Another major player that’s getting into bed with the culture meat industry is Maruha Nichiro Corporation (JPY: 1333.T), which is one of the largest fishery, aquaculture and food processing companies in the world.
In 2022, the company did $6.8 billion in sales, and just last month it launched a collaboration with Umami Bioworks to accelerate the development of cell-cultured seafood products.
Maruha Nichiro has actually been working with Japanese cultured meat companies, but this is the first time the seafood giant expanded outside of its borders.
According to company reps, in anticipation of changes in the global business environment, including technological and legal developments, Maruha Nichiro will expand its research and development system and accelerate its progress toward early commercialization by collaborating with new overseas companies.
So yes, cultured meat and seafood is still prohibitively expensive, but it won’t always be that way. I give it another 15 years at the most before cultured meat finds its way into everything from the tacos at Taco Bell to the cans of tuna we buy at the supermarket.
Mark my words, not only is cultured meat going to replace a large percentage of conventional meat production, but it’ll prove to be one of the greatest investment opportunities of a lifetime.
I’m still bullish on CULT Food Sciences (OTCBB: CULTF), but there are other cultured meat and cellular agriculture plays, including Agronomics (OTCBB: AGNMF) and Steakholder Foods (NASDAQ: STKH). These tend to carry a decent amount of risk, though, so proceed with caution.
Energy Demand will Increase 58% Over the Next 25 Years
After getting your report, you’ll begin receiving the Energy and Capital e-Letter, delivered to your inbox daily.