SINGAPORE – Singapore piqued interest when it was the first country in the world to approve the sale of cultivated chicken in 2020, attracting both local and global players to set up their operations here.

But a few years on, momentum has slowed amid challenges in reaching commercialisation, cost pressures, a lack of clear consumer demand and flagging investment appetite.

This has led to companies scaling down, consolidating and pivoting.

California-founded Eat Just, which was the world’s first to receive approval from Singapore to sell its cultivated chicken, has “paused production” here.

Fewer companies in the cultivated meat ecosystem have been incorporated here each year – falling from seven in 2021 to four in 2022, and none in 2023, according to figures from SGInnovate, Singapore’s investment arm.

But this was not unexpected, said Ms Annabelle Chiong, SGInnovate’s deputy director of investments.

“Many ground-breaking technologies go through an initial period where a lot of start-ups are created, especially if the perceived market appears large... (leading to many wanting) to capture a piece of what was believed to be a huge potential market,” she said. 

Start-ups’ success depends on how receptive mainstream consumers are to cultivated meat, but such options are perceived to be too expensive, she noted.

The funding bubble

Cultivated meat is thought to be kinder and more sustainable as it is slaughter-free, requires less water and land to produce, and results in less pollution overall.

The sector had gained momentum up till 2022, but investor appetite for the fledgling sector began to wane in 2023 amid concerns over its tech scalability and the long timeline from research and development (R&D) to commercialisation, resulting in a slow return on investments.

A report by alternative protein think-tank The Good Food Institute found that by 2023, some US$3.1 billion (S$4.2 billion) had been invested in cultivated meat and seafood companies globally since 2013.

Amid current macroeconomic headwinds and a funding dry spell, industry players expect to see more consolidation in the market through mergers and acquisitions.

This impacts both home-grown firms and alternative protein companies here that hail from places like the United States, Hong Kong, the Netherlands, Australia and Israel.

Mergers would allow start-ups to pool their resources and technical knowledge, which will concentrate their R&D investments. This can bring about quicker technological breakthroughs and commercialisation. 

Venture capitalist Tan Yinglan said the spotlight effect of US-founded cultivated meat companies expanding into Asia helped draw attention to local companies – and that may have created the perception that consumer demand is larger than it actually is.

But the taste and nutritional value of these foods compared with other available protein sources make it difficult to sustain consumer interest, added the founding managing partner of Insignia Ventures Partners, which has invested in many tech firms in the early to growth stages.

“Furthermore, approval for the sale of cultivated meat in the US in June 2023 signals that one of the world’s largest food markets is now open to start-ups in the space – giving companies the option of a much larger consumer market than Singapore’s,” noted SGInnovate’s Ms Chiong.

She said mergers would make strategic sense. “The fall in funding and revaluation of companies have forced them to seek alternative ways to achieve scale and operational efficiencies.”

Tech challenges

Ms Carrie Chan, chief executive of Hong Kong-founded Avant Meats, which has a pilot plant in Singapore producing small amounts of cultivated fish, said: “Due to the economic conditions, investors have become more conservative.

“Some are thinking (this sector) is more challenging, and they should not be investing in anything at the pre-revenue stage as the tech involved can be difficult to scale up quickly.” 

It is innately challenging for cultivated meat companies to scale up their tech quickly and bring products to market.

For one thing, the sheer cost of manufacturing bioreactors at a scale needed for commercial production outstrips any potential savings from economies of scale, said Dr Simon Eassom, chief executive of Food Frontier, a think-tank on alternative proteins in Australia and New Zealand.

This challenge may be multiplied when it comes to dealing with cultivated fish or seafood.  

Firms cultivating meat like chicken and pork can rely on mammalian stem cells, which are already readily available as they are used in the biomedical sector, said ImpacFat chief executive and co-founder Mandy Hon, whose company cultivates fish fat to improve the taste and texture of lab-grown fish. 

To do so, it had to isolate stem cells from fish meat and grow these into fat cells. This was uncharted territory as there was no scientific research to guide the Singapore company along the way, she added. 

Local firm Shiok Meats has faced issues scaling up its crustacean stem cells for production and has delayed its market entry repeatedly since 2020.

The company in 2021 acquired Gaia Foods, which focuses on cultivated red meat, in a bid to expand its portfolio. In March 2024, it merged with Singapore-based Umami Bioworks, whose speciality is in producing various species of cultivated fish.

Shiok Meats’ focus on crustaceans will now take a back seat as Umami aims to commercialise its cultivated fish products first.

Umami founder and chief executive Mihir Pershad told The Straits Times the firm has made “critical unlocks” to production at an industrial scale by establishing immortal cell lines for at least six species of fish so far.

Immortal cell lines are animal cells that continue to proliferate indefinitely while outside the animal’s body. Umami has been able to get the fish cells to grow in larger reactors for at least two species. 

But creating immortal cell lines for crustaceans has been challenging as their biology is quite different from fish, Mr Pershad explained.

Diversify or die

Companies like Eat Just has raised some US$850 million so far, while Temasek-backed Upside Foods raised US$608 million. In comparison, Umami Bioworks has so far raised only US$2.4 million, while Shiok Meats has raised at least US$30 million in funding.

Gone are the days of raising hundreds of millions in funding – and many cultivated meat producers now have to do more with less money, said Mr Pershad. 

“Increasingly, investors ask us, okay, you need $100 million to build your factory, but what happens if you can’t get that kind of funding, what are you going to do?” he added.

Umami’s solution to this is a business-to-business model, in which it sells its tech know-how to food manufacturers instead of launching consumer-ready products in the market. This allows the company to tap into various markets without having to set up numerous production factories around the globe, which can be very capital-intensive.

The company recently signed a deal with Malaysia’s Cell Agritech, which is building a manufacturing plant to produce cultivated grouper and Japanese eel at scale for export by 2025.

Amid these difficulties, cultivated meat companies here have also been looking to diversify their product offerings in hopes of creating new revenue streams to stay afloat.  

Mr Pershad said that while Umami works on getting its cultivated eel approved here by 2025, the company is also hoping to tap into the premium pet food market by creating a “whitefish-based product” made using cultivated fish. 

As for Avant Meats, its cell-based marine peptides for skincare products is closer to commercialisation, said Ms Chan.

Similarly, ImpacFat has set its sights on skincare products and supplements like sustainable fish oil. Ms Hon expects that such products can potentially enter the market faster as they do not face the same regulatory hurdles as with cultivated meat.

When Ants Innovate was founded here in 2020 during the cultivated meat “hype years”, it aimed to produce cultivated whole meat cuts, but pivoted several months later to hybrid meat – a blend of plant-based proteins mixed with a concoction of cultivated meat cells.

Having a hybrid product is easier to scale up and less costly to produce as only a fraction of animal cells is needed, said the company’s founder, Professor Hanry Yu. This has translated to huge savings in infrastructure and operating expenses, he added. 

The firm is now working on getting approval from the Singapore Food Agency, and is raising capital to engage an external contract manufacturer to produce more of its cultivated meat extract for commercialisation. Called Cell Essence, the flavouring is claimed to create a meaty taste and roasted aroma. 

Umami’s Mr Pershad noted: “In 2022, there were around 150 cultivated meat companies worldwide before the market turned. I think it is unrealistic for all of them to scale up and commercialise. Some will consolidate and close down, and only a handful will survive. We hope to be good enough and prove that we deserve to continue existing in this market.”