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Why do YDLabs bet on Foodtech fermentation?

Time and again I am asked why our new Foodtech labs facility, YDLabs, is focused on fermentation, and fermentation only. The two other segments of alternative protein development are either larger or rapidly growing. The plant-based segment is much larger, while cultured meat is growing fast and is by far the “sexiest” segment in the Foodtech town. Yet, still, we had identified fermentation as a promoter with significant growth prospects, great technological advantages for the Foodtech world and where knowledge and expertise can take a venture a long way.

The alternative proteins industry is based on microorganisms, mammalian cell-cultures proteins and plant-based techniques. We had to carefully consider which is the right segment in which we can be as helpful as we can to the Israeli Foodtech industry. The potential problem of cross contamination had eliminated the idea of providing services for a combination of the technologies (i.e., fermenters and bioreactors as a service) under the same roof. Taking that under considerations and though the cultured meat segment is already blooming (disclosure: the writer is a vegetarian and is eagerly craving for all players’ success), we were able to point out several reasons to focus on fermentation:

1. Seasoned technology. Fermentation had been here since the early agriculture period. I will not start a history class pointing out evidence of fermentation processes dating back to 7,000 BC, or Louis Pasteur’s discoveries from the 19th century setting the fundamentals for today’s applications. I will, however, mention that fermentation had long been part of food processing, whether for preservation, taste, health purposes or industrial efficiency goals. Over centuries, fermentation techniques and processes kept expanding in use. Now, as they have become a major factor in the development of alternative proteins major advances are in progress and it is reasonable to assume more will come in the near horizon.

2. Fermentation technologies serve all three alternative protein segments. As a simplistic example, while fermentation processes are used for producing end products, they are also used for producing enzymes for plant-based protein processes, growth factors for cultivated meat production, and ingredients for plant-based and cultivated meat mixture products. Through these, as well as other examples, fermentation technologies are involved in a much larger part of alternative protein development than it seems.

3. Fermentation requires, relatively, a simple and cost-effective development. No, not in general, but certainly when compared to cultured meat development processes. From the raw materials through media and up to the process’s complexity, fermentation is simpler and cheaper. This is amplified by the common fermentation knowhow and expertise available in the market compared to the relatively young cultured meat segment. From a business initiative perspective, the relatively shorter and more efficient process as well as the reduced cost significantly lowers risks.

4. Investments growth is staggering. Capital investments in fermentation-based companies are growing tremendously, showing over 180% growth between 2020 & 2021 (“GFI State of the Industry Report 2021”). Yes, one cannot ignore the accelerated growth of the cultivated meat segment vs other segments, but the flavor, texture, and cost challenges are still far from being resolved. However, as the “old” segment of fermentation is growing in high numbers, and ever-growing number of startups, initiatives of new technologies and ideas emerge in the fermentation-based segment, we are confident this segment will bring the highest value.

Our interpretation, combining all of the above and attempting to look into the future, is that the fermentation segment provides a great potential while still holding the lowest risk. By serving the expanding Foodtech industry it will continue growing, even if not as fast as others, and once it booms, relatively limited resources will be needed to close expansion gaps.

Thanks to Dr. Moti Rebhun and Dr. Yoni Manor for assisting me with this piece

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