The next billion dollar company will be in lab-grown meat
By 2025 the global meat industry will hit a market value of 7.3 trillion USD. Beef accounts for 25% of the world’s meat consumption. The US beef industry produces about 74B annually — it’s a big industry.
The average cost of a beef burger is $4.49.
However, this industry has lots of faults: it’s unsustainable and environmentally unfriendly. That’s why heavy research is going towards the lab-grown burger.
Currently, the cost of a lab-grown burger sits at $11.36 per round.
Yeah, lab-grown meat is currently 3X more expensive than regular burgers. But lab-grown meat is a new technology, so it’s going to grow more and drop in price soon.
It’s just the start for lab-grown meat, the price is going down.
The first lab-grown burger was made in 2005 for $300,000. It’s 2018 and that price has been brought down to $11.36. 13 years later and a 99.996% decreased in price.
The price will go down even more because it’s a new technology. An example of a new technology decreasing in price is genome sequencing: the first human genome took $2.7 billion and almost 15 years to complete. In 2018 the same sequencing costs about $600 and can be done in a few weeks. The price is still falling as the technology is increasing in efficiency; soon we’ll be able to sequence a genome for a few dollars in a few minutes. The only reason the price dropped so dramatically is that the technology improved. Just like genome sequencing, the tech behind lab-grown meat is on its path to improvement.
Companies are working on overcoming challenges within the field of lab-grown meat.
The three main challenges stopping cultured meat from scaling
The biggest challenge for cellular agriculture startups, cultured meat specifically is scaling up their product. Once they scale the product, it’ll be immensely cheaper to produce. The current price of production ($11.36 per pound) reflects the cost of producing the burgers in an unscaled environment (i.e. Petri-dishes). In reality, we would be producing lab-grown meat products in large bioreactor tanks, not small Petri-dishes.
The three primary things that are holding back the cultured meat technology from scaling up are the expense of the medium, costs of the microcarriers and designing + implementing bioreactor systems.
Let's break down the cost barriers
Cost Barrier # 1: the medium
The typical medium for supporting cell cultures is called FBS (fetal bovine serum) which contains fetal cow blood. Its pricepoint ranges, but it’s around $84.50 per 50ml. 50 ml of serum won’t make that many burgers. FBS is too pricey to produce a $4 burger to compete with the other burgers on the market.
They’ve been able to get the cost of the FBS medium down to about $42.50 / 55 ml, but this is still too expensive to hit the market. Researchers have attempted to reduce the use of FBS by 50% or more (mediums are normally 10% FBS — they’re trying mediums of 2–5% FBS), which has significantly reduced costs but at the cost of the cells growing at a slower rate.
The current solution is to save money on the medium and jeopardize cell growth rates.
One of the possible alternatives is NCS (newborn calf serum) since it’s 80% less expensive. However, its downside is that it doesn’t work as well as FBS since it’s a lot more immunogenic.
There are 3 ways startups are going to combat this problem:
- Make FBS cheaper
- Find a plant-based alternative for FBS
- Expand Cell culture life so they can grow in a more immunogenic medium
Right now supply for FBS is low, and demand is High — that’s why it’s so pricey
Slaughterhouses HATE receiving pregnant cattle, therefore don’t buy them. The number of fetuses that actually get to the slaughterhouse is very small, which keeps FBS supply low and prices high.
FBS is a direct by-product of the meat industry. The prices are constantly fluctuating. One of the main factors is climate. When a farm hits a drought, the farmer will send its herds to market, and then it will take years to rebuild its herds. Uncontrollable climate like drought, flooding, storms, etc. will impact the number of cows sent for processing. With climate change, we’re experiencing more and more uncontrollable climate, making the resource of FBS scarce.
There is a growing demand for FBS as cell culture research is happening in many biomedical fields.
On top of that, in order to create 2.2 million lb of beef (0.01% of the 25 B lb beef industry), you’ll need approximately 1,000,000 lbs of FBS. Unfortunately, the animal serum industry only produces about 700,000 lbs of FBS annually.
WAIT! Before you lose hope in cultured meat, there are solutions. It’s probably impossible to create more supply of FBS and lower the price because there is no economic incentive for farmers to raise pregnant cattle. It’s good to use right now, especially for research purposes and understanding the cells. Unless the FBS supply skyrockets, it’s not practical for cultured meat.
Luckily, most cultured meat startups made the switch or are making the switch away from FBS. They’re going to be billion-dollar companies still.
So there are actually TWO ways startups are approaching the expensive media problem (spoiler, it’s actually a bit of both):
- plant-based alternative for FBS
- Expand Cell culture life so they can grow in a more immunogenic medium
Companies like JUST and Memphis meats claim they have plant-based media, but it could cost more than FBS
There are TONS of researchers looking into possible alternatives. Especially in substances like celery. JUST even has an AI plant library where they explore really exotic, unheard of plants. They have yet to mass produce these media and get the price down, but once and if they do, they’ll solve one of the biggest setbacks of cultured meat. If they can produce a media that costs less than $22/L, these companies can produce $22 M in profit per every 2.2 M Lbs of burgers. The best part: the cost of the plant-based media will become way cheaper over time. As we start scaling, the price of the media will drop as will the price of the burgers.
Different fellows and researchers are working hard on replacing the media, they’re almost there.
Lowering the cost of the medium is not the only thing they’re doing to bring the cost down.
Improve cell culture life + ability to proliferate
Now, this varies from organization to organization. Some companies are opting to use IPSC (induced pluripotent stem cells) which have the ability to proliferate indefinitely. Others are using myosatellite cells. Both cell types have their upsides and downsides. What researchers are doing is trying to genetically manipulate cells to perform the fastest conversions of cells into muscles. This is done based off of different experiments/stimulations.
The end goal is to create the best possible cell for cultured meat. Preferably, one that can grow within a more immunogenic medium (i.e. NCS). One challenge faced is that cells age, and eventually, stop proliferating. Molecular scientists are trying to prolong the lives of the cells to increase their proliferation rate. They’re working day in and day out trying to model the best cells possible; I’m confident that pretty soon, they’ll have a stem cell 2.0 that can grow in an immunogenic media and make cultured meat much cheaper.
Once we’ve enhanced the cells, we’ll be able to grow cultured meat in a cheaper medium. The price will dramatically decrease.
Cost Barrier #2: Microcarriers
There are two ways to tissue engineer cultured meat cells: with microcarriers or without. When we culture cells, we place them in a bioreactor tank filled with a medium which gives the cells its growth factors. The classic (and most successful approach so far) is having microcarriers (a type of scaffold) within the medium. These microcarriers vary between different companies, but their overall purpose is to allow the cells to stick and grow with their support.
The average cost for microcarriers is $0.16/cm2. For a 2000L bioreactor tank, there are roughly 5 million microcarriers each about 500μm or 0.5 mm in size. This results to approximately 100,000 cm2 of microcarriers or about $16,000 per bioreactor tanks.
The preferred mechanism (and the future application of cultured meat) will involve culturing cells without microcarriers to avoid extra costs.
There are lots of variable costs involving cultured meat, startups are working to fine-tune their technology in order to make production as cheap as possible.
If they successfully master tissue engineering without scaffolds (microcarriers), they’ll save $16,000 per bioreactor.
Cost Barrier #3: Bioreactor tanks
The biggest cost to cultured meat is scaling up. In order to scale, we’ll need bioreactor tanks. The cost of these tanks will vary between companies. The actual lab to grow clean meat will look similar to a beer brewery.
Once we have breweries built, the cost of producing the burgers will go way down.
So no one has actually created a cultured meat brewery, the closest thing to compare the cost is WuXI, a Chinese company that grows cells in bioreactor tanks (for purposes other than cultured meat) built their 14 tank bioreactor brewery for 150 M. Cultured meat startups can expect to spend 10s of millions of capital on setting up their lab systems, but after that, the cost of production WILL decrease.
Beer is an example. It costs 10s of millions to set up a beer brewery with a bunch of fermentation tanks. But once the brewery is built, the equipment lasts a relatively long time, and the production cost of beer just declines.
It’s also a lot cheaper to make lab-grown burgers in bulk rather than in singular Petri-dishes. Once we get the equipment, cultured meat is on the rise.
Companies and startups are not at this stage, yet. They will be soon. Once they build the breweries with the corresponding equipment, they’ll hit the market fast.
Once we get the variable costs down + set up breweries, how will cultured meat burgers compare to traditional burgers?
The biggest costs of growing beef through cattle are the water, land and food
Notice a pattern? Most of the cows are raised in really hot places that will be most affected by climate change.
By 2030, our food demand will increase by 73% compared to 2010. How will we be able to sustain that change if we’re raising cows at the hottest, most at risk spots of the planet? We won’t. That’s why lab-grown meat is a billion-dollar opportunity.
One of the main resources being put into growing beef is water.
It takes 15,415 L of water to make 1 kg of beef.
Here’s a map of the world and the likelihood of places being in extreme drought:
Most of the areas where cattle are grown today are in places that have an extreme, severe or moderate drought index (with the exception of the southeastern United States and southern South America).
So in the future when the demand for food skyrockets (and as developing countries get richer they’ll want more meat) we are going to run out of the water to grow these meat products.
And thanks to climate change (which was caused by humans, so thanks to humans) droughts will become more common. Meaning, resources like water will become too expensive for farmers and they won’t be able to raise as many cows. Supplies will go down, demand will increase. Meat prices will increase, giving lab-grown meat an easier time competing in the marketplace.
Lab-grown meat will need 82–96% less water and it’s not weather dependent. We’ll be able to make meat during extreme weather conditions (which are going to become the norm with global warming).
Livestock are eating up our water AND land
26% of earth’s ice-free terrestrial land is used for growing livestock and their food. Lab-grown meat will use 99% less land cutting the land expenses by 99%.
The biggest expense is feeding the cows
The average cow in Illinois costs $300 per year to feed. Multiply that by the 1.5B cows in the world, you have a $450B expense.
97% of the food we feed cows is used up in their day-to-day functions. Less than 3% is available to us in their final productions of beef and milk. The whole point of cows is so we can produce beef and milk, but we’re wasting $291 worth of protein and nutrients, to get $9 of protein and nutrients per cow, per year. This ratio (97:03) doesn’t make sense.
By feeding the cells directly in a growth medium, we ensure almost all the nutrients are going towards feeding the cells. There are no stats on this, yet, but the waste levels will probably be significantly less.
It just makes more sense from an economic standpoint to grow just the skeletal muscle of a cow, and feed just the cells in the muscle, than to grow the entire cow and feed the entire cow if the only products we’re using is the skeletal muscle.
Not to mention, cows take on average 18 months to grow their juicy parts. It would take lab-grown meat about 10 days (maybe less as the tech advances) to grow the same parts.
Lab-grown meat is better than conventional meat in every way
- Use less water and land (82–96% less water, 99% less land to be exact)
- We won’t need to feed cows ( the biggest expense in farming )
- Lab-grown burgers take way less time to produce
- It’s not dependant on weather
- They’ll be able to meet the supply and demand of our growing population
The average burger at burger king costs about $4.50 and they sell 2.4B burgers annually -> that ’s $10.8B of revenue. If lab-grown meat companies can get their products down to $3.50 they can compete with burger king (and similar companies) and make tons of profit.