Choosing a meat-free diet is by no means a new idea, though the popularity of plant-based foods has been accelerating recently with approaches such as flexitarianism (primarily a plant-based diet, elimination of processed foods, occasional meat consumption), vegan and vegetarian. According to the Vegan Society, nearly half of the UK is flexitarian, vegan or vegetarian, which by itself provides a significant demand for meat alternatives. Moreover, Good Food Institute estimated a 29% sales growth for the US plant-based meat market between 2017 and 2019, which outperformed the overall United States retail food market growth of 4%. Recent surveys have also indicated that most consumers chose high protein, low carbohydrate diets over a vegan diet, and many high-protein meat alternatives are now available to meet that consumer preference. The number of food companies offering meat alternatives is also expanding, made up of both small, venture backed firms and large, multinational companies with significant R&D budgets like Nestlé, Tyson and Tesco. Finally, a Barclays survey of 5,000 adults from the United States, UK, China, India and Brazil suggested that two-thirds would consider purchasing cultured meat, with higher acceptance rates among younger consumers, emerging markets and vegans/vegetarians.
Animal welfare, health benefits and climate change
Several key drivers are behind this trend of eating less meat or switching to alternatives such as plant-based meats. The first involves animal welfare, as there are many graphical videos, images and information on slaughterhouses, animal processing and intensive farming readily available across the internet. In fact, a study published the Vegan Trade Journal indicated that 51% of polled UK vegan consumers stated they were vegan for ethical reasons. No animals are harmed with meat alternatives like cellular agriculture, making the idea of ‘slaughter-free’ meat popular with many consumers.
The health benefits of alternative meats are also a key driver of consumer demand. A number of studies have shown that illnesses such as cardiovascular and hypertension have been reduced through a decline in eating conventional meat, and others indicated that those who mostly ate plant-based foods were less likely to die from heart disease. Alternative meat diets also have the potential to aid in weight loss and reduce body fat. The idea that a plant-based or alternative meat diet is healthier than one high in red meat consumption has been widely publicised. Of course, the healthiness of an alternative diet is primarily based on the saturated fat content of the cultivated cuts themselves. If the cultivated meat cut has similar saturated fat levels to conventional meat, it would not be expected to have any health benefits versus conventional meat.
It should, however, be noted that there are conflicting studies about the impact of switching to meat alternatives. For instance, in August 2020 the Cochrane Institute stated that there was no link between saturated fat and the risk of dying from heart disease, but this contradicted their earlier 2015 report that indicated a mortality risk from saturated fat. Nutrition standards are constantly changing, especially in regard to government recommendations on how much red meat one should include in a diet. In spite of these issues, the point that meat alternatives are healthier for you is relatively easy for consumers to understand, which will likely drive demand going forward.
Climate change and sustainability issues are the third driver behind consumers eating less conventional meat. Concerns over global warming and climate change have been growing across many nations, and according to Bloomberg, investments in renewable power, electrical vehicles and other technologies focused on reducing our dependence on fossil fuels grew at a 19% CAGR through 2020 to US$501bn. Thirty-two percent of respondents to a 2020 UK government poll said that limiting the effects of climate change was the reason they were avoiding or eating less meat, up from 20% in 2019. Conventional meat requires substantial amounts of land and water for both the animal feed and meat production, and according to Our World in Data, meat and dairy currently occupy 77% of the world’s agriculture landmass but only contribute 17% of the world’s calorie supply. Exhibit 6 compares the nutrition versus environmental cost in terms of water use between beef and other products. Also, cultivated meat production can be more local and hence shipping itself would be over shorter distances, thus a generating a lower carbon footprint. Could also make the point that production can be more local and hence shipping itself will be over shorter distances hence lower carbon footprint. But that wouldn’t be according to Kearney so may be best mentioned elsewhere. However, energy consumption for heating and cooling is relatively high for meat alternatives, though this should fall dramatically as cultivated meat operations move from pilot scale to commercial sizes with larger bioreactors. Notably, plant-based meat also can have a negative environmental impact. Soy is a key protein plant-based alternatives, and its production is considered one of the leading causes of deforestation. In fact, 65% of the world’s soy comes from countries with the highest deforestation rates, according to the BBC. Nevertheless, environmental concerns will likely continue contributing to the demand for meat alternatives, especially cultivated meat products.
The COVID-19 pandemic has also benefited non-meat alternatives, with US plant-based sales growing 264% in the nine weeks ending 2 May 2021, according to Nielsen. The ongoing shipping delays have caused supply shortages and could lead to significant price increases for conventional meat, while a Mintel report stated that 25% of UK millennials found veganism more appealing as a result of COVID-19.
While these factors will significantly drive demand, consumer acceptance will be crucial to cellular agriculture’s growth. Eating meat is a part of our human culture, and consumers have strong historical, culture and psychological ties to the idea of eating beef, chicken, pork, etc. But on the other hand, as McKinsey aptly describes it, ‘consumers know exactly how their salmon steaks and chicken tenders should taste and feel. These subtleties make replicating the meat experience tricky’. This is why cultivated meat companies are focusing on how to reproduce the sensory experience (taste, look, smell, texture, etc) that consumers enjoy when consuming meat, whether it be blending cultivated cells with or adding cultivated created fat to plant-based proteins.
Food safety is improved with the cultivated meat process, which reduces the likelihood of health hazards from bacteria such as E. coli, drug-resistant pathogens like some strains of salmonella and viruses like avian influenza, given the absence of mass slaughtering. The production processes are much cleaner, the potential for diseases is drastically less and far fewer growth hormones are used in the process as compared to conventional meat. Because the process is cleaner, the food safety benefits carry over into the finished product and the shelf life itself is lengthened. This alone has significant cost implications for distribution costs, maintaining shelves, etc. as there are fewer bacteria in the process that would otherwise cause spoilage.
Food security is also becoming more prevalent, as governments strive to become less reliant upon imports and move towards self-sufficiency. Local production is key, as supply disruptions and shortages are more prevalent now with COVID-19’s determinantal impact on shipping and distribution. For instance, Singapore’s ‘30 by 30’ programme is targeted on building up their agri-food industry capability and generating 30% of their needs locally and sustainably by 2030, and the government has funded many different technologies and initiatives focused on this objective. Cellular agriculture can help meet this need for local food generation, as producers do not need large areas of land to raise cattle and slaughterhouses for processing (as with traditional meat production) while cultivated meat can be created in local facilities and shipped same day to consumers, reducing the need to import meat.
Other markets for cellular agriculture
Protein and meat supply are not the only potential markets for cellular agriculture. Cell-based products are being evaluated for non-red meat alternatives such as fish, seafood, chicken, dairy, gelatine and even for non-foods like leather, cotton and silk. While there is a wide variety of prospective markets for cellular agriculture, consumer acceptance will likely vary accordingly based on the product. Surveys on consumer attitudes to cultivated food have shown that younger consumers are more accepting of these alternative products and, as discussed earlier in this report, the labelling and naming of the products will be key to desirability. As described by McKinsey, exotic meats such as ostrich, kangaroo and alpaca could be made cheaper and more widely available than through current conventional means. Moreover, leather created through cellular products may be more desirable to consumers, as it would avoid many ethical issues associated with animal-based leather and reduce the environmental impact of using the harsh, toxic chemicals often utilised in making traditional leather. In the near term, we believe that the consumer goods space will be the primary market that sees expansion, especially for more expensive products such as prime cuts of meat, leather and expensive cheeses.