Research predicts significant disruption of cheese market with animal-free dairy

The UK produces and consumes a lot of cheese. According to 2018 figures, 470,000 tons is produced, and 790,000 tons consumed, annually – equating to 11.9kg of cheese consumed per person.

Due to the greenhouse gas (GHG) emissions associated with dairy production, predominantly through methane released during the digestive process of cattle, it has been estimated that the average UK consumer’s cheese consumption creates 79.73kg of CO2e – which collectively, is the equal to 1.2% of GHG emissions in the UK.

Animal-free cheese, made from precision fermentation-derived dairy proteins, holds the promise of recreating the conventional dairy cheese, but with significantly fewer GHGs, as well as less land and water.

But just how disruptive this technology is expected to be, in terms of potential market share, has yet to be estimated.

New research funded by German precision-fermentation start-up Formo has sought to do just that.

Why focus on the UK?​

In a study published in International Food and Agribusiness Management Review Journal​, co-authors Peter Slade, associate professor at the department of agricultural and resource economics at Canada’s University of Saskatchewan, and Formo analyst Oscar Zollman-Thomas, examined consumer demand for animal-free dairy cheese produced using cellular agriculture.

A total of 1,249 participated in the study, all of whom reside in the UK. A survey was conducted as well as a ‘discrete choice experiment’, whereby participants were faced with different choice tasks demanding they choose between six options: a nut-based mozzarella, premium mozzarella, ball mozzarella, animal-free (precision fermentation-derived) mozzarella, or not purchasing. Pricing was a key feature of the experiment.

As to why a German company sought to conduct the study with a Canada-based researcher on the UK market, Zollman-Thomas suggested several factors influenced the decision.

“Peter [Slade] is simply one of the best academics globally for this type of research and he has had a longstanding interest in the dynamics of the emerging cellular agriculture market,” ​the Formo analyst told FoodNavigator.

Formo surveyed a number of different countries (and revealed it will be set to publish more research in the future) but focusing on the UK for this initial research ‘felt prescient’ for a number of reasons.

The UK is a ‘middle ground’ between consumer attitudes in the US an EU markets, while currently operating under EU regulations; there is a strong vegan/vegetarian/flexitarian movement and existing penetration of the plant-based dairy category in the UK; as well as strong momentum behind novel food approval reforms, noted Zollman-Thomas.

‘If competitive prices are achieved, animal-free dairy is poised to revolutionise markets’​

Study findings suggest that animal-free dairy is poised to replace a significant portion of conventional dairy cheese consumption.

If animal-free dairy is sold at a price premium of 25%, the study predicts consumer adoption will initially capture a 22% market share of the cheese market. For Formo, this indicates precision fermentation is ‘bound’ to disrupt the mass market.

At price-parity, the findings are more significant: the study predicts that animal-free cheese will capture a third (33%) of cheese market share. And if market demand grows, industry collaborations strengthen, and technological advancements continue apace, these figures are on track to experience an ‘astounding leap’, noted the precision fermentation start-up.

“The question of whether society will embrace the next generation of food has loomed over the cell-ag space for quite some time. As long as precision fermentation dairy can achieve competitive prices, it is poised to revolutionise markets,” ​commented Prof Slade on his findings.

The research also suggests that 79% of consumers asking for animal-free dairy cheese will be consumers were previously consumed conventional dairy cheese.

So when will precision fermentation-derived cheese hit the market?​

For animal-free dairy to truly make a splash on the UK or EU market, it must first receive pre-market approval.

Precision fermentation-derived is already on the market in other jurisdictions. In the US, for example, Perfect Day’s whey protein received US Food and Drug Administration (FDA) approval back in 2020.

Formo aspires to be the first European company to launch precision fermentation-based cheese (and egg) products, and would like that launch to take place on home soil. The company is optimistic about novel food approvals in both the UK and EU.

“We’ve had some brilliant conversations with UK policymakers and note the fantastic work of organisations such as the Alternative Protein Alliance that have already put reform and support firmly on policymaker agendas,” ​Christian Poppe, director of public affairs at Formo, told this publication.

“In the UK, we’re certainly hearing positive noises about embracing [cellular ag tech] and we’re hoping we’ll see some similar moves in the EU soon.”​

Formo is eyeing foodservice and retail channels, with restaurants set to be the first places consumers will be able to try its products.

When asked for details on the timing and location of Formo’s market entry, CEO and founder Raffael Wohlgensinger said the company is working on a diverse range of products, looking at a ‘spectrum’ of different proteins and possibilities for getting products to consumers as rapidly as possible. “We’re seeing the potential or even debuting some of these before the year’s end. Europe is Formo’s home and the home of cheese, so it’s here where our heart and focus is right now.”​

Source:​ International Food and Agribusiness Management Review
‘Cheese without cows: Consumer demand for animal-free dairy cheese made from cellular agriculture in the United Kingdom’
Published online 19 July 2023
DOI: 10.22434/IFAMR2022-0150
Authors: Peter Slade and Oscar Zollman-Thomas.