Cell-Based Meat Market To Reach $25 Billion By 2030, Says McKinsey Report

Cultivated meat could balloon to a US$25 billion global industry by the end of the decade, predicts a new report by analysts at McKinsey & Co. The report estimates the trajectory that the cell-based protein industry will take in the next few years and outlines the key cost, regulatory and consumer acceptance hurdles that players must overcome to accelerate the pace of adoption. 

In a new report, McKinsey analysts take a bullish stance on the future of cultivated protein, saying the global industry could reach US$25 billion as soon as 2030. Having already made its way into restaurants in Singapore in December last year, the researchers believe that the sector could begin supplying “much as a half of 1 percent—billions of pounds—of the world’s meat supply” by the end of the decade. 

According to the report, there are several key factors that may affect the industry’s growth trajectory, such as the level of consumer acceptance and price parity with conventional meat.

“The focus of the next decade will likely be on proving commercial viability, with modest market penetration,” wrote the authors Tom Brennan, Joshua Katz, Yossi Quint and Boyd Spencer. “To succeed, the industry must assuage potential concerns around a novel food while delivering deliciousness at the right price.”

Taste key to consumer acceptance

When it comes to consumer acceptance, one main challenge for cultivated protein makers is how to distinguish their products from existing plant-based meat alternatives and conventional meat on the market. But beyond labelling and names, the cultivated meat industry must match or even surpass existing animal-based proteins to raise consumer adoption.

Creating specialty meats or products that taste even better will be a big selling point for the industry, according to the analysts, and they should play to their advantages of using cellular agriculture to create real animal protein of the highest quality. 

“The world primarily eats the meat of animals that are the easiest to farm industrially, but cultivated meat won’t face those constraints,” wrote the authors. “Instead, the industry could select cell lines from specific animals with the best traits, such as Wagyu beef or wild salmon, and replicate them at the same cost as, say, beef patties or tilapia.” 

But before cultivated meat producers reach this stage, McKinsey believes that like Eat Just, the company first to debut cultured chicken in Singapore last year, many players will be using a hybrid approach to get their products on the market. 

The industry could select cell lines from specific animals with the best traits, such as Wagyu beef or wild salmon, and replicate them at the same cost as, say, beef patties or tilapia.

“In the nearer term, companies may choose to focus on a single area and mix plant protein and other flavours into their products to achieve the desired taste and texture.” 

Other startups who have decided to take a hybrid approach include California’s New Age Meats or Moolec Science, a company dedicated to producing animal-free meat, egg and dairy proteins using both plant and animal cells. 

The road to price parity 

McKinsey says that another main factor affecting the pace of consumer adoption is price. If cultivated proteins can position itself as a “bargain” compared to its conventional counterparts, demand will follow. 

While the journey “won’t be easy,” the authors say that looking at the history of cost reduction in cell-based meat production, the industry is well on its way to achieve cost parity with traditionally produced meat by as soon as 2030. It echoes the predictions made in a recent GFI paper. 

“In less than a decade, companies have been able to reduce the production costs of cultivated meat by 99%.” 

Currently, the most expensive part of cell-based meat production is due to its pilot-scale and technical challenges, but McKinsey estimates that around 75% of costs can be slashed through scaling up, while the other 25% will come from “fine-tuning R&D”. Price points can also be reduced through the hybrid approach of mixing plant proteins with cultivated animal cells. 

But even before they reach price parity, motivated by environmental, ethical and safety concerns, more consumers will be willing to pay the premium that comes with cultivated proteins, says the report. 

“There is evidence in today’s marketplace that consumers are willing to pay extra for products they believe to be healthier or more sustainable.” 

In less than a decade, companies have been able to reduce the production costs of cultivated meat by 99%.

Sustainability concerns will pave way for regulation

Currently, Singapore remains the first and only country to have given the go-ahead for cultured meat to be sold commercially. But McKinsey researchers believe that it won’t be far off for other nations to follow suit, given rising concerns about food security and resilience from supply chain shocks as a result of the pandemic. 

Still, the “onus will be on producers” to convince both consumers and regulators that their products are as safe and nutritious as their conventional counterparts. 

But the industry’s sustainability advantages are likely to make them more attractive to particular countries that are especially vulnerable to climate-related food shortage risks. 

“The industry could prove attractive to some jurisdictions because of its potential to be more sustainable,” wrote the authors, citing a CE Delft-GFI life-cycle assessment that found cultivated meat slashed 75% of carbon dioxide and land and water usage compared to beef. 

More investment needed to achieve economies of scale

In 2020, cell-based protein startups raised more than US$360 million in investment, a 6-fold increase from the year before. It marked a record year for the sector and the broader alternative protein industry, but the report says that more investment is still needed to scale up enough to supply global protein demand. 

At current levels of cell-culture productivity, the industry would need anywhere from 220 million to 440 million litres of fermentation capacity, enough to fill 88 to 176 Olympic-size swimming pools.

“Reaching a US$25 billion cultivated-meat market by 2030 will require the annual production of 1.5 million tonnes of cultivated meat. At current levels of cell-culture productivity, the industry would need anywhere from 220 million to 440 million litres of fermentation capacity, enough to fill 88 to 176 Olympic-size swimming pools.” 

At present, the pharmaceutical industry’s cell-culture capacity equates to less than ten swimming pools, so far more capital is needed to ramp up production enough to supply just 1% of the protein market. With more funding, players in the space can properly build out the raw material supply chain, develop a streamlined manufacturing process and innovate factory designs that can be replicated all over the world to begin disrupting how we produce meat. 

“Further investment, ingenuity, and commitment are likely needed to move this concept from a novel small-batch product to one of the tempting protein options on millions, if not billions, of people’s plates,” the researchers say. “That potential is real.”

Lead image courtesy of Good Meat / Eat Just.