Lab-Grown Meat: An Emerging Industry with Massive Potential

• Cultivated meat is grown from animal cells in a lab and could reduce environmental strain from livestock farming.
• Singapore approved cultivated meat for consumption in 2020. Production costs have dropped 99% since 2013.
• Cultivated meat production involves growing cells in bioreactors, harvesting them, and then forming them into meat products.
• Advantages are better taste potential, nutrition, and sustainability. Challenges are high costs and needed capacity expansion.
• The main factors for adoption are consumer acceptance, managing risks, achieving cost parity, policy, and expanding production capacity.

A new form of meat production is emerging that could transform the $1.4 trillion global meat industry. Called cultivated meat, it involves growing animal cells in a bioreactor to produce meat products identical to conventional meat at a cellular level. This novel technique offers tremendous advantages in taste, nutrition, and sustainability compared to traditional livestock farming. However, substantial challenges remain before cultivated meat can achieve mass-market scale. This investor report provides an overview of cultivated meat, analyzes the factors that will determine its adoption, and assesses its disruptive potential.

What is Cultivated Meat?

Cultivated meat is produced by painlessly taking cells from an animal and replicating them in a bioreactor to grow muscle and fat. The cells are then processed into familiar meat products like chicken nuggets or steak, often using plant proteins to provide structure. It differs from plant-based meat, which uses only vegetable proteins. Cultivated meat is real animal meat grown directly from cells, not requiring slaughtering animals.

The core process involves growing stem cells in shaker flasks and progressively larger bioreactors until ready for harvest. The cells are centrifuged to isolate the cultivated meat before blending with additives into the final product. Production methods have advanced rapidly. When the first cultured burger debuted in 2013, it cost over $300,000. Just 8 years later, costs have dropped by 99%.

Massive Potential to Disrupt a Giant Market

The global meat market was worth $1.4 trillion in 2020. If cultivated meat could capture just 1% of this market, it would represent a $25 billion industry. For comparison, plant-based meat sales reached $7 billion in 2020 and are projected to hit $35 billion by 2027. The market potential for cultivated meat is truly massive.

Unlike plant-based meat, cultivated meat offers the taste, texture, and nutrition of conventional meat without requiring animal slaughter. It could make premium meats like wagyu beef as affordable and accessible as ground beef. The potential for creative innovation is also vast—imagine a mammoth burger on the menu!

Revolutionary Sustainability Benefits

By reducing the need for industrial livestock farming, cultivated meat provides extraordinary sustainability advantages. According to the UN, livestock production occupies 45% of the planet's land and emits 15% of greenhouse gases. Cultivated meat cuts land and water use up to 98% compared to conventional meat. If scaled globally, it would massively reduce agriculture's environmental impact.

Overcoming the Challenges to Reach Scale

Despite its huge promise, massive challenges remain before cultivated meat can reach mass-market scale. Currently, there is extremely limited production capacity, with less than 10 Olympic swimming pools' worth of global bioreactor volume compared to the 176 pools needed. Key steps to scale include:

• Expanding bioreactor capacity for cultivated meat production
• Developing tailored raw materials instead of repurposing from pharma
• Applying new technologies like AI to increase bioreactor efficiency
• Reducing costs further to reach parity with conventional meat

If costs follow the trajectory of human genome sequencing, some experts predict cultivated meat could reach cost competitiveness by 2030. But it will require billions more in investment and capacity expansion just to gain a 1% market share.

Critical Factors for Adoption and Growth

The pace of consumer adoption and market growth will depend on five crucial factors:

Consumer acceptance - Can cultured meats match the taste, texture, and experience of conventional meat for the mainstream? Targeted marketing and messaging will be key.

Managing risks - Health and safety concerns must be addressed transparently. Economic impacts on farmers and workers must also be responsibly managed.

Achieving cost parity - Cultivated meat must reach cost competitiveness with conventional meat through economies of scale.

Policy response - Governments will play a key role in regulation, subsidies, and standards for this new industry.

Production capacity - Massive bioreactor scale-up is needed to produce enough supply to meet future demand.

Investment Outlook

With over $1.7 billion invested since 2020, cultivated meat has attracted growing investor enthusiasm, especially from billionaires like Bill Gates, Richard Branson, and John Doerr. Still, substantially more investment will be required to fund the capacity expansion and technological innovation needed to reach scale production. Investors must understand the risky, long-term nature of bringing a radical new protein source to global plates. But the market potential is astronomical if that vision can be achieved. For investors with patience and fortitude, cultivated meat offers the chance to transform the future of food.