From lab to table: Will cell-cultured meat win over Americans?

Plant-based meat is, all of a sudden, on fire. In first-day trading on Thursday, California-based Beyond Meat opened on the Nasdaq stock market at $46, after pricing its shares at $25, and surged 163 percent in the best IPO so far in 2019.

Another industry is paying attention. The makers of cell-cultured meat, muscle tissue grown in a lab with cells harvested from a living animal, are poised to launch their first commercial products later this year, and hope the buzz around plant-based meat could forecast a similarly effusive welcome of cell-based protein alternatives.

But while plant-based and cell-based meat companies both say they are providing alternatives to traditional animal agriculture, the two rising rivals to traditional meat have antithetical aims, different audiences and a raft of disparate challenges.

And that could make it much harder - and take much longer - for cell-cultured meat to find purchase, even though companies that make it ostensibly have a much bigger potential market. Only 3.2 percent of Americans are vegetarian, and 0.5 percent are vegan. Cell-cultured meat companies are targeting all those carnivores and omnivores who want to eat meat, but with no animal slaughter and a smaller environmental footprint.

But with non-vegetarians embracing a new generation of plant-based products, burgers that chew, sizzle and even bleed like traditionally farmed meat, cell-based meat companies face stiff competition within the alt-meat market.

The tipping point for plant-based meat alternatives may have arrived a bit earlier than the Beyond Meat IPO - putting more obstacles in cell-based meat's way.

On April 29, Impossible Burger, Beyond Meat's chief competitor, announced a shortage. Food distributors couldn't get enough of the plant-based patties; major fast-food players such as White Castle and Red Robin jostled for their share. And on that same day, Burger King announced the plant-based Impossible Whopper would be offered nationwide by the end of the year.

Last week, Tyson Foods, the world's second-largest processor and marketer of chicken, beef and pork, revealed it would pull out of its 6.2 percent stake in Beyond Meat in advance of the IPO. Tyson's reason? It aims to start its own plant-based meat company.

Tyson is not the only meat giant to hedge its bet, with Cargill investing in alt-protein start-ups in the event consumer tastes shift precipitously in that direction.

It wasn't long ago that industry experts such as Don Close, senior animal protein analyst in North America for Rabo AgriFinance, dismissed plant-based meat as, um, a nothingburger.

'When they introduced plant-based products, restaurateurs said it looked really promising, but the reorder rate is really slow,' Close said last month. 'It's a negligible percentage of overall sales, and the amount of traction they are getting from the public is small compared to the media attention.'

'In vitro' meat, grown from cells in a bioreactor, could have an even longer path to adoption.

'People often do not want to think of 'science being in their food,' and it can seem unnatural,' says Tamika Sims, director of food technology communications at the International Food Information Council Foundation.

Kristopher Gasteratos, founder of the Cellular Agriculture Society, an international nonprofit organization using donations to advance cellular agriculture, talks about a revolution - but even his time scale is over the long term.

He argues lab-grown meat will replace 50 percent of the meat we consume by the middle of this century. By the end of the century, according to Gasteratos, intensive animal agriculture will be phased out entirely and all our meat will be grown in factories.

'If only half of it becomes remotely true, it will be one of the most important advancements of the century,' he said.

Gasteratos, speaking at a recent conference of ranchers and meat experts in College Station, Tex., cites global population growth projections and increasing per capita meat consumption among countries with growing middle classes against a backdrop of climate-related changes likely to shift or shrink arable land.

The first lab-grown burger was presented at a news conference in London in 2013, its tissue grown in a lab at Maastricht University in the Netherlands, at an estimated cost of $1.2 million per pound. Now the United States has at least nine cell-culturing companies, among 26 worldwide and with potentially more shadow companies gearing up in China.

This year Israeli-based company Aleph Farms said it had gotten the cost down to $100 per pound, and industry insiders say American companies are getting the cost to $50 per pound.

The USDA and FDA say they will have guidelines in place later this year - which could bring cell-based meat to market as early as this fall.

The barnyard lobby - representing the meat, livestock and poultry industries - is keenly interested in hammering out a framework for bringing cell-grown meat to market in a way that protects its interests. And that means dictating who gets to use terms like 'beef.'

Big Beef was the first to designate this as a policy priority with the National Cattlemen's Beef Association saying last year in a letter to the USDA: 'Cell-cultured meat manufacturers must not be permitted to use the term 'beef' or any nomenclature associated with traditional livestock production.'

There are reasons beef is leading the charge, and they aren't hackneyed narratives about cowboy-hat-wearing, aw-shucks ranchers vs. slick Silicon Valley venture capitalists. Cell-cultured meat companies will probably enter the beef arena first.

Eighty percent of early products will be 'unstructured meat' - ground beef and the insides of a chicken nugget as opposed to a T-bone or chicken wing, which are harder to produce. And with this country dispatching 50 billion hamburgers annually, three every week for each American, wresting one of those away from traditional agriculture, or from plant-based companies, would be big business.

Danielle Beck, senior director of government affairs for the National Cattlemen's Beef Association, said Big Beef is eager to avoid the mistakes of the dairy industry's ongoing kerfuffle over milk. The FDA has chosen not to take enforcement action against the proliferation of nut milks, soy milks, oat milks, etc. using the label milk. From Beck's perspective, these products should be labeled as 'imitation milk.'

'Our producers are looking at the struggles of the dairy industry, and they are being proactive because we don't want to end in the same way. Every single product needs to be distinctly identified in the marketplace,' she said.

So far, conventional and cell-cultured producers seem to be leaning toward 'cell-based meat' as the preferred descriptor - although Beck is still pushing for a description of the production process on the label.

Still, Beck might be right that many consumers remain hazy on what cell-cultured meat is, how it is made and what environmental footprint it will have.

Erlinde Cornelis, a marketing professor at the business school at San Diego State University who studies consumer psychology, said younger consumers are unlikely to be queasy about alt-proteins' fabrication. For people who have grown up with the specter of climate change, adoption of plant-based or cell-based meat over traditional animal agriculture is easy.

'Plant- and cell-based will appeal to different markets, but there will be some overlap. Actual meat is an old technology. It's almost ignorant if you know how much of our resources it takes; it's like typing on a typewriter when you have speech-to-text technology. From an ethical standpoint, some people might still be reluctant to try cell-based because it comes from an animal source. And like any food innovation, there will be skeptics.'

Specific claims about sustainability of cell-based meat - water and energy use, waste, input costs, food safety, use of antibiotics - are largely unavailable as no company has scaled up such that monitoring would be meaningful.

And therein lies the problem. To arrive at a product that is cost competitive with traditional meat or plant-based, cell-based meat companies will have to scale up. And to drive demand, they must attract an avid customer base with claims about nutrition, sustainability practices and environmental impact.

The alt-protein world is as wide open as the American West was a century ago. Cell-cultured meat must stake out its place.