2020 State �of the Industry: �Fermentation-�enabled meat, eggs, �and dairy

Agenda

Welcome & introduction to the Good Food Institute

Why the world needs alternative proteins

2020 Fermentation State of the Industry

• Commercial landscape
• Investments
• Science and technology
• Government & regulatory

Q&A

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The Good Food Institute

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Science and Technology

Advancing foundational, open-access research in alternative proteins and creating a thriving research and training ecosystem around these game-changing fields.

Corporate Engagement

Partnering with companies and investors across the globe to drive investment, accelerate innovation, and scale the supply chain—all faster than market forces alone would allow.

Policy

Advocating for fair policy and public research funding for alternative proteins.

GFI is a 501(c)(3)nonprofit developing the roadmap for a sustainable, secure, and just protein supply. We focus on three key areas of work:

GFI officially earned GuideStar's 2019 and 2020 Platinum Seal of Transparency—obtained by less than 1% of nonprofits—reflecting our commitment to maximum impact, efficiency, and inclusion.

We work as a force multiplier, bringing the expertise of our departments to

the rest of the world.

United States

Brazil

India

Europe

Asia Pacific

Israel

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100+ staff in 6 regions

Total meat

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= 10 MMT

Alt meat

Additional meat demand by 2050

Fundamental efficiency gains for alternative proteins

gfi.org

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CALORIE OUT

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CALORIE OUT

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CALORIES �IN

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13%

CONVERTED

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CALORIES �IN

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3%

CONVERTED

Source: Shepon, et al., Energy and protein feed-to-food conversion efficiencies in the US and potential food security gains from dietary changes.

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CALORIE OUT

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CALORIES �IN

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9%

CONVERTED

Cycling calories through animals in this way is equivalent to 87-97% food waste in production.

Where does the global protein supply come from?

Source: Poore and Nemecek 2018

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Agricultural land used for crops for humans supplies 2/3 of the global protein supply.

Land use

Global protein supply

Meanwhile, even though about 83% of agricultural land is used to produce meat, aquaculture, dairy, and eggs, these sectors only provides a 37% of the global protein supply and 18% of the global calorie supply.

Source: United Nations, Livestock’s Long Shadow (report)

Sustainably

Industrialized animal agriculture is in the top 2-3 most significant contributors to the world’s most pressing environmental issues such as water use, air pollution, and loss of biodiversity.

Industrialized animal ag is responsible for 14.5% of greenhouse gas emissions—a higher share than the entire transport sector.

Sources: World Resources Institute (calorie formula);�UN FAO (land use)

Efficiently

It takes nine calories of food fed to a chicken to produce one calorie of meat.

75% of agricultural land is used for raising and feeding livestock yet only provides 1/3 of the global protein supply.

Sources: FDA (animal-consumed antibiotics); IMS Health (human-consumed antibiotics); United Nations IAGC (AMR)

Safely

Animals in the United States consume more than 2x as many medically important antibiotics as humans do.

Based on current trends, medical experts expect 10 million annual deaths from antimicrobial resistance (AMR) in 2050, a 14-fold increase over current deaths. 

How will we feed 10 billion people by 2050?

GFI’s approach

GFI’s Solution: Accelerating alternative proteins

We can create meat, eggs, and dairy more sustainably and efficiently by making them from plants, cultivating them directly from cells, or producing them by fermentation.

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Instead of asking consumers to give up the foods they love, GFI is accelerating the transition to alternative proteins by helping companies make products that are delicious, affordable and accessible.

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Alternative protein production platforms

Plant-based

Photo courtesy of Plant-Based Seafood Co.

Fermentation

Photo courtesy of Ecovative Design: Atlast Food Co.

Cultivated

Photo courtesy of Wildtype

Comparing alternative proteins and conventional meat on environmental impacts

For GHG comparison to conventional beef production, cultivated meat’s global warming benefits are best viewed as short-term, as beef’s impacts are driven primarily by methane.

Source: GFI & CE Delft lifecycle assessment 2021. Note: The beef shown here is from dairy cattle. Beef from beef cattle is significantly more resource-intensive, with 70x as much GHG emissions compared to plant-based meat.

Animal product alternatives will occur along a spectrum

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100% fermentation-derived

Growth factors from fermentation

Fermentation-derived flavoring ingredients

Enzymes can improve protein functionalization or coagulation

Tiny organisms, tremendous potential

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Microbial fermentation has been used for:

• Cheese
• Beer, wine, & spirits
• Bread, kimchi, tempeh
• Enzymes & food processing aids
• Vitamins, natural flavors, pigments
• Fungal biomass meats since Quorn in 1985

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90% of modern cheese production uses fermentation-derived rennet enzymes, rather than extracts from calf stomachs.

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Traditional fermentation: using biological processing to improve functionality

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Biomass fermentation: high protein content and quality; imparting meat-like texture without extrusion or extensive processing

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Precision fermentation can address key functional and sensory challenges in alternative protein products

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Egg white proteins

Milk proteins �(casein, whey)

Collagen proteins

Heme proteins

Growth factors

Different fermentation approaches vary in the degree of downstream processing they require and their functional activity in formulations

Source: GFI, Fermentation State of the Industry Report, 2020

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Although fermentation is a relatively mature platform, alt protein applications present new challenges

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Fermentation can address key challenges in processing and formulation of plant-based products

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INGREDIENT PROCESSING

Raw materials are isolated and functionalized by mechanical and chemical processes to create optimal ingredients for the end product.

END PRODUCT FORMULATION AND MANUFACTURING

Texturization

The correct mix of ingredients and processes are established to create the desired taste, texture, smell, and structure

Raw material optimization

Isolation & functionalization

Formulation & manufacturing

Commercial landscape

Expanding fermentation-powered alternative protein startup landscape

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• Thirteen startups dedicated to the use of fermentation for alternative proteins launched, along with new suppliers focused on fermentation-enabled alternative protein ingredients.
• Activity in precision fermentation increased, with nine of the 13 new companies focused on precision fermentation, three on biomass (an area with significant activity in 2019), and one on traditional fermentation.
• About 4 in 5 alternative protein fermentation companies have formed since 2015

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Startup technology focus areas and locations

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Companies with initiatives in fermentation value chain

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Source: GFI analysis

Established leaders in fermentation are increasingly catering to the needs of the alternative protein sector

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2020 product launches

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Planterra, a plant-based meat subsidiary of the world’s largest meat producer, JBS, introduced their first line of products under the brand OZO, which features pea and rice protein fermented with shiitake mycelia from MycoTechnology.

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2020 saw the market launch of the first dairy product made through precision fermentation. Perfect Day’s commercial ice cream launches represent the first time consumers have been able to buy precision-fermentation-enabled animal-free dairy made with real milk proteins.

Fermentation infrastructure priorities

Production capacity

• Dedicated facilities owned & operated by alternative protein brands
• Contract fermentation providers

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Processing capacity

• Sources of raw materials like sugar or other biomass feedstocks
• Marketplaces & exchanges to aid sourcing
• Upstream processing & quality/safety testing
• Cheap downstream processing (recovery, extraction, purification, drying, etc.)

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Challenges

• Need capacity at various scales: pilot, demo, commercial
• Retrofitting obsolete biofuel facilities
• Existing production infrastructure, inputs, and workforce come from high-cost, high-margin life sciences industry, with emphasis on sterility that is over-engineered for food production purposes

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For more information on the fermentation capacity landscape, please view the slides and recording from GFI’s recent webinar, Commercial Fermentation: Opportunities and Bottlenecks, presented by Mark Warner

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Global alternative protein market projected to reach $290 billion by 2035

Note: Global share calculations assume $1.4 trillion global total meat market, unless source materials provide their own share estimate

Source: Business Times (May 2019); J.P. Morgan (May 2019); A.T. Kearney (2019); Grizzle (May 2019); UBS (July 2019); Barclays (August 2019); Jeffries (September 2019); A.T. Kearney (2019); Stephens (2021); BCG (2021); EY-Parthenon (2021)

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Investment

Alt protein investment backdrop

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Source: GFI analysis of Pitchbook data

Fermentation-powered alternative protein investments surpass $1 billion

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Key 2020 Funding Rounds

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$300 million Series C

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$45 million General Debt

Source: GFI analysis of PitchBook Data, Inc. Invested capital includes accelerator and incubator funding, angel funding, seed funding, equity and product crowdfunding, early-stage venture capital, late-stage venture capital, private equity growth/expansion, capitalization, corporate venture, joint venture, convertible debt, and general debt completed deals.

Note: Data has not been reviewed by PitchBook analysts.

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Annual investment in fermentation companies

2013-2020

Total invested capital: $1.03 billion

2020 fermentation investment overview

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Source: GFI analysis of Pitchbook data

A variety of funding models

Funding Models: A Heatmap

Analysis inspired by the “Funding Models in Life Sciences” newsletter from Joshua Elkington of Axial

Dilutive

Legend (Deal Count)

Non-Dilutive

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-

-

-

→ Logo in cell is an example of a company pursuing said financing strategy

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→ Hyphen in cell suggests no companies have (to our knowledge) publicly

pursued said financing strategy

Notes

Dilutive models

Funding models

by deal count

Example

Non-dilutive models

Funding models

by deal count

Example

Note: Examples are select companies pursuing said financing strategy. Analysis inspired by the “Funding Models in Life Sciences” newsletter from Joshua Elkington of Axial.

Science & technology

While we have barely scratched the surface of what’s possible, fermentation is poised for rapid growth

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The top taste barriers reported for plant-based meat are focused on moisture, flavor, and texture

Source: Food Systems Innovations, “Chicken and Burger Alternatives: Taste Test Results” (December 2018)

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Formulation solutions: leveraging fermentation-derived ingredients to augment plant-based products

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OPTIMIZING FLAVOR AND FUNCTIONALITY

IMPROVING TASTE AND TEXTURE THROUGH FAT ENCAPSULATION

ENHANCING NUTRITIONAL PROFILES THROUGH BIOFORTIFICATION

RECAPITULATING THE CONSUMER EXPERIENCE OF COOKING

Utilize a recombinant protein platform to produce key flavor molecules and/or enzymes that can improve ingredient functionality

Utilize metabolic engineering to produce volatile compounds identical to those given off by cooking meat to capture the olfactory experience

Develop methods for fat encapsulation that can withstand processing into plant-based meat, allowing for higher fat retention

Develop microbial strains that will bioaccumulate or synthesize high levels of vitamins or minerals as a natural biofortification ingredient

Fermentation-derived enzymes are especially promising for augmenting plant proteins

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Lots of room for enzyme adaptation, prospecting, or engineering to improve ingredient functionality or biomaterial properties.

Enzymatic treatment can address these key challenges with plant proteins:

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• Low solubility
• Low gelling and crosslinking capacity
• Bitterness, beany notes, other off-flavors
• Low emulsification
• Low fat binding and water binding capacity

Enzyme manufacturers are seizing on this opportunity and developing custom portfolios of enzymes suited to these challenges.

Key opportunities for innovation

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Strain development

Feedstock optimization

Process design & manufacturing

Target identification and selection

Formulation & product development

Key R&D areas with potential for scale and cost reduction

Novel strain development

Feedstock / waste valorization

High-volume, low-cost mfg. capacity

Source: GFI analysis

• Screen microbial strain libraries for production-relevant traits (yield, temperature tolerance, feedstock flexibility) and performance traits (protein content, savory or neutral flavor, fiber formation).

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• Develop expression platforms for high-value ingredients that are induced by low-cost triggers.

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• Develop strains with innate production of limiting vitamins or nutrients (bio-based fortification).

Examples of high-impact research areas:

Key R&D areas with potential for scale and cost reduction

Novel strain development

Feedstock / waste valorization

High-volume, low-cost mfg. capacity

Source: GFI analysis

Develop processing methods to leverage existing biomass sidestreams from local industries (agricultural processing, forestry, etc.) as fermentation feedstocks.�

• Develop characterization tools to enable predictable adjustment of processing conditions to accommodate feedstock variability.�
• Build technoeconomic models for assessing the economic viability and break-even volumes for new feedstocks.

Examples of high-impact research areas:

Key R&D areas with potential for scale and cost reduction

Novel strain development

Feedstock / waste valorization

High-volume, low-cost mfg. capacity

Source: GFI analysis

• Bioprocess engineering to enable retrofitting and conversion of existing fermentation facilities.

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• Engineering novel bioreactors that can accommodate larger volumes, more viscous liquids, etc.

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• Scale-up and scale-out frameworks for solid-state fermentation.

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• Novel harvesting and sterilization methods to increase efficiency and reduce energy inputs.

Examples of high-impact research areas:

Fermentation adjacent technology: Plants as recombinant protein platforms

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At least 11 publicly announced companies are now working on this approach

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Proposed advantages:

• Improved sustainability metrics for producing certain target molecules
• Widespread agricultural infrastructure
• Lower CAPEX 🡪 potentially lower attainable prices
• Plant hosts themselves can be used elsewhere in alt protein supply chains (amino acids, added proteins, scaffolding materials, other feedstocks)

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*List may not be comprehensive or inclusive to larger suppliers that source a portion of their recombinant protein catalogue via plants

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For a comprehensive look at the science of fermentation

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Source: GFI analysis

Check out GFI’s science of fermentation page: gfi.org/science/the-science-of-fermentation/

GFI has mapped challenges and solutions throughout the alternative protein value chain

GFI recently published an overview of the most pressing challenges we’ve been told about at each stage of the alt protein supply chain, representing whitespace opportunities for startups, investors, and established suppliers, based on over 150 supply chain interviews.

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Tools for the industry

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Source: GFI analysis

Source: GFI analysis

Ecosystem building

Advancing science

gfi.org

GFI Competitive Research �Grant Program

Funding for cutting-edge science to take plant-based and cultivated meat to the next level

Learn more about funding opportunities >>

Sourcing and scaling the next generation of alt proteins.

Differentiating muscle and fat cells in animal culture.

Optimizing non-animal cell culture for protein biomass.

Engineering recombinant proteins as inputs for animal-free food.

Research white spaces

• In 2019 and 2020 GFI awarded $6.9 million to 35 research teams around the world.

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• Research teams are conducting cutting-edge open-access research projects aimed at improving the organoleptic qualities, cost, and scaleup of alternative proteins.

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• Researchers in academia, government, industry and nonprofits from around the world are eligible.

Government & regulatory

Israel

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Source: GFI analysis, Israel Ministry of Health | Image credit: GPO Kobi Gideon

Food Control Service

“Appoint a body to serve these industries in order to connect and oversee all the stakeholders operating in this field.”

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— Prime Minister Netanyahu

Regulatory - United States

• Multiple companies have already obtained “no questions” letters from the FDA for purified fermentation-derived ingredients, meaning the FDA does not object to the companies’ view that their ingredients are “generally recognized as safe” (GRAS). 
• Nature’s Fynd (formerly Sustainable Bioproducts) filed a GRAS notice with the FDA in January 2020; the FDA’s response is pending. 
• In March 2020, Perfect Day received a no questions letter from the FDA in response to their GRAS notice for beta-lactoglobulin, the major protein in whey.

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Regulatory - Singapore

• The Singapore Food Agency (SFA) updated a year-old guidance document on novel-food safety assessments. According to the SFA, the framework set forth in the guidance document steered the SFA’s approval of Impossible’s soy leghemoglobin in August and Triton Algae’s Chlamydomonas reinhardtii algae in November 2019.

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Regulatory – Australia & New Zealand

• In December 2020, Impossible Foods received approval for their heme from the regulatory agency Food Standards Australia New Zealand; the approval became final in February 2021

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European Union

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Source: GFI analysis, European Commission, Chatham House

Use of genetic engineering?

Novel Food Regulation

Regulation No. 1829/2003 (GMOs in food and feed)

Yes

No

EU Labeling

• In October 2020, the European Parliament rejected a bill that would have prohibited the use of meat terminology like “sausage” or “burger” on labels for products not derived from an animal carcass.
• The Parliament did pass a similar ban which introduced further restrictions on the labelling of plant-based dairy. While dairy terms such as “milk” and “yoghurt” are already banned under EU law, these new restrictions would ban any ”evocation” of the concept of dairy, even when used with a clear modifier such as “alternative” or “style.”�

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Government support

• Meati Foods received an equity investment from the U.S. Department of Energy
• Mycorena received a 50,000-euro grant from the European Commission
• The PLENITUDE project—a consortium of 3F Bio, Bridge2Food, Mosa Meat, Wageningen University, IFF, and other companies—received a 17-million-euro grant from the EU Horizon 2020 program
• The EIT Food Accelerator Network (funded by a European Commission Horizon 2020 grant) included Mycorena and The Mediterranean Food Lab in their 2020 cohort
• San Francisco’s Perfect Day announced that they would collaborate with Singapore’s Agency of Science, Technology and Research (A*STAR) to build a research and development center. 
• The EU Smart Protein project published a new fermentation-related research study led by University College Cork. The project is a $10.5 million initiative of the European Union to support the alternative protein industry and includes support for fermentation (fungi and side-stream conversion).

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Conclusion

Consumer response has been strong in spite of premium pricing, implying strong growth ahead as products improve and the supply chain scales

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• Abundant, inexpensive capital
• Diverse pool of investment sources to meet variety of industry needs
• More food industry partnerships

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• More research funding
• Talent & workforce development
• Better end product formulation
• More & better ingredients
• Scientific advancement & innovation
• Shared & open-access knowledge

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• Ecosystem of enabling industries
• More production/processing capacity
• Scaling infrastructure for future demand
• Better processing & production techniques

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• Lower prices
• More variety
• Wider availability
• Improved nutrition (protein quality)
• Improved functionality & versatility
• Quality: Better flavor, texture, & sensory appeal

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• Food industry support
• Positive consumer perceptions
• Social and institutional support
• Cultural & cuisine integration
• Effective promotion

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The “feed” industry of the future – alternative proteins need to utilize every fraction of crop or biomass inputs

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OR

SIDESTREAM BIOMASS

• High utility for plant-based meat, egg, and dairy products

High molecular-weight proteins

• High utility for cultivated meat production; may need to supplement with fermented amino acids

Amino acids, small peptides

• High utility for microbial fermentation (production of ingredients, enzymes, growth factors, fungal protein) or scaffolding for cell-based meat

Simple sugars and longer polysaccharides and starches

PLANTS

ALGAE

BACTERIA

FUNGI

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The alternative protein industry has applications to and synergies with other parts of the multi-trillion-dollar global bioeconomy

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Production benefits of alternative proteins

Complete customizability and control

• Additive assembly instead of disassembly, can be designed from the ground up
• Steak with your brand’s logo printed into the marbled fat
• Custom meat blend (turkey + duck + chicken) that is unique to your brand
• The species of meat we currently eat (cows, chickens, pigs, etc.) weren’t necessarily selected for being the most delicious or nutritious: these species happened to be easy to domesticate
• Better nutrition, can control fat ratios and compositions
• Improved shelf life and food safety

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Produce just the highest-value meat cuts

• No carcass balancing problem, can produce the exact cuts demanded
• Eventually, premium cuts like sirloin or bluefin tuna could cost the same as ground beef, causing a dramatic shift in consumption patterns

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Production benefits of alternative proteins

Easier and faster to produce

• Faster to produce
• Production can be much more responsive to demand than animal-based meat, which takes months or years, resulting in boom/bust cycles
• Reduces supply and price volatility
• Can be made anywhere, fewer geographic limitations
• Easier to automate production, reduced worker crowding
• Ex. easier urban production, inland production of seafood

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Alternative proteins are reframing the meat, egg, & dairy categories

Meat has become more abstracted away from the animal over time

• From hunting/gathering and agrarian economies >> centralized farming and slaughter
• From buying whole parts of animals (side of beef) >> buying specific cuts and formats
• All enabled by food-tech innovations such as boxed beef and cold shipping

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The definition of “meat” is shifting, from being primarily defined as animal tissue to:

• Functional - center-of-plate anchor, satiety, nutrition and protein source, energy
• Experiential - specific grouping of flavors and textures, umami, dense flavor

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Integrating plants and new forms of protein is the next step of this evolution

• Plant-based, fungi, algae, cellular agriculture, precision fermentation, etc.
• Hybrids/blends of animal + plant protein, animal + cellular protein, plant + cellular, etc.
• Breeding better fruits and vegetables for flavor
• Spreading protein around the plate

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Animals as a technology are being superseded, which has happened before

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Made irrelevant via alternative technology

Transportation

Horses & pack animals

Fuel & Energy

Fuel

Lamps (whaling)

Draft animals

Research / Animal Testing

Models for Human Disease

Food & Materials

Meat & Byproducts

Category

Animal Technology

Alternative

Technology

Cars, Planes, Trains

Electricity &

Tractors

Refrigeration,

Processing, &

Currency

Body-on-a-chip

New Protein & Materials

Food Storage & Tradeable Wealth

Livestock

Q&A

Download State of the Industry reports at:

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gfi.org/industry

For more resources, sign up for GFI’s �Plant-Based Insider newsletter:

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gfi.org/insider

Contact us at corporate@gfi.org with any questions!