Agriculture Practice
Ingredients for the future:
Bringing the biotech
revolution to food
Fermented ingredients could alter the food landscape faster than
once thought. However, new business models are needed for the
$100 billion to $150 billion opportunity in fermented novel proteins.
by Daniel Aminetzah, John Levene, and Tom Brennan, with Kate Toews
March 2025
New biological technologies are sweeping across The high interest in novel foods is due to their ability
industries and unlocking possibilities for food.1 to augment traditional food production. For proteins
Fermentation, a type of bioprocessing, allows food in particular, the global market today is sizable, at
producers to make proteins and other ingredients using approximately $3.0 trillion, and is estimated to grow
microbes rather than animals, significantly reducing to approximately $3.5 trillion by 2050. However,
land use and emissions from animal agriculture while increasing feed prices, climate volatility, and disease
increasing reliability and food security. are challenging animal agriculture’s ability to support
the nutrition needs of the growing global population.
Fermented novel proteins could make up about
4 percent of total protein production by 2050, an Novel ingredients produced through bioprocessing
annual market of $100 billion to $150 billion, with are a way to mitigate these risks (see sidebar “About
variability based on climate policies and the pace fermentation and cultivation of cell cultures”).
of technological development. Advancements in Because fermentation takes place in a synthetic
fermentation technology also stand to benefit other environment (bioreactors), manufacturing is both
industries such as chemicals and materials. controlled and modular, increasing geographic
flexibility and reducing exposure to weather,
Before novel proteins can take off, fermentation supply chain, and disease-related disruptions in
technology will need to scale. Most novel-ingredients the traditional food and agriculture value chain.
players today have production costs that are an order In addition, fermentation requires a smaller land
of magnitude higher than the cost of the production footprint than traditional agriculture, making it a
of traditional protein, which are typically in the range powerful option for building greater food security.
of $2 to $15 per kilogram. To bring down price points
through economies of scale, our projections show
fermented-novel-ingredients players will need Scale drivers for the future of food
to invest more than approximately $250 billion Before the novel-ingredients industry can help
cumulatively by 2050 to expand capacity. make food systems more sustainable and resilient,
it needs to be scaled up significantly. However,
In this article, we explore how the food industry existing capacity to support scale-up is limited,
can accelerate the shift to fermentation-derived and contract manufacturing organizations (CMOs)
ingredients, most notably proteins. To get there, often have margin expectations that are not in
incumbents, start-ups, and investors can improve line with food manufacturing industry standards,
fermentation production processes and bioreactor often making them unviable for companies looking
technology to reduce costs, make new products for more capacity. Although several new capacity
that are compelling to consumers, and bring additions have been announced, others have fallen
partners together to scale the industry. by the wayside due to macroeconomic factors.
Building more capacity isn’t the only challenge. The
The potential for novel ingredients underlying technology and processes need to be
The potential market for fermented-protein developed and improved. The opportunities and
products is expected to be $100 billion to $150 risks of novel ingredients are still being investigated,
billion by 2050 (Exhibit 1).2 This opportunity has and incumbents, start-ups, and investors alike are
spurred traditional-fermentation players, food in the process of allocating capital expenditures,
giants, sovereign wealth funds, and others to invest keeping stock of new developments, and
more than $4 billion of capital in precision and understanding customer needs.
biomass fermentation over the past five years.3
1
For more on the Bio Revolution, see The Bio Revolution: Innovations transforming economies, societies, and our lives, McKinsey, May 13, 2020.
2
Protein market segments include ruminant (beef, lamb, and goat), poultry (chicken and turkey), monogastric (pork), fish, dairy, and eggs.
Blended-product sales that include any fermented or cultivated ingredient were fully allocated to their respective biotech category. In other
words, the sale of a hybrid product using both plant and cultivated ingredients is considered “cultivated” for end-product sales. The noticeable
drop in plant-based product sales should therefore be seen as driven in significant part by the increase in blended-product sales.
3
Emerging sustainable investing opportunities: Cultivated protein, PitchBook, September 15, 2023.
Ingredients for the future: Bringing the biotech revolution to food 2
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<MCK248171 Fermentation biorevolution>
Exhibit
Exhibit <1>1 of <3>
Fermented novel proteins could account for approximately 4 percent of the
global protein market by 2050.
Global protein market size, median adoption scenario,1 $ billion
Plant-based Fermented (incl plant blends)
Cultivated (incl plant blends) Conventional
4,000
3,400–
3,400– 3,700
3,300– 3,600
3,100– 3,500
3,500 3,400
3,000–
2,800– 3,200
2,900
3,000
2,500
3,200–
2,000 3,300
2,800–
1,500 2,900
1,000
500
~0 130–180
0–10 100–140
0
2025 20–30 2030 2035 2040 2045 2050
Note: All figures are approximate and may not sum to totals, because of rounding.
1
Based on a 2°C warming scenario, in 2020 dollars. Figures reflect median of 2 growth scenarios. Protein market segments include ruminant (eg, beef, lamb, or
goat), poultry (eg, chicken or turkey), monogastric (eg, pork), fish, dairy, and eggs. Blended-product sales that include any biotech ingredient (fermented or
cultivated) were allocated to the respective biotech category—ie, the sale of a plant/cultivated hybrid product is considered “cultivated” for end-product sales.
The noticeable drop in plant-based product sales should therefore be seen as driven in significant part by the increase in blended-product sales.
McKinsey & Company
Ingredients for the future: Bringing the biotech revolution to food 3
About fermentation and cultivation of cell cultures
Bioreactors are large vessels that create companies that use biomass fermentation, to produce bioidentical versions of other
controlled environments to support biolog- such as Nature’s Fynd and Superbrewed animal proteins, such as whey, collagen,
ical processes. In these vessels, microor- Food, have launched in recent years. and those found in egg whites.
ganisms such as yeast, bacteria, or cells
In precision fermentation, organisms are Cultivation is an analog of fermentation in
are fed a carbon source (typically glucose
genetically reprogrammed to produce which cell lines of plants or animals, rather
or sucrose) and produce useful chemicals
specific molecules, such as insulin or than microorganisms, are used to create
or materials. These materials are then har-
laundry detergent enzymes. In the food useful molecules (such as monoclonal
vested from the broth and used to create
industry, although precision fermentation antibodies) or tissues (such as in cultivated
products.
has been used for decades to make critical meat).1 In the case of cultivated meat, these
In biomass, or whole-mass, fermentation, proteins such as rennet and other enzymes, cells can be grown on tissue scaffolds to
the microorganisms themselves are har- it was made famous for alternative-protein mimic the structure of animal muscles or
vested and used as proteins. One example applications by Impossible Foods, which can be combined with plant proteins and
is the mycoprotein Quorn, which was launched its heme ingredient in 2016. other ingredients to create blended meat-
brought to market in 1985. A number of Precision fermentation is now being used based products.
1
For more on cultivated meat, see “What is cultivated meat?,” McKinsey, September 13, 2023.
To demystify the future of this growing industry, we Most savings are expected to come from primary
identified three areas crucial to building and scaling drivers of the COGS, including titer (the measure
a new food ecosystem: of concentration of the desired product in the
post-fermentation broth), downstream processing
— Process improvements and redesigned (converting the fermentation broth into a stable
bioreactors could drive yield improvements, product), and cycle time.
reduce bioreactor costs, and lower production
costs by approximately 50 percent; new Some of these drivers have steadily improved over
bioreactor technology could also expand the time. For example, core intellectual property (IP)
global market opportunity for OEMs. owners are making continuous titer improvements,
and for decades, chemical and pharmaceutical
— Upgraded formulation and food design could companies have deployed digital analytics and,
result in a wider variety of high-quality offerings, increasingly, AI to optimize manufacturing.
particularly as companies improve product taste
and texture. What could truly spur the industry forward is step-
change process improvements. More-fundamental
— New business models could help the industry changes to bioprocessing could significantly
mitigate risks and finance more than $250 increase active cycle time and capital efficiency.
billion in expected infrastructure scale-up. Several start-ups are exploring converting fed-
batch processes into continuous ones (see sidebar
Production improvements could “Case study: Australian bioprocessing start-up
reduce unit costs by 50 percent Cauldron”), while other companies are converting
The single most important factor for launching the traditional aerobic processes into anaerobic ones.
novel-food market will be reducing the unit costs of
novel ingredients. By implementing technological In addition to step-change improvements in
innovations in bioprocessing and downstream processes, it will be critical to upgrade bioreactor
production processes—taking a total cost-of- technology. Industries such as pharmaceuticals
goods-sold (COGS) approach—novel-ingredient and chemicals have designed fermenters to fit
companies could have line of sight to cost reductions their needs, but bioreactors have not yet been
of approximately 50 percent right now (Exhibit 2). redesigned to suit the needs of the food industry.
Ingredients for the future: Bringing the biotech revolution to food 4
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Exhibit 2of <3>
Exhibit <2>
Process improvements can improve the cost of goods sold for fermented
ingredients by up to 40 percent more than scaling alone.
Illustration of unit cost changes: Scaling vs process improvements
Key process
Unit cost, $ Unit cost, $ optimization levers
• Titer (grams/liter
[g/L])
• Recovery yield (%)
• At-spec yield (%)
• Throughput
(g/L/hour)
• Operational
efficiencies (overall
equipment
2x scale 2x process parameters effectiveness)
20–40% 40–60% • Contamination
unit cost decrease unit cost decrease control
Scale (facility m3) Process efficiency (titer)
McKinsey & Company
New assets must be developed that meet food- Better food-formulation capabilities could
grade specifications and move closer to the margin create groundbreaking new products in the
expectations of the food sector. approximately $3.5 trillion protein market
As fermented novel foods begin to come down
To get there, bioreactors and their surrounding the cost curve, food and beverage companies will
components need to be stripped down and have the chance to introduce new ingredients and
built from the ground up in a fit-for-purpose offerings for consumers. While precision-fermented
way, but global OEMs have yet to address this ingredients are genetically the same as their
opportunity. In this gap, some start-ups (including animal-derived counterparts, biomass proteins
a small set of asset-focused start-ups such as offer unknown and exciting possibilities because
Sterling Bio Machines and Ark Biotech) have many of these ingredients are totally new to human
redesigned bioreactors and built custom models consumption. New tastes, meat alternatives, and
out of necessity. In addition, some companies are beverages will become available, and innovators
exploring the use of more-modular fermentation that have strong food-formulation capabilities will
tanks to significantly reduce capital costs and drive stand out from the pack.
learning curves.
Ingredients for the future: Bringing the biotech revolution to food 5
Case study: Australian bioprocessing start-up Cauldron
Cauldron is a precision-fermentation over multiple weeks. We maintain micro- competitive price in the market. The other
company that has developed and imple- organisms in a productive state, which big challenge is access to manufacturing
mented continuous-fermentation methods. maximizes output and reduces the amount capacity, which can be hard to find.
We interviewed CEO Michele Stansfield of “downtime” in the fermentation cycle.
McKinsey: How are you working to build
and CFO David Kestenbaum about how We’ve run our hyper-fermentation process
ecosystems to support your business?
they navigate problems and find efficien- for as long at eight months and 24 days at
cies as a start-up in the novel-ingredient a scale of 10,000 liters. These productivity Cauldron: We want to build partnerships
space. This interview has been edited for gains translate into lower cost of goods that help speed up time to market and
clarity.1 sold and better capital efficiency, which make it easier for precision-fermentation
have been key roadblocks to the develop- companies to go from lab to commercial
McKinsey: Tell us about your continu-
ment of the sector. scale—encouraging specialization and al-
ous-fermentation technology. What prob-
lowing everyone in the industry to focus on
lems does this technology let you address? McKinsey: What challenges do you see for
what they do best. So far, we have formed
the novel-ingredients supply chain?
Cauldron: Historically, running continuous partnerships with strain engineering and
fermentation has been a challenge due to Cauldron: One of the most overlooked bioprocessing companies upstream from
contamination of the ferment and genetic challenges today is access to adequate us and are exploring joint ventures with
drift of the microorganism population. Our levels of feedstock. If you’re trying to supply chain partners to scale up our man-
“hyper fermentation” process makes it pos- achieve price parity but spending too ufacturing capacity.
sible to run our fermentation continuously much on glucose, then it’s tricky to have a
1
Comments and opinions expressed by interviewees are their own and do not represent or reflect the opinions, policies, or positions of McKinsey & Company or have its endorsement.
As food scientists learn the true breadth of the to try food and drinks containing novel ingredients.
texture, taste, and protein fortification capabilities Survey results also indicated that consumers are
of novel proteins, companies will be able to create particularly interested in trying novel ingredients in
unique proprietary offerings for consumers. snacks and during lunch. These results can provide
Manufacturers can experiment with using novel guidance for food formulators as they develop new
fats, for example, to improve mouthfeel and add offerings and work to educate consumers about
savory flavors to food while replacing undesirable novel ingredients.
ingredients such as palm oil. Precision fermentation
could also allow manufacturers to use individual Scaling the industry poses a investment
egg, dairy, or other proteins that offer more- opportunity to build new business
specialized nutrition, tastes, or textures. It may models of more than $250 billion
be that these novel ingredients can replace many To drive the expected scale of this industry,
traditionally sourced products such as gums and $250 billion or more may need to be invested in
methylcellulose that deliver critical performance fermentation assets over the coming 30 years,
benefits in foods but that can be considered according to McKinsey analysis. This global
undesirable by consumers. expansion approximates the type of industry shift
that solar panels and electric vehicles (EVs), for
Knowing what consumers are interested in will be example, have seen in previous years.
key to driving the development of new foods. As
outlined in a recent McKinsey article, consumer The infrastructure investment needed is likely
insight at this stage is nascent but shows promise too large to be funded solely by venture capital.
for novel ingredients.5 Depending on the ingredient, And until remaining technology and commercial
49 to 67 percent of consumers indicated willingness milestones are achieved, project finance and growth
5
Kimberly Stover, Kate Toews, and Roberto Uchoa, “Novel proteins: Consumer appetite for sustainably made ingredients,” McKinsey, March 21, 2024.
Ingredients for the future: Bringing the biotech revolution to food 6
Manufacturers can experiment with
using novel fats, for example, to improve
mouthfeel and add savory flavors to food
while replacing undesirable ingredients
such as palm oil. Precision fermentation
could also allow manufacturers to
use individual egg, dairy, or other
proteins that offer more-specialized
nutrition, tastes, or textures.
equity players remain reluctant to enter. This leaves New business models are the key underlying factor
a gap in the global funding landscape that the that will allow the novel-foods industry to address
ecosystem can adapt to fill (Exhibit 3). these points. If start-ups and other players in the
novel-food space can build an offtake and risk-
To unlock new funding models and allow global sharing ecosystem, they could attract investors and
capital pools to begin investing at scale, two areas bridge the funding gap. These connections would
need to be addressed: also make it easier to improve process technology,
build better bioreactors, and commercialize novel
— Commercial offtakes have been the linchpin in foods.
securing debt in major capital expansions in other
industries, such as EV batteries, sustainable A few types of partnerships and funding are already
aviation fuel, and hydrogen technologies. proving to be effective in the novel-foods space:
In consumer sectors, binding offtakes have
traditionally been less common, but start-ups and JVs. Joint ventures (JVs) can be used to share
large food companies are beginning to enter joint risks—and returns—across many players, unlike
development agreements. CMOs, which alter the unit cost structure of a
product. Although JVs can be complex, a number
— Technological risks can deter investors, of start-ups are exploring these arrangements
particularly as process innovations, redesigned and other alliances that bring together multiple
bioreactors, and new foods are being tested. sources of capital to derisk investment and
However, technological developments regarding jointly contribute IP and assets. For example, the
process, assets, and scale are expected to deliver Oman Investment Authority has partnered with
material cost reductions over the coming five MycoTechnology to build a facility to upcycle waste
years, providing a compelling case to investors. dates into mycelium proteins.6
6
“MycoTechnology partners with Oman Investment Authority to target alternative protein opportunity,” PR Newswire, May 4, 2022.
Ingredients for the future: Bringing the biotech revolution to food 7
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<MCK248171 Fermentation biorevolution>
Exhibit 3of <3>
Exhibit <3>
Significant capital outlay is required for new assets, and many sources of
capital can be explored.
Capital expenditure breakdown for greenfield1 plant employing conventional fed-batch technology
Capacity2 Capital cost, $ million Example capital sources
• Venture financing (20% internal rate
Demo 75–150 of return [IRR])
• Institutional or sovereign wealth funds
(10–18% IRR)
200–300 • Infrastructure funds (10–15% IRR)
Commercial
• Strategic or commercial partners (IRR
varies)
• Government-supported (eg, grants)
Mega-scale 500–900
1
Assumes greenfield construction. Retrofit of an existing facility could save 20–30% in capital expenditures.
2
Demo has a capacity of 200 kiloliters, commercial has a capacity of 1 megaliter, and mega-scale has a capacity of 10 megaliters.
McKinsey & Company
Sovereign investment. While corporate venture capital Considerations for novel-
has cooled over the past few years, we expect it to ingredients players launching
rise to previous levels in the long term, given its strong the industry of tomorrow
track record in the food industry. In the meantime, The investors, strategic partners, and commercial
sovereign and strategic investment interest remains partners that come together with innovators will
high. For example, the Dutch National Growth Fund be builders of the novel-foods market and will
has allocated €60 million for precision fermentation play a crucial role in fueling the global growth of
and cultivated novel ingredients.7 biotechnology. For each group of players, a few
factors will be important to consider:
Government programs. Many countries are
creating government programs to support the Ingredients incumbents. Biotech-produced foods
budding fermentation industry, such as by providing can allow ingredients manufacturers to expand their
nondilutive funding and facilitating new capacity portfolios and build a competitive edge through
build-out. For example, in a recent fundraising round, unique formulation capabilities and know-how.
Business Finland, an organization run by the Finnish Because novel proteins can be produced anywhere,
government, issued Onego Bio a $10 million grant.8 they offer an opportunity for ingredients incumbents
And Change Foods agreed to concentrate its animal- around the world to enter animal protein markets
free dairy production in the United Arab Emirates, for the first time, shifting the competitive landscape
supported by the UAE NextGen FDI Initiative.9 for products such as dairy, collagen, eggs, and even
non-protein products such as cocoa.
7
“Netherlands to make biggest ever public investment in cellular agriculture,” Good Food Institute Europe, April 14, 2022.
8
“Onego Bio raises $40M to scale up animal-free egg production,” Onego Bio, April 2, 2024.
9
“Change Foods is making big moves in the UAE,” PR Newswire, October 20, 2022.
Ingredients for the future: Bringing the biotech revolution to food 8
OEMs. As the asset base to support biotech- novel ingredients could offer a competitive edge as
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enabled ingredient production is constructed, there more proteins are commercialized.
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is a significant market opportunity for bioreactor
and downstream processing OEMs. In the novel- Investors. As stakeholders mature, traditional
ingredients industry, much of the asset base investors are increasingly exploring the sector and
currently in use is borrowed from other industries and looking into business models that might allow for
has yet to be value-engineered for food production. greater investment. Establishing infrastructure-
The companies that choose to invest in designing grade financing from securitized assets with
and developing fit-for-purpose technology over the committed offtake at market-clearing prices is
coming years may become critical players as global expected to be critical for scaling the industry, as in
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capital expansion continues. other industry scale-ups such as wind and solar.
Innovators. Start-ups are eager to bridge volume
needs with on-demand capacity, and they
stand to benefit greatly from partnerships with Over the coming five years, we expect a
incumbent players and investors. In the current combination of cost parity and consumer demand
macroeconomic funding environment, some players to mature and derisk the novel-ingredients industry,
may fail to demonstrate progress fast enough to leading to a global infrastructure expansion. In the
continue to secure funding, leaving a narrowed meantime, leaders can continue building creative
field of innovators. Looking forward, each innovator mechanisms to balance capital, risk, and returns. If
will need to make choices about what capabilities players can enter this investment opportunity now,
to invest in, from titer improvements to ongoing IP they have a chance to build the food supply chain of
creation. Developing food formulation capabilities the future.
and a distinctive understanding of how to work with
Daniel Aminetzah is a senior partner in McKinsey’s New York office, John Levene is a partner in the New Jersey office,
Tom Brennan is a partner in the Philadelphia office, and Kate Toews is an associate partner in the Chicago office.
The authors wish to thank Bryan Vadheim, Jannik Buddenberg, and Olivia Sánchez Badini for their contributions to this article.
Copyright © 2025 McKinsey & Company. All rights reserved.
Ingredients for the future: Bringing the biotech revolution to food 9
