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Science plays catch-up to plant-based meat demand, investments

Food companies have most of what they need for plant-based proteins to take off: customer interest, investor cash, and a growing presence at retailers and restaurants.

But they fall short on one key ingredient: the ingredients.

Companies ranging from Beyond Meat Inc. to Nestlé SA are looking for new protein concentrates, oils and production processes to add to their arsenal for producing plant-based meats. Many are keen to find ways to make existing products, which often rely on soy and pea protein, taste and look even more like their animal-based counterparts, as well as address health concerns and extend the approach to new proteins where plant-based alternatives are few, such as seafood.

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Manufacturers and analysts expect sales of plant-based meat to skyrocket in the coming years. Analysts surveyed by S&P Global Market Intelligence project annual sales at Beyond Meat to rise to $1.05 billion in 2022 from $87.9 million in 2018, while Barclays estimated in 2019 that plant-based meats would lead annual sales of meat alternatives, which also include cell-cultured products, to $140 billion globally by 2029.

But those on both the scientific and financial sides of the plant-based business say a dearth of research exists to meet those aspirations, creating a potentially significant barrier to scaling up.

"These guys are furiously doing R&D work on every possible protein that they can," said Greg Bohlen, an early Beyond Meat investor and former board member, in an interview. "We're in the first inning of a nine-inning ball game," he said of the current state of plant-based science.

New ideas at 'every step of the process'

That means that researchers examining plant-based meat ingredients are still looking for answers to some basic questions. Few food ingredients on the market today were created with the current plant-based surge in mind despite the interest from companies and consumers.

"There's more money than ideas," Ricardo San Martin, research director and industry fellow at the Alternative Meats X-Lab at the University of California, Berkeley, said in an interview. The lab, which includes undergraduate and graduate students at the university, is working with companies including Nestlé and Swiss flavor-maker Givaudan SA on plant-based food projects, though it receives most of its funding through philanthropy. Nestlé did not respond to requests for comment.

One of the projects that San Martin and researchers are tackling examines the best way to add plant-based oils to imitation meat. On the one hand, the researchers are experimenting with oil from canola, sunflowers and other sources to determine which binds best with the texture of the constructed meat.

On the other hand, they are looking for a healthier alternative to the coconut oil that Beyond Meat and others use. Coconut oil is a saturated fat, a group of lipids that have been associated with cardiovascular disease. "We don't think any of these burgers are healthy," San Martin said.

Other challenges run deeper into the supply chain. Many ingredient-makers have only recently started to breed crop varieties specifically for plant-based foods, said David Welch, director of science and technology at the Good Food Institute, or GFI, a nonprofit that works with scientists and entrepreneurs. GFI provides grants to researchers, including San Martin, to study meat alternatives.

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Among GFI's other grantees in 2019 were researchers developing varieties of quinoa higher in protein than existing options and removing undesirable flavors from pea protein.

Two years ago, "there wasn't visible interest in the industry for breeding or engineering a new crop," Welch said in an interview. "That's now changed." GFI plans to announce another cohort of grantees this spring.

Experimentation also extends to the process used to add meat-like texture to plant proteins, with researchers looking into three-dimensional printing. Many companies use a process called extrusion, which involves exposing ingredients to heat and pressure — as well as high costs, both up-front investments for machinery as well as operating costs for electricity.

"We're seeing companies and universities trying to innovate every step of the process," Welch said.

Companies take action

San Diego-based Before the Butcher sells plant-based meats ranging from ground beef to turkey burgers in stores operated by The Kroger Co. and Albertsons Cos. Inc. The products are primarily soy-based, but the company is planning to add protein from another plant, such as quinoa or mung bean, in a revised version of its beef burger, CEO Danny O'Malley said in an interview.

"There's a lot of interest in variety and other proteins," O'Malley said. New ingredients have the potential to add nutrients other than protein, such as fiber, to the burger — something that Before the Butcher's customers have expressed interest in, he said.

But sourcing and developing new ingredients at scale, especially in a sustainable way, poses challenges, said Scott May, the head of MISTA, a San Francisco-based arm of Givaudan that works with food companies such as Danone SA and Mars to develop new products.

One startup MISTA is working with has been trying for several years to source fruit from the baobab tree for use as an ingredient, forging relationships with farmers in Africa to scale up production. "It takes a lot of time and money and effort to set up" a supply chain, he said.

Even Beyond Meat, which has found success distributing its Beyond Burger through retailers such as Costco Wholesale Corp. and restaurants such as Restaurant Brands International Inc.'s Burger King, is looking into alternatives to pea and other mainstays of the plant-based meat world. As it looks to expand production and distribution of its products abroad, the company is also investigating which proteins are easiest to source in other parts of the world, Executive Chairman Seth Goldman told an audience in January at the National Retail Federation's Big Show in New York.

"Our goal is to be plant-agnostic," he said. "We should be able to take protein from any plant that has protein."

But such experimentation is likely to complicate the financial picture for companies. Already, Impossible Foods Inc. has said it would face challenges supplying McDonald's Corp. with its existing meatless burgers, and analysts surveyed by Market Intelligence expect Beyond Meat to report a loss for the company's 2019 fiscal year.

Developing new ingredients to take plant-based meat into other categories, such as poultry and seafood, will mean more time before companies and other investors see a return on the money that they've put to work, San Martin said.

"I would say the timeline is longer than what they're used to," he said.