Don't have a cow? Perfect Day animal-free milk bids for slice of multibillion-dollar global dairy market
Like fellow Bay area start-up Gelzen, Berkeley-based Perfect Day is one of a new breed of companies in the ‘cellular agriculture’ business – using genetically engineered yeasts that have been ‘programmed’ to produce proteins and other ingredients found in plants or animals - on an industrial scale, without harming any animals, and with considerably less impact on the environment, co-founder and CEO Ryan Pandya told FoodNavigator-USA.
“We want to make a goldilocks product that has all the nutritional benefits of cow’s milk but none of the compromises.”
Cellular agriculture
In a nutshell, it is taking food grade yeast, and adding DNA sequences (which can be 3D printed using synthetic biology techniques) which effectively instruct that yeast to produce the proteins found in milk – predominantly casein (Perfect Day is making four different caseins that make a micelle) but also lactoglobulin and lactoalbumin, the two proteins that form the bulk of whey protein in milk. It then throws them into big fermentation tanks with corn sugar and other nutrients to feed on and sits back while they get to work.
When the microbes have done their work at the bio-refinery, the proteins are harvested via a mechanical process and added to water, minerals, and plant-based fats and sugars to make dairy milk.
When it comes to sugars, galactose, not lactose, is added, which means Perfect Day is lactose-free, a big selling point in many markets.
We’re in talks with three of the largest dairy companies on the planet
If this all sounds a bit well, ‘unnatural,’ you can have a conversation about how natural, humane, or sustainable it is to raise millions of cows as milk machines. But Perfect Day isn’t on a mission to “burn down” the dairy industry, stresses Pandya, who notes that some of the world’s biggest dairy companies have also invested in plant-based milks such as almond and soymilk.
“We’re actually in talks with three of the largest dairy companies on the planet to potentially partner up to get this to consumers faster and be more accessible.”
The GMO factor
As for the ‘GMO factor,’ which has created PR problems for several pioneers in the synthetic biology arena, Pandya is confident that by being completely transparent about the process and its environmental and ethical benefits, and engaging with NGOs at an early stage – Perfect Day will be able to avoid ‘Frankenmilk’ headlines.
“I don’t think it has to be all GMOs are great or all GMOs are evil, you have to think if there are right ways to do it and right reasons for doing it. I think a lot of NGOs are also excited by how much more efficient this is in terms of resource utilization compared with industrial dairy farming; we’ve done a lifecycle analysis; and when it comes to water, land use and greenhouse gas emissions we are significantly more efficient (click HERE).”
To be clear, Perfect Day’s milk is actually a non-GMO product in that it does not contain any GMOs (none of the yeast used to manufacture the proteins is present in the final product), and it would not need labeling according to the federal GMO labeling bill that President Obama has just signed.
That said, as GMOs are used in the production process, the milk would probably not meet the standards laid out by the Non-GMO Project for its seal, although Pandya says he has not spoken to the organization about this yet.
“We wanted to create a branded retail milk product first because we don’t want people to hear about this product because it has been snuck in some candy bar, we want to be upfront about it.
"We want people to actively buy our products because they are made in a different way, not in spite of the fact they are made in a different way.”
Perfect Day co-founder and CEO Ryan Pandya
The global dairy industry is worth half a trillion dollars
Unlike dairy alternatives, meanwhile, Perfect Day’s product will have the taste, functionality and nutrition of dairy milk – which means it can be used in everything from cheese and yogurts to ice creams that taste exactly the same as the animal-based versions, which means the size of the prize – should it capture even a small share of these markets – is potentially eye watering.
This might also explain why investors were pretty excited about this company almost as soon as it got out of the blocks (to date it has raised $4m, with early investors including vegan billionaire Li Ka-Shing’s Horizon Ventures fund, and is looking to complete a new round later this year).
“The dairy industry is worth half a trillion dollars, and you can cut and slice that in lots of ways. But in the US, 80% of milk is turned into other products, not served in a glass of milk, so that’s really where the big opportunity is.
“We wanted to create a branded retail milk product first because we don’t want people to hear about this product because it has been snuck in some candy bar, we want to be upfront about it. We want people to actively buy our products because they are made in a different way, not in spite of the fact they are made in a different way.”
“We make it sound simple, as if we just put in a gene and the yeast cell makes protein and that’s it, but it’s actually a lot more complex than that.
“We’ve spent two years learning all about milk protein and all of its idiosyncrasies, and we keep hitting these barriers, but every time we knock down a barrier we plant a flag. Now someone starting this journey is going to encounter all of these same barriers, which we’ve already solved, and we have a good amount of IP around it too now, so the easiest way to do this would be to license it from us.”
Perfect Day co-founder Perumal Gandhi
The business model
So what’s the business model? Is Perfect Day going to build its own animal-free branded foods empire; become an ingredients supplier making dairy proteins and/or milk to food manufacturers; or a tech company that will license its cellular agriculture technology platform to others?
“There are so many options that we are not marrying ourselves to any particular scenario just yet. The long-term goal is to make better, animal-free dairy products as accessible and as mainstream as possible,” says Pandya, “so we may work with other people.”
From an equipment perspective meanwhile, Perfect Day doesn’t require any particularly specialized kit, he adds. “People often lump us together with the cultured meat people, but there’s a lot of companies out there with fermentation tanks that could be used, especially in the biofuels sector, where there is a lot of underutilized equipment because that industry hasn’t taken off… yet.”
The price of the first retail product, a milk that is scheduled for commercial launch in late 2017, is likely to be on a par with organic milk, says Pandya.
“Eventually we want to be lower cost than cow’s milk.”
We’ll likely call it animal-free dairy milk, but no decision has been taken yet
But what about the regulatory status of Perfect Day’s products, and how might they be labeled?
It’s new territory, acknowledges Pandya, who says he has been in conversations with the FDA almost from day one, but it’s actually not as complicated as you might think, given that Perfect Day is making ‘dairy’ proteins (albeit using a different process) that are very well understood and widely consumed.
As for the term ‘milk,’ a term that has a standard of identity, discussions are ongoing (more on this HERE) but the FDA’s primary concern is that labeling is not misleading, he contends.
“We’re not trying to pass this off as cow’s milk, so we’ll likely call it animal-free dairy milk, but no decision has been taken yet.”
From a safety perspective, raw unpasteurized cow’s milk can carry bacteria such as Salmonella, E. coli, and Listeria, which are responsible for causing numerous foodborne illnesses, something Perfect Day does not have to deal with. However, it will likely pasteurize its milk just to be on the safe side, he says.
