Upside Foods And Good Meat Secure USDA Approval For Lab-Grown Meat

Key takeaways

• The USDA has given the go-ahead to two lab-grown meat start-ups, Good Meat and Upside Foods, to sell their products
• The cell-cultured meat industry is predicted to hit $13.7 billion by 2043
• None of the start-ups are publicly traded yet, but indirect exposure is available through companies like Tyson Foods

On Wednesday, we saw a major milestone in the development of lab-grown meat: Upside Foods and Good Meat have secured approvals to begin commercial sales of lab-grown chicken. That means you could soon see real meat that’s been grown in a lab in your grocery store.

The breakthrough can potentially transform animal agriculture, a major driver of global greenhouse gas emissions, but the new product likely needs a PR campaign before the public gets on board with the idea. Investors are chomping at the bit to get in on the promising start-ups. Here’s the latest.

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What’s the latest in food tech?

The U.S. Department of Agriculture has officially given two start-ups, Upside Foods and Good Meat, the go-ahead to commercially produce and sell lab-grown chicken in the country.

The process works by harvesting a small number of stem cells from animals before inserting the cells into a cultured environment to help the cells grow. They’re then harvested and put into a bioreactor, which creates the end product of lab-grown meat.

Both companies had previously received the green light from the U.S. Food and Drug Administration in November last year, having deemed the chicken filets safe for human consumption, but the Department of Agriculture’s approval was also needed for labeling clarification and a rigorous inspection process of its labs.

Uma Valeti, CEO of Upside Foods, said the approval would “fundamentally change how meat makes it to our table. It’s a giant step forward towards a more sustainable future”. Good Meat’s CEO Josh Tetrick had similar views. “This announcement that we’re now able to produce and sell cultivated meat in the United States is a major moment for our company, the industry and the food system”, he said.

Both companies have already partnered with leading restaurants to serve lab-grown chicken to paying customers. Upside Foods fans can experience cultured meat at three-Michelin-star chef Dominique Crenn’s San Francisco restaurant, while Good Meat will work with chef and restauranteur José Andrés and his Washington D.C. restaurant.

What was the market reaction?

Neither company is available on the stock market yet, but there were still movements in the wider food industry at the news. Beyond Meat, which produces realistic meat-free products, saw a 0.81% uplift to its share price.

The plant-based alternatives industry has struggled in recent months, with Beyond Meat’s stock price plunging by 80% since its 2019 peak and plant-based milk producer, Oatly, seeing 91% of its value lost. Investors will be cautious to see whether lab-grown meat may suffer the same flash-in-the-pan trajectory.

Tyson Foods, which produces about 20% of the beef and poultry in the U.S., saw a small slip in its stock price from $50.26 to $49.76 when the news was announced, even though it has a stake in Upside Foods. American food processing company Hormel Foods has dipped 1.9% in the working week, and food conglomerate General Mills saw a 1% lift to its stock in the same period.

The rise of lab-grown meat

Ever since the first lab-grown burger hit headlines in 2013, there’s been a flurry of start-ups on the scene dedicated to making cell-cultured meat a viable commercial reality. It’s no wonder angel investors and VC firms are pouring money into the industry: a report from IDTechEx puts the potential value of the sector at $2.1 billion by 2033 and $13.7 billion by 2043.

Eat Just, which owns Good Meat, secured $25 million last year from Chinese private equity firm C2 Capital Partners, which Alibaba backs. It also announced back in 2022 that it had signed a seven-year deal with biotech equipment company ABEC to handle the entire design and manufacture process for the bioreactors needed to create lab-grown meat.

As for Upside Foods, it became a unicorn company after its Series C funding round last year, which raised $400 million. The round was co-led by Temasek and the Abu Dhabi Growth Fund, and the company also counts Bill Gates as a long-term investor.

Other companies are quickly catching up. British company Uncommon has just raised $30 million in its latest funding round, whose investors included OpenAI CEO Sam Altman, while Multus Biotechnology secured $9 million in its Series A funding round back in January.

The U.S. isn’t the first country to approve lab-grown meat – Singapore already beat everyone to the punch in 2020 when it approved Good Meat’s product. The early adoption in the East Asian country has proven production capacity is a key issue the industry needs to overcome: it only produces up to six pounds a week in Singapore.

There are also price concerns with the products, given the expense of producing the meat in the first place. One analysis report from 2020 puts the price of producing a pound of lab-cultured meat at $17, whereas the price to produce a pound of beef is just $2.

The bottom line

We’re still in the very early stages of seeing lab-grown meat becoming a mainstay of the global food chain, but a lot of funding is making its way into the industry with some high-profile backers. Now the U.S. has officially greenlit two companies, we can expect the industry to soar.

Investors should consider whether we’re looking at a food fad or a sustainability breakthrough. Wall Street isn’t looking for another failed venture like the plant-based alternative industry, which the lab-grown meat sector risks copying if it can’t scale up.

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