The precision fermentation technology sector is growing rapidly, but food and beverage manufacturers in the US and across much of the globe face substantial bottlenecks in scaling new products.
Factories capable of producing fermentation-derived ingredients – everything from dairy and egg proteins to natural food colorants – can cost hundreds of millions of dollars in capital expenditures to build, posing a major roadblock for companies in bringing their products to market.
Greater cooperation within the industry – a challenge made more difficult by competing interests – and increased government support are critical for developing the burgeoning technology, according to industry leaders at Future Food-Tech San Francisco in mid-March.
Precision fermentation’s chicken and egg question
Among the biggest problems associated with precision fermentation-derived products is whether or not the market will support them – and for investors that’s a risky bet.
Steve Molino, principal of Synthesis Capital and moderator of the panel “Engineering the Future of Food: Fermentation and the Path to Scalable Innovation” posed it as a chicken and egg question.
“You need to make massive quantities of your novel ingredient or novel product, which means you need large-scale facilities,” he said, noting that such projects are too costly for venture capital firms to handle alone.
A project of that magnitude requires debt financing, which requires long-term purchase contracts, also known as offtakes, with large buyers like Unilever, according to Molino. In order to build the factories to scale, companies must prove their products will sell.
Proof of concept is the biggest concern, confirmed Florian Viton, Unilever’s vice president of Research and Development Foods Science and Technology and site leader at the company’s Hive Global Foods Innovation Center in Wageningen, Netherlands.
“What we need above everything is certainty,” he said, noting that Unilever needs its partners to commit to a consistent volume. Providing that proof is a challenge if the product has not yet gone to market.
Starting out small for Solar Foods
One company, Solar Foods, has been navigating the path to scale its Solein product for nearly a decade, and is close to opening its first large-scale factory, according to CEO Rami Jokela.
Solar Foods manufactures its flagship ingredient through a gas fermentation process that uses renewable electricity to split water into hydrogen and oxygen. The resulting hydrogen, carbon dioxide from the air and minerals are then fed into a bioreactor that creates protein, fiber and healthy fats.
The technology has the potential to create a “paradigm shift” in food and beverage manufacturing due to the process, which uses little energy and can operate in any region of the world and during any season, said Jokela.
The Helsinki, Finland-based company founded in 2017 has spent nearly a decade scaling its manufacturing capabilities, opening its first small-scale factory in the Vehkala district of Vantaa, Finland, in 2024.
The smaller factory is capable of producing 160 tons of Solein a year, but Solar Foods’ large-scale factory, known as Factory 02, set to open in the Selkäharju area of Lappeenranta, Finland, in 2028, will increase output to 6,400 tons annually.
The company said in December it is building a network of strategic partners to launch additional factories in the United States, Southeast Asia and the Middle East. Solar Foods is still searching for two or three partners to help with Factory 02’s real estate, hydrogen production, electricity grids and cooling and heating capacity
Solar Foods is proving its scalability in the market by launching in Singapore in 2022. Jokela said in October that the Singapore test market has enabled the company to begin expansion into other parts of the world.
“The regulatory framework in Singapore allows for very fast processing,” he said. “Four years ago, when we first started there, we received approval for sale very quickly.”
Unilever’s Viton agreed that Singapore is a strong partner for food manufacturers because the country has made food security a part of its national agenda.
“They have been able to harmonize the way that they attract and have developed local partners,” Viton said. “They have a large investment National Fund behind it that is also the fuel in the engine.”
Precision fermentation scaling in the US
Fermentation production in the US has some catching up to do, according to Shannon Hall, co-founder of Pow.Bio, a biomanufacturing company in Berkeley, Calif., that is developing a high-efficiency fermentation platform that reduces cost and time to market.
“We really lack the ability to make stuff in the US, so I think the headline has got to be infrastructure – who enables it, how do we get it done?” she said.
The production of fermentation-derived goods is agnostic to whether it’s made by companies like Solar Foods, purchased by Unilever or enabled through a structured process from Pow.Bio, according to Hall.
“I think we should be measured by our ability to meet our sovereign need for certain goods, and we do it in five years or less,” according to Hall.
That likely requires investment in shared capabilities at scale, rather than taking on the risk of a singular customer, Viton added.
Partnering on fermentation at scale
Partnering on such shared fermentation production capabilities is the focus of work taking place at the iFAB Tech Hub at the University of Illinois Urbana-Champaign.
The consortium of company and organization members includes big names in the industry like ADM and Primient, both of which develop corn-derived ingredients sourced in the Midwest.
Collaborating with competing food manufacturers is a challenge to navigate, according to Beth Conerty, regional innovation officer at iFAB Tech Hub. “I do spend a lot of my time figuring out how to build firewalls between those two companies,” she said.
Molina questioned the panel about the potential for “institutionalizing the ecosystem” in a way that creates a formal system – whether through a standing organization, consortium or industry group – that aggregates learning, so each new company doesn’t have to start from scratch searching for “the ideal partner” to help scale their product.
That’s where competition gets in the way, according to Conerty.
“We run into challenges routinely around intellectual property and confidentiality, and hopefully there are more groups that are not-for-profit and/or independent that can help collect some of that,” she said.
Conerty noted that iFAB has worked with about 150 companies on biotech projects and learned about fermentation processes that are proprietary.
“I think that the more data we get, the more companies we work with, the further the industry progresses,” she said. “Some of that rises to the top anyway, but if there was a way to institutionalize it, that would be nice.”
Government’s role in fermentation
Institutionalization could come in the form of more organization at the federal level.
The US National Security Commission on Emerging Biotechnology (NSCEB) is pushing for legislation to create a centralized office at the federal level to oversee biomanufacturing and biotechnology, Conerty noted.
Biotechnology research at the federal level is now handled by a variety of government agencies, which creates a fragmented landscape for the field, according to Conerty. For example, funding of biofuels used for aviation is handled by the Department of Energy, while bioengineering used in the military is handled by the Department of War, she said.
“I’m over here with funding from the Department of Commerce,” because of iFAB’s work in economic development, she said.
“It’s just so fragmented right now and with limited resources and budget debates at the federal level, it’s really hard to bring all of that together to one cohesive mission. If there’s a centralized office and funding goes through that, maybe that’s another step in the correct direction.”
Hall made the case that cooperation at the federal level is possible and has taken place in times of need, citing the rapid development of vaccines during the COVID pandemic.
“I think there does need to be some sort of rallying call and drivers that are on the horizon and hopefully emerging to help us get there,” Hall said. “There’s great work done by various legislators on trying to set either a security standard or a climate standard that drives us in the right direction. But we kind of need a reckoning.”
