Lab-Grown Chicken Company Bets the Farm on Alt Protein

Kingdoms rise and empires fall. It’s the way of things. But will plant-based meats and other alternative proteins created from animal cells in bioreactors or metabolized by microbes in fermentation tanks really replace a Juicy Lucy or Nashville hot chicken? It’s a question we’ve been asking and writing about a lot lately, and not because we’re looking to make any dietary changes. It’s something that every retail investor should be considering, as more companies like Beyond Meat (BYND) go public (probably through an upcoming deluge of risky SPAC deals). If this trend really has legs, then we also need to know if the dividend-growth stocks we hold such as McDonald’s (MCD) and Archer Daniels Midland (ADM) are keeping up with the times. So let’s look at a buzzy, well-funded startup (with a SPAC-worthy checkered history) that became the first company to sell lab-grown chicken commercially.

The Age of Chicken

First, let’s talk turkey … er, chicken. Real chicken. Like this fun fact: It appears that humans first decided to cook cluckers sometime between 400 and 200 BCE in an ancient city called Maresha in modern-day Israel. A verifiable fact: Humans love their poultry products. In fact, we slaughter 50 billion chickens every year, according to the World Economic Forum. At any one time, the combined mass of live chickens exceeds that of all other birds on Earth, scientists reported, prompting a writer in the New York Times to quip we live in the Age of the Chicken. While the introduction of fake meat has taken a bite out of beef products, chicken has flown the coop in terms of market share in recent years:

Graph shows increase in market share for chicken despite the emergence of plant-based proteins.
So far, chicken has resisted the plant-based trend.

Seems like people are hardly ready to cross the road for a chicken concocted in a lab. 

It’s Just Hampton Creek Rebranded

Click for company website

So we weren’t quite sure what to make of the company that made headlines at the end of last year for getting regulatory approval in Singapore to sell the world’s first commercial chicken – San Francisco-based Eat Just. We were even more surprised to learn that the company, founded 10 years ago, has raised $220 million in disclosed funding over a dozen rounds. How did we miss this juggernaut, valued at more than $1 billion? And then it dawned on us: Eat Just is just Hampton Creek rebranded, if not reinvented. 

Update 05/19/2021: Eat Just has raised $170 million to scale its cell-based meat subsidiary, Good Meat. This brings the company’s total funding to $440 million to date.

While it’s tempting to dredge up all of the controversy that has followed Hampton Creek over the years – the battles with Big Egg, the buyback scandal of its plant-based mayo, and accusations of shoddy science by former employees – we’ll just leave it that the company has, at times, been called the Theranos of Mayonnaise. Theranos is the blood-testing startup that bled investors dry, with founder and turtleneck sweater mannequin Elizabeth Holmes awaiting trial. It’s hard to say how Hampton Creek/Eat Just investors feel about all of this, as the company attracted some top-tier venture capital firms in its early days, including Khosla Ventures, Horizons Ventures, and Founders Fund. Khosla Ventures was on board from Seed to Series C in 2014 before becoming notably absent after the mayo hit the fan starting in 2015. King of ESG investing, Bill Gates, was also among the company’s early cheerleaders.

But somehow Eat Just (not to be confused with Just Eat, a publicly traded online food delivery company out of London) survived and continued to raise capital, though mainly from European investors. Maybe it has something to do with CEO and co-founder Josh Tetrick, who looks like Tom Brady’s younger brother (and was once an aspiring NFL linebacker). We saw him perform at the online Food and Agriculture Conference 2021, hanging 10 from the Hawaiian Islands and talking about “doing some work with the United Nations Development Program and the government in Liberia, and helping some kids in South Africa.” He wanted to change the world. 

The Chicken or the Egg or Neither

So, how is chisel-jawed Josh changing the world? Great question. The company, formerly known as Hampton Creek, originally made its name by creating an egg-free mayonnaise based on pea protein. Strangely, there is no mention of Just Mayo anywhere on the company’s rebranded website. And Josh never talked about it during his softball interview with the conference moderator. Instead, he went on some metaphysical journey about how an egg actually comes from a plant, his not-so-subtle way of introducing Eat Just’s latest flagship product, Just Egg, which took about four years of R&D. It turns out there is a type of protein in the humble mung bean that can be used to create a product that tastes and gels similar to an egg after you’ve processed it with a few other ingredients.

Plant-based egg substitute
Our Millennial MBA wants to know: Where’s the avocado? Credit: Eat Just

Josh claims the brand is the fastest-growing egg substitute in the United States. However, it’s unclear if this is the right time to disrupt Big Egg. Americans are on pace to eat the most eggs in 50 years – 279 per person, per year. The highest cholesterol-raising egg consumption was in 1945 when people ate 404 eggs per person, with the low point coming in 1991 when the average consumer cracked open just 229 eggs. East Just has released three versions of its plant-based product, including the standard liquid substitute, a premade egg patty, and something French-sounding called Sous Vide.

Chicken grown in a lab.
This actually looks kind of good. Credit: Eat Just

Eat Just jumped into cellular agriculture, which uses animal cells to grow meat without the need to slaughter them, back in 2017. The technology used by Eat Just and similar companies is so versatile that you can grow virtually any sort of exotic flesh in the lab. Apparently, the science-friendly authorities in Singapore liked the idea and granted Eat Just permission to sell its franken fried chicken. (For the sake of food technology history, McDonald’s released the McNugget back in the early 1980s, arguably the first chicken that’s more science than nature.) A local restaurant, 1880, was the first to put the Eat Just nuggets on the menu in December 2020, serving it up in a trio of sample dishes for the bargain price of $23.

Conclusion

And that brings us back to our original question: Is Josh single? Will alternative proteins from plants, test tubes, or a microbe’s microscopic bunghole displace animal-based meats and dairy products? RethinkX, a think tank that seems to have put some real thought and research into the topic of future food and agriculture, believes it will happen in the next decade. To quote: “The cost of proteins will be five times cheaper by 2030 and 10 times cheaper by 2035 than existing animal proteins, before ultimately approaching the cost of sugar.” This is a subject that we will dive into deeper for our premium-paying clients in an upcoming article that will dissect the value proposition of Beyond Burger. We owe Mike the Headless Chicken nothing less.

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