Op Ed: Thomas Cresswell, CBO of Melt&Marble, on the Route to Market and Scalability for Fermentation-Enabled Ingredients – vegconomist

Thomas Cresswell has over a decade of diverse experience spanning investment banking, strategy consulting, and venture capital. He began his career in the M&A team at RBC Capital Markets in London, before transitioning to strategy consulting at Strategy& (formerly Booz&Co).

Driven by a passion for food and sustainability, Thomas then embarked on a career shift, joining Cargill’s Corporate Strategy Team. Here, he spearheaded initiatives such as the global specialty fats strategy and played a pivotal role in establishing Cargill Ventures. He orchestrated over 15 investments in the agrifood sector, focusing on precision fermentation, cultivated meat, and alternative protein and fat solutions.

Thomas is now the Chief Business Officer at Melt&Marble, continuing his mission to revolutionize the food system. In this piece, he discusses challenges relating to the commercialization of fermentation-derived ingredients, from gaining regulatory approval to scaling production.

The Unique Challenges of Bringing Fermentation-Derived Ingredients to Market

By Thomas Cresswell

Transitioning from innovation to commercialization within the novel ingredients sector is a multifaceted journey. It begins with identifying viable market opportunities and understanding the needs of commercial segments. Having a clear understanding of how to scale the technology and how to navigate regulatory hurdles from the outset is essential. This enables the development of executable plans and realistic expectations of the costs and timelines associated with bringing these ingredients to market.

Customer-centric innovation

In the dynamic landscape of business-to-business food ingredients, customer-centricity is critical. Understanding customer requirements lays the groundwork for developing and launching sustainable, market-relevant products. Seeking and incorporating customer feedback is paramount for novel ingredients firms. Feedback isn’t just data; it serves as a guiding compass for product development. Proactive response to feedback, transforming suggestions into actionable improvements, and collaborative testing bolster relationships and elevate ingredient quality and relevance.

An effective ingredient proposition must address tangible customer pain points, offering solutions not readily available in the market. These solutions should be compelling enough to foster active partnerships and collaborative ventures with customers seeking innovative solutions. Furthermore, understanding customer products is crucial. This entails building capabilities internally that understand finished product formulations in the target applications.

Initially, recruiting food science experts adept at developing formulations akin to those of target customers is imperative. These experts initiate the process by creating model systems to test ingredients in-house. As commercialization nears, they collaborate closely with customers, supporting them through formulation and new product development, typically via joint development agreements.

This customer-intimate approach not only enables the development of ingredients that address genuine customer needs but also fosters customer loyalty and lays the groundwork for enduring partnerships.

Scaling up production

Scaling poses a critical challenge that can define the trajectory of an ingredient or company’s success. Each scaling phase, from lab-scale to pilot scale, demo scale, and ultimately large-scale manufacturing, demands meticulous attention to safety, quality, and repeatability. Continuous optimization is imperative, compelling companies to refine strains and bioprocesses to enhance unit economics.

The key performance indicators such as rates, titers, and yields in fermentation, ultimately drive the cost of production. Therefore, having a sound understanding of the underlying technoeconomics of your strain and bioprocess enables you to see clearly what targets need to be achieved to make a commercially viable business model.

Securing access to commercial-scale production is perhaps the biggest challenge that fermentation-enabled ingredients companies need to solve. Unless specializing in ultra-specialty ingredients, it is unlikely that the operation will ever be financially viable using contract manufacturers (CMOs).

Consequently, this means that there are effectively two options for a company to produce at a commercial scale: either build assets or form a strategic partnership with an organization that either has assets or will build new ones specifically for the company’s operation.

Early pioneers in precision fermentation, such as Perfect Day and Mycotechnology, have diversified into additional contract development and manufacturing organization (CDMO) services to offset asset underutilization. While offering strategic advantages, these endeavors primarily aim to cover operating and depreciation costs.

Considering the above, if opting to build proprietary assets, a phased scaling approach is advisable. Gradual scaling enhances the capacity to secure larger contracts and offtake agreements, facilitating access to cheaper financing options like debt or infrastructure financing traditionally associated with capital investments.

When exploring strategic partners for commercial-scale production, understanding the strategic value to the partner is critical. This could take many forms, but typically producing an ingredient that is strategically relevant to that partner will be key. Hence, forming a broader strategic partnership that includes a commercial agreement alongside a production agreement will make the proposition far more attractive.

Regulatory pathways and consumer perceptions

In addition to production intricacies, the novel ingredients sector grapples with regulatory complexities. European-based players increasingly explore overseas markets due to the stringent and time-consuming approval process within the EU EFSA framework. Conversely, the U.S. market provides a more streamlined pathway via the self-GRAS (Generally Regarded as Safe) process.

Consumer receptivity towards precision fermented ingredients is generally positive or open-minded, as indicated by preliminary findings from a consumer acceptance study by the Good Food Institute Europe. Nonetheless, challenges persist in dispelling misinformation and raising awareness. Educating consumers about the safety and benefits of these sustainable innovations is imperative, especially amid lobbying efforts from traditional industries. Moreover, consistent B2B trade communication is essential for keeping these technologies and their unique value proposition at the forefront of decision-makers’ minds within food manufacturing enterprises of all sizes.

Organizations such as the Precision Fermentation Alliance and Food Fermentation Europe are also playing a critical role, enabling the industry to have a united voice when engaging with governments and other organizations.

Tomorrow’s ingredients landscape

In summary, the journey from innovation to market success in the novel ingredients sector is multifaceted. Precision fermentation emerges as a transformative force, offering sustainable alternatives and precise, controlled ingredient production, alongside high-performance and climate-resilient options. The evolving narrative of precision fermentation and novel ingredients underscores the relentless pursuit of solutions that reconcile sustainability, ethics, and customer satisfaction without compromise.