Precision Fermentation is on the rise in food & beverage – but cost remains a challenge

In the food and beverage industry, the use of precision fermentation is rapidly gaining popularity. According to a new report from Roland Berger, that is not without reason – the technology heralds major promise, but at the same time, many hurdles still need to be taken to scale the technology to widespread success.

First, what is precision fermentation? It is a cutting-edge biotechnological process used to produce specific ingredients – like proteins, enzymes, fats, or vitamins – by programming microorganisms such as yeast, bacteria, or fungi to produce these compounds with high accuracy.

The key advantage of precision fermentation is that it allows for the creation of ingredients that are molecularly identical to those found in animals or plants – without using the animals or plants themselves. This makes it a powerful tool for creating sustainable, ethical, and scalable alternatives to traditional products.

According to Roland Berger’s analysis, precision fermentation is making important strides in the worlds of food & beverage, cosmetics, and pharmaceuticals.

The food & beverage sector is seen as the top beneficiary of the technology. Of those using precision fermentation, 75% focus on protein production, particularly dairy proteins, while the remaining 25% target ingredients such as fats, oils, flavors, palm oil, and cocoa butter. Companies that are active in the space include DSM-Firmenich and Fonterra.

Overcoming challenges

While the technology shows promise, the report highlights that its outlook is tempered by several significant challenges that must be addressed before it can achieve widespread success. “Precision fermentation offers game-changing potential for specialty molecules, but economic viability remains challenging for commoditized products, even with significant yield improvements,” said Alexander Belderok, Senior Partner at Roland Berger.

Among the most pressing is the need to achieve cost parity with traditional production methods, a task complicated by scale limitations and inherent process inefficiencies. Furthermore, safety concerns and ethical considerations surrounding genetically modified organisms can significantly impede consumer acceptance of precision fermentation-derived products.

Adding to this complexity is the regulatory landscape, which varies widely and results in prolonged approval times and increased costs, further complicating market entry.

To shed light on what cost and scale requirements are needed for accelerated roll-out, Roland Berger developed a model projecting cost prices based on advancements in volumetric yield. The findings indicate that, in the current situation, with a yield of 10 g/L, the cost price remains high and uncompetitive compared to traditional methods.

However, should there be a substantial improvement to 25 g/L, cost prices may decrease, although significant challenges to competitiveness will still persist. Ultimately, achieving an ambitious yield of 50 g/L could lead to further cost reductions; yet, competing with traditional products priced below EUR ~50/kg will continue to pose a significant challenge.

Strategies for enhancing cost-competitiveness

To further improve the cost-competitiveness of precision fermentation, several factors must be considered, said Belderok.

For instance, cost price differences are less significant for products with low inclusion rates, as their impact on the final product price is limited. Additionally, precision fermentation has the potential to utilize raw materials with negative cost prices, such as CO2 and waste streams. Lower purity requirements can also facilitate less complex and costly processes, particularly in downstream applications.

Furthermore, technological disruption in downstream processes, such as continuous fermentation and reductions in consumable costs, could enhance cost competitiveness, albeit with significant challenges.

Belderok: “By focusing on these strategies, the industry can not only improve the economic feasibility of precision fermentation but also align with the growing demand for sustainable and innovative food solutions.”