Why Biotech Meat Cannot Compete With Animal Meat At Retail
Even combining cell-cultured meat with plant-based ingredients will still prove impossible to compete with the real thing in the marketplace.
Recently, the U.S. Food and Drug Administration released its “no questions” letter in response to biotech meat company Upside Foods’ safety submission for cell-cultured chicken. Many media outlets falsely reported the news as “approval” or “clearance” despite the FDA saying, “the voluntary pre-market consultation is not an approval process”.
Upside Foods called the letter a “green light”, which many media outlets repeated, even though this also overstates the move as there is still a long way to go, for both FDA and U.S. Department of Agriculture approval and oversight. (The two agencies share jurisdiction and the FDA alone lists 8 steps, including the pre-market letter, while USDA lists 7 steps.)
But regardless of how close regulatory approval may be for cell-cultured meat, or for that matter, scientific viability, if and when any product is ready to be commercially sold, the nascent industry faces significant marketplace challenges that few seem to be talking about.
The various challenges that plant-based meat has experienced in the marketplace offers us some clues as to what’s coming for biotech meat companies.
Prices will remain too high
Plant-based meats are already having a lot of challenges competing with animal meat on price, and cell-cultured is far worse. We keep hearing about “scaling” but no company has commercialized anything yet. A few restaurant servings in Singapore two years ago does not count as serious marketplace commercialization.
There still isn’t even a full-scale plant, only a showcase pilot facility built by Upside Foods that the company says can make only 50,000 pounds of “finished product”. In April of this year, the company raised $400 million to build a plant to produce at commercial scale, but as of early December, CEO Uma Valeti said they are still scouting locations and that he hopes “that states will reach out to us to put our facility in their region.” Doesn’t sound very imminent or promising.
So if the only company to receive any government approval in the U.S. has not even started to build a factory to make product at scale, biotech meat seems pretty far off from viable commercialization. That means companies will be making small batches if anything, which will remain very expensive. This could explain why Upside Foods is cozying up to high-end chefs and talking about restaurant tastings. While this may be a valid way to taste-test some products, it’s also a sure sign that anything close to price parity with animal meat is a long way away.
Valeti himself acknowledged this recently saying, “in time, we expect our products to be at parity with conventional meat, but that's going to be 5 to 15 years away.” Translation: he has no idea how long, if ever, this might take.
Given both the current scientific challenges of making cell cultures into something resembling meat and the high cost of “biotech meat only” products, many companies are talking about making hybrid products, which means combining cell cultures with plant-based ingredients.
But that’s not likely to bring prices down enough, given that the animal meat category is so vast, with so many options to choose from. Even in these inflationary times, consumers are simply “trading down” from more expensive to less pricey meats, think swapping steaks for burgers or pork chops for hot dogs.
Paul Wood, an expert in food technology, doesn’t see the price problem being solved anytime soon. He told me: “I continue to have conversations with various companies in this space and have yet to be convinced that they are anywhere close to a reasonable cost of goods sold.”
Retail shelf space is hard to maintain
If and when biotech meat companies can produce enough commercially, even as hybrid products, they still face massive uphill battles at retail, where shelf space is extremely competitive, especially in the meat aisle.
Beyond Meat and Impossible Foods have been able to snag some limited space in the meat section since their respective retail launches, but those products tend to get lost among all the animal meat, as it can be difficult to maintain prominent placement over time. Most meat departments are simply a mess. And yet, biotech meat companies think they are going to somehow do a better job positioning themselves and standing out in the very competitive and messy meat aisle?
Upside Foods’ Valeti recently put down Beyond Meat and Impossible Foods for making “vegetarian products”, as if that’s a bad thing. He was asked about store placement by a reporter who noted how Beyond and Impossible were able to get shelf space in the meat aisle; Valeti took the opportunity to literally distance his yet-to-be-made products from theirs, saying: “This is chicken cells that are growing into meat, so we expect it to be positioned in a supermarket or a grocery aisle right where meat products are sold, whether it's frozen aisles or refrigerated or fresh, not next to vegetarian products because this is not vegetarian.”
Perhaps the Upsides CEO was confusing Beyond and Impossible product placement with the “vegetarian section” of many supermarkets, where it’s true, these more “old school” products tend to be targeted to a niche vegetarian audience.
But still how will these new biotech products be positioned to stand apart from both the animal meat and the “vegetarian products” that Valeti doesn’t want to be near, even as Beyond and Impossible products are already in the meat section?
In addition, even meat companies that have jumped on the plant-based bandwagon are selling their meat alternatives in the meat section, right next to Beyond and Impossible. For example, meat giant Smithfield sells its “Pure Farmland” brand in the meat aisle, while major retailers such as KrogerKR are now selling their own private label plant-based line, with everything from deli slices to sausages to chicken.
In other words, the meat section is already overcrowded, mostly with animal meat, but also with plant-based alternatives, all of it driven by companies with significant power over what gets placed on store shelves, including retailers selling their own brands.
Now comes cell-cultured meats, likely hybrids. It appears highly likely that hybrid biotech meat products will get completely lost in the meat section. At the very least, no one seems to have a viable plan to compete on shelf.
Consumers won’t understand it
Almost no one, outside of the echo chamber of vegetarians, investors, and reporters has even heard of biotech meat, which also goes by more friendly names such as “cultivated meat”, the industry’s preferred euphemism.
We are talking about explaining to consumers an entirely new category of food, and one that is extremely complicated to explain. Most of the consumer surveys attempting to predict acceptance are biased by the companies that paid for them.
For example, this press release headline sums it up: “Over a Third of U.S. Consumers Will Adopt Cultured Meat When Launched, Says New Survey from Future Meat Technologies”. The results are as reliable as a headline that reads: “99 Percent of Consumers Will Stick with Meat from Animals, Says New Survey from Tyson.”
Another reason biotech meat companies are turning to plant-based ingredients is for greenwashing: to help “explain” to consumers what the heck this product is. Because at least most consumers have heard of peas and soy but almost none have heard of lab-grown meat, and if they did, would likely be turned off by it. This is a huge problem known as the “ick factor”, which tends to based on emotions, not logic, making it all the harder to overcome.
Some companies claim to be making plant-based products “taste better”, for example, by using cell-cultured fat as an additive to plant-based products. Here is how one analyst put it, using the biotech food industry’s euphemisms: “[Hybrid products] can help get consumers comfortable with the idea of precision fermentation or cultivated cells on a gradual basis. It may be easier for people to try a plant-based burger with an animal-free fat than to try a product that is entirely cultivated.”
Maybe so, but how will hybrid products even fare, given how confusing they can be? Consumers tend to want one or the other, “real meat” or an alternative, not both. We can look at what happened when Tyson tried to launch a line of hybrid products that combined animal beef with plant-based ingredients. They pulled it shortly after a failed launch of a “blended burger”. And Tyson is not exactly a start-up.
It will all be very confusing to explain in a busy supermarket, where most studies have shown that consumers take all of 13 seconds to decide what to buy. Good luck with that.
America Runs on Chicken Wings
Meanwhile, the animal meat industry keeps on doing its thing. With an over 100-year head-start on turning animal meat into a commodity at prices all consumers can afford, the Big Meat Machine shows no signs of slowing down.
In the 52-week period ending in May 2022, U.S. retail meat sales topped $85 billion, an increase of 5.8 percent over the previous year. In fact, of all meat categories, chicken sales led the way, increasing 10.6 percent to top $15 billion.
Also, in the fresh meat category, chicken wings saw a whopping 21 percent gain in dollar sales. Nothing stops Americans from loving their chicken wings. And yet, no one is making chicken wings in a lab. That’s why the problems related to meat production won’t be solved by food science or consumers, but by politics, as I wrote about before. And that won’t change, regardless of what any biotech meat company says or does.