Tyson Ventures, the venture capital arm of Tyson Foods, has purchased a minority interest in Memphis Meats, a cultured meat startup based in San Francisco. The company said in a release that the move represented Tyson's "commitment to explore innovative, new ways of meeting growing global demand for protein." Terms were not disclosed.
Memphis Meats plans to use the investment to more quickly develop products and is now looking to expand its stable of chefs, scientists, and creative and business teams, Tyson said. Along with Tyson Ventures, other investors in Memphis Meats include DFJ, Atomico, Cargill, Bill Gates and Richard Branson, the company noted.
Tyson Foods CEO Tom Hayes said that while the move may seem counterintuitive, it makes sense because Tyson handles more than just chicken products, and the growing world population will need more protein from all sources.
Tyson Foods and its venture capital arm have been busy in the M&A space. Last year, the company bought AdvancePierre, a maker of RTE hamburgers, stuffed chicken breasts, cheesesteaks and other sandwiches, for $4.2 billion. The move was seen as furthering the company's expansion into prepared and branded foods that might bring in bigger and more reliable profits than its sometimes erratic meat businesses.
About a year before that, Tyson announced it would invest in Beyond Meat, a California plant-based protein company that produces meat-like burgers, heat-and-eat meals and other plant-based products. It was the first major meat company to do so and joined General Mills and The Humane Society of the United States in the investment pool. Tyson Ventures subsequently hiked that initial 5% stake by participating in another capital financing round to benefit Beyond Meat.
Canada's Maple Leaf Foods, a packaged meats provider, also made an investment in plants. It announced late last year that it would buy vegan meat and cheese maker Field Roast Grain of Seattle, a premium maker of grain-based "meat."
According to Allied Market Research, sales from the plant-based foods industry could hit $5.2 billion by 2020, Reuters reported, putting Tyson's financial involvement in the space in a much clearer and more profitable perspective.
Cargill has also invested in Memphis Meats, and the company's move last summer was a first for a major meat company.
While cultured meat, like plant-based foods, is considered "cleaner" than that produced through traditional animal-based agriculture by reducing the carbon footprint and eliminating animal slaughter, it requires a complex procedure and is very expensive to produce.
Memphis Meats CEO Uma Valeti told The Wall Street Journal last year that his company can make a pound of cell-cultured meat for less than $2,400, down from $18,000 last year.
At the Institute of Food Technologists conference last June, the company's senior scientist, Eric Schulze, said the startup expects to sell clean meat products in high-end restaurants at a higher-than-average price point by 2019. By 2021, it hopes to reach cost parity with grocery store meat products — at about $3 to $4 per pound.
If these and other projections for the product pan out, cultured meat could be appearing in grocery store displays next to the real deal and in restaurants serving unique protein sources. It could even become a trendy practice among foodies and others who want to purchase and consume foods with relative health halos stemming from their more sustainable origins.
Meanwhile, Tom Hayes, Tyson's relatively new and growth-oriented CEO, said that investing in cultured meat in no way competes with his company's core businesses.
"This isn't an 'either or' scenario; it’s a 'yes and' scenario," he said in a statement. "If you think about it, a protein strategy inclusive of alternative forms is intuitive for Tyson Foods. It's another step toward giving today’s consumers what they want and feeding tomorrow's consumers sustainably for years to come."