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If you can create vaccines in a few months, processes that in the past took years to create, it's only a question of harnessing the right technology to develop another way to create meat. Rapid advancements in technology are transforming our approach to some of humanity's oldest and most essential industries. From medicine to food production, these innovations are redefining traditions and reshaping the future. So we understood that you need to harness technology and we need to focus on products that we can produce today and that will make a difference today, and that's what we are doing.
Being a public company can be hard. Small missteps can have outsize consequences. I'm Tom Ryan, founder and CEO of ICR, and over the last 25 years, we've helped thousands of companies understand and navigate the stock market and the media. We'll demystify these and other increasingly complex stakeholder groups so you can focus on what you do best: building your company and unlocking your true potential. This is Welcome to the Arena from ICR.
There's a spotlight right now on cultured meat products, driven by a growing global population and an urgent need for nutritious food options that address the environmental impact of industrialized farming. While vegan and plant-based products have gained significant traction in recent years, today's guest is pushing boundaries even further, pioneering cutting-edge meat alternatives that don't compromise on quality or flavor. Today we're joined by Arik Kaufman, an accomplished entrepreneur and the CEO and co-founder of Steakholder Foods. Driven by strong values and a bold vision for the future of sustainable food, Arik has led Steakholder Foods in the development of 3D-printed fish and steak, eco-friendly alternatives to conventional meat products that maintain the authentic flavors and textures consumers crave. With its innovative food printing technology, Steakholder is pushing this growing industry forward. Arik is all-in on alternative animal products. He's the co-founder of three other food tech firms, two of them can be found on the Tel Aviv Stock Exchange. He's also a founding partner of the Blue Sound Waves, a partnership and investment vehicle led by Ashton Kutcher, Guy Oseary, and Effi Epstein. Let's enter the arena with Arik Kaufman.
How did this opportunity come to you about Steakholder Foods, and why did you decide to enter the industry?
So I was a lawyer for many years, M&As, a lot of M&As, a lot of licensing agreements. At a certain point of time, I decided to open my own practice, and then I became the business development director of Clalit Health. It's like the largest HMO in Israel, second largest HMO in the world. I was exposed to many, many different cultures, a lot of giant companies. I've been there for like seven, eight years, and then I was eager to try to do something of my own. It's a true story. We sat in a restaurant here in Israel, they just brought us a new plant-based burger—I won't mention the name, something international—and we ate it. I felt from one end that there was a lot of buzz around this new product, but at the other end, it didn't feel good enough. And then we decided to try to make something different. I made a call to one of my colleagues who was a genius in the engineering area, and I asked him how much will it cost to develop a printer that will 3D-print steaks. So he told me it will be around—I think the numbers were 30 million dollars—and that was it. Then we established the company. We called it MeaTech at the time because it was a combination between meat and tech. That's the name that I came up with, and all the rest is history.
Well, it's amazing. And I think what would be helpful for you to explain to the audience is kind of the secular trend behind this, meaning the demographic changes around the world, the fact that the middle class keeps expanding. Why is this needed at this point in time given all of that?
So we really wanted to make a change. I think that at the time there were a lot of cannabis companies that were blooming because the regulation in the state just entered, and we really wanted to make a change. We understood that—I don't know how many people are exposed to how the meat is produced, but it's not a very nice sight. And I'm saying it not as a vegetarian; I also eat meat. And we really thought that it's time to make things different. As you said, middle-class population is rising dramatically. You can see only in China, which has I think a billion and a half citizens, the majority of them were not middle class. But as time evolves, they begin to become middle class. Middle class want to drink milk and they want to eat meat. And we understood that it's only a question of harnessing the right technology to develop another way to create meat. Because if you can create vaccines in a few months, processes that in the past took years to create—and I came from the medical and pharmaceutical sector—so we understood that you need to harness technology. We were quite romantic at the time because we started as a company that wanted to create printers that will create cultured meat, meaning real meat. But as time went by, we understood that we need to focus, and we need to focus on products that we can produce today and that will make a difference today. And that's what we are doing.
And this is such a huge concept for most people; they're not familiar with it. Can you explain how the 3D food printing technology actually works and maybe what sets you all apart from other plant-based meat and fish alternatives?
Sure. So I'll start from the beginning. We started with an aim to 3D-print real meat, meaning that the printer will be integrated with real cells, live cells. They will be printed at nanometric precision and they will be kept alive after they are printed. Then incubation—you let the steak grow as you let a cow grow, a much shorter process. If the cow, it takes a few years until you can slaughter it and eat it. After you 3D-print the steak, it takes around a month of incubation, muscle fibers attach, and then you can eat the steak. We 3D-printed the largest cultured meat steak ever printed by the end of 2021, it was 100 grams, a steak. But then we understood that it's not cost-effective. The geopolitical and economical environment changed. You had COVID, and then you had the war between Russia and Ukraine, and you have interest rates that went high, and then the whole world was a different world. It didn't have the patience to wait for a product that is disruptive, and it wanted to see something that is produced today. Then we understood that the printers that we've developed are very, very high-end, and we can harness them with products that are in the market today. You begin to see today in the market whole cuts, like real steaks with fibers, with taste, that look, feel, and taste as real steaks, but they are fully plant-based. The reason that you didn't see them until now is that the hardware that creates these products is nonexistent. So the machines that create the burgers that you eat today are machines that are out there for many years, not too sophisticated. The outline of the product is exactly the same of the inline. And our uniqueness is that we know how to create very unique and high-end textures. We can really mimic the filet mignon, the ribeye, and a full range of products that are non-existent today in the plant-based industry.
Well, sticking on the technology theme, I know that you worked very hard to collect numerous patents and things like that. Maybe talk about the IP and how important that is to your strategy going forward.
So it was super important for us since we incorporated the company. Our main focus was to develop things that can be patent-protected. We always looked for prior art before we started any R&D activities. And today we hold a vast portfolio of IP, know-how, and trade secrets that are fully owned by Steakholder Foods. We never had joint IPs, we never had royalties, no patent infringements. Everything was fully owned by us, and we knew it would be crucial to have a clean IP portfolio once you engage with the larger players of the world. And that's exactly the position that we are now. We are trying to sell our machines to the larger manufacturers of the world, and one of the first things that these manufacturers look at is freedom to operate. They want to ensure that what you are selling to them is really yours. And so that's crucial, and we have a clean IP portfolio today.
Yeah. In terms of the business model, I know you have kind of a B2B model right now. Why did you choose that over direct consumer at this time, and why does that give the biggest benefit to your potential customers and clients at this point?
I think it's a question of cost. In order to be active as a B2C company, first of all, you narrow down your potential of takers, meaning your potential clients are only the end customers. The other way, if you're looking at a B2B business model, everyone can be our clients. We can sell to all of our competitors. And second of all, cost is key today, and the access to funds is challenging. And a B2C company needs to invest a lot in marketing expenses. And on the opposite, we only need to sell our product to a significant player in the industry, and it already expands all their market expenses. So I think it makes, today, if you take into consideration cost, commercialization possibilities, much more reasonable to be in a B2B business model.
Yeah. So you're licensing and selling the technology, meaning the printers and premixes, to those companies. And who are your customers? What are some of those companies that maybe you can name for us?
We've made a deal with a company in Israel, it's like the largest tofu producer in Israel, that will be the first company that we will see our products entering the market with. It's supposed to happen really in the next months. We are really at final stages of integration of our printer in their factory. Globally, we've published that we've entered into an agreement with a company owned by one of the governments in the GCC, which is like the Emirates. That's also an international company. But we do aim, and we've published it a few months ago, that we aim to enter into an agreement with an international player by Q1 2025. And we are aiming for companies that have a proven presence in the market, international-wise. We do not look to enter into engagement with smaller startups. We are really looking to engage with the Nestles, the Unilevers, the Cargills, the Tysons—significant, significant players.
Vegan and alternative proteins have come a long way in the last decade, and the market is keeping up. In the US alone, a third of all adults who eat meat and poultry report they are actively trying to reduce their intake, and the US retail market for plant-based foods is worth 8.1 billion. There's still plenty of room to grow in terms of popularizing new products and technologies. And I asked Arik's thoughts on how the plant-based market might evolve over the next 5 to 10 years and what factors will drive widespread adoption.
So if you look at the landscape of alternative proteins, I was a very big believer in the cultured meat industry because I believe that in the long run we will need to be able to produce real meat. Because if you really want to replace meat consumption, you need to replace meat with meat. That's something that I always said, and I still back up: meat will replace meat. I think that the learning curve of the integration of cultured meat, it will take a little bit more than it was expected. At the time, they talked about 2030 as already a year that this industry will be a multi-billion dollar industry. I think it will take a little bit more time because no one expected what happened in the world. But I think that we will reach the point that we will see cultured meat, like real meat that was created outside of animal, in the grocery stores. And I think that it will be side by side with traditional meat. I don't think that anyone needs to be afraid that the traditional meat industry will evaporate. No, it will always be there. But we will see different things. I think that in the meanwhile, the market awaits for more exciting products to enter the market, and I think that there we can really have a huge influence with new products that are not out there, not only rebranding of products that are there for decades. Because a plant-based burger—I used to eat a plant-based burger when I was a child here in Israel. I don't think there's a huge advancement leap with it, mainly marketing. But we see fermented products today entering the market. We will see 3D-printed products entering the market that really will affect the structure and the complexity of the products. And then we will see, I think, more consumers maybe replacing the meat products, not in total, but once a week—the flexitarians—with very, very cool and tasty plant-based products.
And so for sure, the industry needs to kind of scale together. The other piece of making progress is regulations and governments. How do you look at the regulatory environment right now? Is it friendly? Is it overly complicated? What are the things that you're doing to kind of work with regulators to create that mass adoption down the road?
I have to say that regulation—I think we see advancements in regulation. You have already a few countries in the world that allow to sell cultured meat. As I said, today, regulatory-wise, the 3D-printed products that are approved to be sold—so no novel ingredients inside the premixes that Steakholder Foods is using today—are fully approved to be sold in the States, in Europe, in the UAE. So that pathway is clear. I think that the main focus in the future has to do with subsidies to these disruptive areas, because it's very difficult to be a small startup to try to disrupt a new sector without any subsidies. And I think that there are funds that are injected; they are not enough. And I believe that in the future we will see more significant funds injected through countries that will want to secure their access to alternative proteins. With respect to the title, it will be food security. They will want to ensure that they have the capabilities to produce proteins on their soil.
