Upside Foods established as Memphis Meats has emerged as leading U.S. contender for commercial production of cell-cultured meat. In August 2017 the predecessor of the company raised $17 million in series A funding with participation from “the usual suspects”, Bill Gates, Richard Branson and Kimble Musk. At this time, Memphis Meats had prepared a meatball at a cost, with amortization of R&D amounting to $18,000 per pound. The promise was that with scale of production, price would be reduced although nowhere near the comparison with real meat.
In early 2020, Memphis Meats raised $161 million in a series B round involving SoftBank Group and participation by Cargill Inc., Tyson Foods, Future Ventures and influential investors including again Branson, Gates and Musk. Following the large capital infusion, Memphis Meats became Upside Foods and opened their Engineering, Production and Innovation Center (EPIC) in California. This pilot plant, 53,000 square feet in extent is capable of producing 50,000 lbs. of cultured meat annually. To place this in perspective, the proposed output represented the edible meat from 15,000 chickens. This assumption is based on a 6.5lb. bird live with 75 percent yield and 70 percent edible meat based on a broiler with a bone to meat ratio of 3:1.
Recently Upside Foods announced that it would locate its commercial plant for cultivated meat in Glenview, IL. Requiring an investment of $140 million for a 190,000 square foot facility with an ultimate production potential of 30 million lbs. annually. Assuming that all product was in the form of a chicken substitute, the projected maximum production would amount to the equivalent of 8.8 million birds annually or 0.1 percent of current U.S. broiler production. This would be hardly a proportion that would displace the conventional industry.
It is self-evident that capital investment relative to saleable product is disproportional to required investment in the production of broilers, excluding live bird facilities owned by contractors. The comparison could be made with Costco that invested $450 million in their Lincoln Premium Poultry operation for the plant, hatchery and feed mill to produce two million birds per week. The capital cost of edible chicken meat in this operation would be $1.27 per lb. The proposed Glenview plant to be erected by Upside Foods at $140 million producing 30 million lbs. of edible chicken meat annually would be $4.66 per pound per year. The respective capital investments would be reflected in the fixed cost of production including interest, depreciation and overhead. The projected fixed cost generated by Upside Foods would be $1.36 per pound compared to 0.36 cents per pound for the conventional Lincoln Premium Poultry complex.
In November 2022 the Food and Drug Administration completed a pre-market consultation and the Company announced plans for commercial production in 2023. Approval by regulatory authorities does not necessarily represent consumer acceptance. There will certainly be a curiosity factor that will attract affluent consumers to sample a meal containing cell cultured meat in a gourmet restaurant. Given the differential in projected cost, it will be a long time before we see a product alongside real chicken and beef in a supermarket display cooler. The challenge for aspirant producers of cell-cultured meat will be to scale up from laboratory and in some cases limited pilot plant production to commercial output.
Upside Foods has opted to produce sheets of tissue in reactors a departure from the more simple process of cultivating a meat slurry that is suitable for nuggets and pre-formed meat products. In order to produce whole cuts, as claimed by Upside Foods, the company will have to refine its technology and demonstrate consistent output of saleable product at a price that is reasonably competitive with real chicken, beef or seafood.
A disturbing review by Matt Reynolds on September 15th posted on Wired raises doubt as to the ability of Upside Foods to actually produce a saleable whole cut of chicken meat. The 4 oz. fillets served once per month to 16 diners in a six-course $150 meal by the Bar Crenn restaurant in San Francisco were fabricated from thin sheets of tissue grown in roller bottles and then fabricated by hand.
Upside Foods COO Amy Chen was quoted as stating that product is still being produced in laboratory-scale 2-liter plastic roller bottles that would create an immense environmental problem of disposal after a few cycles of use. Despite the hype associated with the opening of the EPIC facility, in November 2021, the company apparently has been unable to produce saleable product consistently from reactors that would be required for commercial scale output. Upside intends producing “whole-textured” chicken in the Glenview facility but is unable at the present time to attain production using capital intensive and sophisticated metal reactors with a capacity of 500 liters (130 gallons). Reports from company insiders and ex-employees suggest that the first generation of bioreactors is unsuitable and modifications are anticipated. Despite the fact that the installations at the EPIC plant are non-functional the company continues to conduct tours and imply that the EPIC installation is in fact capable of producing 4,000 lb. quantities of cultured meat each month.
If in fact Upside cannot produce whole cuts in their reactors then they should cease hyping their technology, return to the drawing board and make changes that will satisfy their promises.
Upside owes its investors a frank appraisal of progress and achievement and an assurance of when commercial production will be attained. The article quotes employees referring to their company as the “next Theranos” representing an extremely disquieting comparison.
Upside Foods along with competitors collectively need to justify the approximately $3 billion invested in the technology over the past seven years. Upside has received over $500 million since inception as Memphis meats. Above all this emerging industry must be honest with its investors, be realistic in ambition and ultimately aspire to establish a niche in the protein market when technical restraints are resolved.