Blain’s Morning Porridge – Nov 10th 2023: Saving the Planet from Farm to Ferm
“If at first you don’t succeed, try, try again..”
What matters more; a new smart-phone or food security? Spending billions developing AI to make life more confusing, or improving the environment and social cohesion? Science and Technology can address humanity’s biggest problems – but how do we ensure they are focused on the right ones?
Earlier this week I found the clearest signal yet of how the coming AI everything revolution is the stuff of bluff and bluster. How? I read a piece on Bloomberg about failed Crypto shysters posing as AI entrepreneurs. Bloomberg profiled one guy who turned his NFT sales platform into an AI powered digital pet. FFS – go buy a Tamagotchi (remember them?)
Capitalism is greedy. That’s why it sort-of-works – but sometimes it needs nudged in the right direction.
Ask about Tech and you will immediately think how the seven-mega-Tech-stocks have driven stock markets this year. Each claims a winning axe in the AI revolution. Even venerable old Microsoft is trading at a record high. Sadly, it’s largely froth. AI might change the world, as did the internet, as did digitisation, as did the mobile phone – yawn. In Spinal Tap terms, Silicon Valley is paved in 25 carat gold (one higher than purest gold), because it captures the imagination of greedy investors looking to clamber onboard the next $3 trillion tech miracle. Ask Masayoshi Son of Softbank how that’s working out for him in the wake of WeWork’s bankruptcy.
The reality is the problems facing humanity are more serious than replacing accountants with AI, or how clever the camera on your next smart phone might be. Science and Technology, plus human inventiveness, and our inability to innovate solutions are far broader than just developing the next Tik Tok. It will be our ability to drive Tech and Scientific innovation that avoids multiple Malthusian crises in the global economy in coming decades – but not if we remain fixated on financing the wrong kind of tech.
AI itself won’t solve climate change, decarbonise, or reduce greenhouse gas emissions. It won’t directly address systemic societal problems like global food insecurity or the effects of chaotic climate events. AI can be part of the solution. Fortunately, there is a new scientific and technological revolution underway that will address many of the social economy’s problems. It’s happening in renewable power and energy transition. It’s happening in food security and decarbonisation.
None of it will be simple. Realigning the global economy from the bottom up was never going to be easy. To make it work, we’re going to need to create a new priorities in terms of infrastructure – not just new national grids for power, but new infrastructure for new industries.
As I often do, let me start with a story:
- In 1903 Oliver and Wilbur Wright flew the first airplane. (My dad (an aviation engineer) went on a personal pilgrimage to their hometown of Dayton Ohio and afterwards commented it was no surprise they’d taught themselves to fly!) For the next decade the fragile planes fell out the sky, failed, broke up, crashed, and were derided for scaring the horses. “They will never replace the train”, thundered the papers. A decade later (spurred by the imperatives of WWI) a major aircraft industry had developed. None of the firms that launched aviation were around 20-years later. Swift technical evolution saw them quickly replaced. 50 years later we were crossing the Atlantic at Mach 2 in time for second breakfast. (In the past 50 years all we’ve really seen is the emergence of Ryan Air.)
Perhaps the most exciting, and potentially most rewarding tech sector today, and the one I bet you were not thinking of, is Biomanufacturing. It has massive potential to genuinely change the world, and there are imperatives driving it – food security, social stability, climate change and decarbonisation.
Unfortunately, the firms that hoped to be the darlings of a Bio-revolution are today’s “scaring the horses” train wrecks – just like early planes. Beyond Meat made plant-based patties. It was supposed to be disruptive and transformative, highlighting a new food industry – popularising not-meat by appealing to environmentally conscious consumers by cutting methane belched and farted into the atmosphere by cattle, and healthier by slashing the high costs cholesterol imposes on health. But, Beyond Meat has seen a massive collapse in its stock price from a peak of $234 to a mere $7 today. To some extent it has scared off investors.
What went wrong?
One aspect is that artificial meat costs more than real meat. That doesn’t help when consumers found they just didn’t like the product either. In September Investment Bank TD Cowan said the core problem “is the product… Consumers cite taste, aroma and texture of meat alternatives relative to the real thing, not price or health benefits.” Beyond Meat has seen sales tumble 23% y-o-y. Its’ products have been dropped by fast food chains. After trialling the McPlant patty in 2022, McDonalds was unimpressed and decided it was just too early stage for their customers.
Privately held Impossible Foods was valued at $7 bln two years ago when the stock was valued at $14.64. It has seen its potential valuation crumble based on employee shares now less than $1.50. It is at least increasing sales, strongly suggesting it’s a better product. It’s been using a Biomanufactured protein, “heme”, to give the sensation of blood in its product.
The reality is, no matter how good the product concept, or how attractive the marketing opportunity sounded, in order to sell meatless meat for health and save the planet reasons the actual product has to be good and priced to sell to the mass market.
The key takeaway is not that plant-based Meat is a bad thing. The lesson is the technology was still very early stage. There are many evolutionary dead ends in business.
Bio-tech is evolving and getting better – although plant-based meat is probably a limited evolutionary niche. The future won’t be about dressing up plant raw materials with all kinds of additives to make non-meat sausages.
Biomanufacturing is going to be about the alternative Protein sector. Many people believe Star Trek food replicators using 3D printing tech to construct and deliver perfectly acceptable “meat” based meals made from proteins derived from precision fermentation are just a few years away. Not every bio-science expert agrees with this; it would be complexity without much additional value – but the outcome will be the same: mass produced protein identical to animal proteins available at cheaper cost.
The basic technology behind precision fermentation is as old as mankind. Humans have been brewing beer by fermenting sugars for millennia – any ancient archaeological site always features a brew house. New fermentation technology and precision fermentation allows bio-scientists to grow identical animal products in fermentation tanks. It’s now possible to recreate the proteins to create bioidentical, nutritionally equivalent whey, milk and eggs. Stem Cells can be grown to produce lab-grown meat. We are now past the initial experimental/demonstration phase with many of these technologies close to commercialisation.
Meatless meat products might have been brought to market too soon and too quickly because of the frenetic, speculative frothy everything bubble that drove anything remotely tech/green to insane levels due to ultra-low interest rates. I also suspect one way to popularise new food products from fermentation into the food-chain is not just through vat-grown meat, but in creating a whole new cuisine around new protein and other fermentation food products. Personally, while I regard tofu as an offence against humanity, anything can be made absolutely delicious with enough tasty hot sauce!
It’s not just vat-grown meat. An ever-wider range of product’s suitable for Bio-Manufacturing are being innovated. It’s a spectrum from proteins to feed stocks, food to petrochemical substitutes, which can be made in large, modern fermentation tanks able to produce a whole range of offtakes at increasingly competitive costs, with lower carbon costs and green-house emissions. Sounds too simple a win?
There is an infrastructure problem. The number of fermentation tanks available to create commercial scale proteins and other products is currently in very short supply. It has become a massive bottleneck for BioManufacturing. Facilities are expensive to build, require power to keep cool, and are simply not available today. The industrial infrastructure to drive a fermentation revolution – where tanks can produce runs of constantly changing product – doesn’t yet exist. (It will tomorrow – I’m working on it.)
Fermentation is well understood, but complex. Utilising “precision fermentation” to grow the specific proteins and biomass to make plant-based burgers or petrochemical substitutes can be done on the laboratory bench. To provide proof of concept demonstrations currently requires the repurposing of other medium sized fermentation vessels to show. To actually get the products on the shelves for mass consumer testing, there are very few large commercial fermentation vats available.
To create a scale business without serious supply-side blocks and to bring down the costs to compete with conventional product, it will be necessary to construct larger vats. There are only 17 fermentation facilities around the globe able to handle 100,000 litre runs that will be required to really change the cost metrics for mass consumer production.
But do that, and the upside is unlimited. Reducing emissions from livestock could potentially be a massive component solution to decarbonisation, with the added plus of creating greater food security through access to plentiful proteins. Second generation technology will be more precise, raise capacity to commercialisation scale, and drive down costs through scale.
To push costs down, fermentation experts reckon doubling production brings the cost down by 1.4 x. By making the process more efficient and improving the “titer” (effectively the concentration) by a factor of 2 can bring costs down by the same amount. What is holding back Biomanufacturing through fermentation is a bottleneck in the means of production.
Do you see the opportunity? If you do, we should have a chat.
And before I get an angry letter from Jeremy Clarkson about my intention to wipe out traditional farming, if we do see the scale innovation of Fermentation based food and protein production it won’t spell the end of traditional farming – far from it; it will likely focus protein based farming to produce higher welfare, hi-quality luxury product, raising the potential for increased farming profits also!
No Time For Five Things This Morning…
Have a great weekend – no porridge on Monday morning.. I’ll be on a plane…
Market Strategist – Author, The Morning Porridge