1. A roadmap to the era of cell-ag 2020.06

2. World after cell-ag entering mainstream?
What will happen to farm animals and
farmscape?
Large factory by monopoly corporation?
Who sells cell-based meat and how?
What would happen until then?

3. “Disruptive technology” in general
Conventional
technology
Price Parity(PP)
Disruptive
technology
・Performance of disruptive technology increases with time.
・Conventional technology is outperformed at the PP.
・Fundamentally inferior technology never reach the PP.
Performance
Time
Now↓
Reference
https://en.wikipedia.org/wiki/
Disruptive_innovation
[Perceived value]
[price]

4. In case of cell-based meat….
Conventional
meat
Price Parity(PP)
Cell-based
meat
・Performance of cell-based meat increases with time.
・Conventional meat is outperformed at the PP.
・Conventional meat stays, if cell-based meat is inferior.
Performance
Time
Now↓
※This slides assume
fundamental superiority of
cell-based meat.
[Perceived value]
[price]
Includes everything, from taste,
texture, instagrammability,
ethical feel-good factor etc.

5. Scenarios of cell-based meat entering mainstream
Time
Performance
Conven-
tionalPrice Parity
PPNow
Centralized
Distributed
Cell-based
・What might happen until the price parity is reached?
・What might happen after the price parity?
・What should we do in the world after meat price parity？
？

6. Before PP
・The cell-based meat hype may
peak 2021〜2022
・Initial products would be limited to
nuggets, foie gras etc., and generally
fail (overblown) expectations.
・Would get through the worst in
2030s, but the share would be 0.1%
・But the PP will eventually be met as
technologies advance.
・Companies need strategies to go
over the trough of disillusionment
“Hype cycle”
https://en.wikipedia.
org/wiki/Hype_cycle
PP Met
https://www.digitalfoodlab.com/top-foodtech-trends-2019-dfinsights/

7. When the PP nears in (late 2020’s)
Animal welfare organizations would serve as the “canary”
- Increased frequency of posts like “Let’s everybody eat XXX (specific
cell-based product brands)” on socials networks hint the PP closing in.
Meat industry lobbying is already resisting
- The main arena would be in marketing, categorization, labeling and
food safety regulations. (Possibility of smear campaign)
- Bold forward moves will be found in regions with little meat industry
lobbies like Singapore.
Pro and anti lobbies fight
across “The Chasm” by
sending messages that
target “Early Adopters”.

8. PP Reached = Disruption
Photography：
Fujifilm and Kodak
・The cost-benefit of cell-based meat will
gradually increase to the PP.
・Once PP is reached, the market share of
cell-based meat increases exponentially.
・New markets that never existed under
conventional meat emerges
・Surrounding industries like processing,
packaging etc. moves to adapt.
・Unexpected entrants - i.e. Nvidia
(computer parts) entering automotive
industry with autonomous vehicle.
(Reference)
“The Innovator’s Dilemma” by
Clayton Christensen

9. Disruption sequence and entry barrier from the start
Foie gras
$55/kg
Tuna
$28/kg
Seashells
$23/kg
Crab (edible part)
$40/kg
Pork, chicken
$2/kg
Beef
$4/kg
Japan
$22/kg
Price parity reached by unit prices, “disruption” occurs accordingly
(As all products would be based on the same technology, entry from the middle i.e. tuna may prove difficult.)
Hong Kong
$17/kg
Singapore
$12/kg
Germany
$11/kg
USA
$11/kg
Beef consumer prices (2019)

10. Possibilities after price parity
Time
Performance
Conven-
tionalPrice Parity
PPNow
Required capital is big
Required capital is small
Cell-
based
?
Q.
How much capital is
needed for new
market entrants?

11. How much do you need to launch a business?
“It is customary to to consider the cost of the plant as varying
by about the 0.6th power” (New Scientist vol.17, No.326 p355)
CA = The construction cost of Plant A
CB = The construction cost of comparable Plant B at different capacity
SA = The capacity of Plant A
SB = The capacity of Plant B
CB＝CA×(SB/SA)^0.6
The upfront investment
appears relatively large,
hinting a community-
scale facility.
Scale Cost Cost per kg meat
100kg/mon. $0.3M $33
1t/mon. $1.2M $13
10t/mon. $4.8M $5
100t/mon. $19M $2
1000t/mon. $75M $0.8
Q: “What is the minimum
efficient scale (MES) of
cell-based meat?”
(Estimated by IntegriCulture Inc. / 2017)
0.6th power rule & 7-year depreciation
assumed

12. “Required capital is big” high-MES scenario
・2 to 3 cell-ag companies per country (like automotive industries)
・High minimum efficient scale (MES) - economy of scale is everything
・Foxconn-style “cell culture foundries” is possible
↑Transport of amino acids to
cell-ag plant with big tankers
←Littoral petrochemical plants are
replaced by cell-ag plants

13. ・Economy of scale is not everything - room for other competitive edges
・Equipments and ingredients are commodities, like restaurant industry
・Open source cultured meat, nonproprietary recipe, DIY cell culture vats
“Required capital is small” low-MES scenario

14. Scenario in between（i.e. Beer industry）
Ohwaki Engineering CO.From hp of Sapporo Beer
・Local and private brewery brands alongside big brands
・Big brands leverage on the economies of scale
・Small brands target local and niche markets
・The required capital for market entry generally decreases with advancing
technology (i.e. AI & automotive), and the scene eventually shift to Scenario 3?
PicoBrew : Beer brewing machine for home-use
Mass brand companies Local brewery Home brewery

15. ・The minimum efficient scale
at the price parity determines
the outcome.
・Actions of animal welfare
organizations and regions
like Singapore would hint the
nearing price parity.
・Other cell-ag (fur, timber,
seafood etc.) products may
follow the same path.
time
PP not
reached
Capital
intensive
Not capital
intensive
Cell culture &
cooking not
distinguished
Democratization
Likely scenario
from 2030s
How would cell-ag enter mainstream?
Minimum efficient scale (Required size of capital for market entry)
Reach PP
High-MES
scenario Reach PP
Low-MES
scenario

16. ・“DIY meat” allows room
for competition other than
scale and price, pushing
the balance to the right.
・Continued development
in DIY meat acts as a tidal
force pushing industry
decisions to the right.
time
PP not
reached
Capital
intensive
Not capital
intensive
Cell culture &
cooking not
distinguished
Democratization
“DIY meat” may shift the balance
Minimum efficient scale

17. Farmers launching brands in democratized cell-ag
・Local farmers and town butchers
can develop their own cell-based
meat recipe.
・Hobbyists can come up with unique
meat recipe and brands.
・Bioreactors in backyard, fewer
cows that are better looked after
More info↓
https://www.slideshare.net/
2co/the-cellular-agriculture-
farmscape

18. Farmers sell meat ($70/kg), not cow ($15/kg)
Farmers may sell or license cells
Fewer cows
Bioreactors in
the backyard
Many cows
Cows are the product Cell or meat is the product
Traditional farmscape Cell-ag farmscape
The Cell-Ag Farmscape