“In precision fermentation, downstream processing accounts for up to 70% of capital expenditures. This high cost has made it difficult for early precision fermentation companies to scale and successfully integrate into the existing food system,” according to Daisy Lab CEO Irina Miller.
She explains several precision fermentation players are offsetting this expense by producing specialized ingredients that are in demand but limited in nature – such as lactoferrin. While economically effective, this approach does not solve for the need to produce more popular dairy proteins in a more sustainable, reliable and economic fashion.
“Currently the total global precision fermentation capacity is about 16 million liters, which is like one big dairy factory. And that is distributed globally – usually in very small research facilities in academia or the private sector. … So, relying on the capacities that we currently have, we might make an impact or might penetrate some high value, niche markets with vegan ingredients and vegan products, but really making an impact on the global commodity scale is just not possible now,” she told FoodNavigator-USA.
She argues that to make an impact on the global commodity market, precision fermentation players need to work with – not against – conventional dairy producers to supplement the commoditized ingredient and finished product markets.
“To date, companies that fall within the alternative protein camp have often taken to vitriol rather than seeking meaningful partnerships with one of the world’s largest food and beverage manufacturing ecosystems,” she said.
Fostering collaboration with innovative strains, fermentation protocols
Daisy Lab is making it easier for the two dairy protein producers to work together by designing strains and fermentation protocols that fit directly into the existing dairy infrastructure, which it can license to quickly and economically scale production, said Miller.
“Daisy lab is developing dairy identical proteins, mostly to be used as an ingredient, but we are not trying to be the B2B company or build a vertically integrated business from the strain to the final product or the final ingredient. We think that there is so much more opportunity out there already to use the CapEx and equipment that has already seen a lot of investment from the dairy companies and is already out there,” Miller explained.
For example, she said, when it comes to filtration technology, a lot of it can be used to process the precision fermentation liquid – if it is done right.
She explains that the current technology at most dairies could not handle intracellular fermentation, which some precision fermentation companies use to purify protein, but Daisy has created strains “in just the right way” with extracellular expression to produce one protein that does not have anything else in the broth that would need excessive purification.
“Fundamentally, the fermentation broth that comes out of our fermenter, once its spun out, is the composition that is very similar to dairy, except it has a higher protein, different mineral balances – less calcium and more potassium. It has no lactose. And it can literally just go through the exact same processing equipment,” she explained.
Miller acknowledged that dairies likely would need to buy a standard fermenter – but Daisy would make suggestions about what to buy and where to fit their strain and protocol.
“What we are offering is not just licensing. We are not saying, ‘Here is a box, here is a strain and here is a piece of paper or protocol – off you go.’ There would be consulting and education and support,” she added.
Why should dairy processors partner with Daisy?
While Daisy’s approach could streamline scaling of precision fermentation, a fundamental question is why would a dairy company want to help scale what some might consider a directly competing product?
Miller explained that adopting this technology would give dairies that follow a seasonal cycle a way to produce bioidentical proteins during the traditional downtime – allowing them to maximize the use of their equipment and ensure year-around business.
“There are some places in North America, and definitely in New Zealand, Australia and some European countries, that follow the seasonal production cycle of milk. So, three times out of the year that milk supply is simply not available or much lower. So, that could be a good time to substitute the production with precision fermentation, because they already have the plant. That is the most expensive thing to build in the precision fermentation industry, but 70% to 80% of the equipment already exists at dairy companies. All they need is a fermenter, and essentially away they go,” she said.
Another benefit for the dairy industry is the planning cycle for precision fermentation is much shorter than for dairy from cows, she said.
“Rather than waiting nine months for a cow to become pregnant and start collect her milk, with fermentation technology the planning horizon is a week. You flip the switch and it is running,” which gives dairies more flexibility, she added.
Finally, she said, precision fermentation can help dairies “cut to the chase” and reach their final product faster. She explained in New Zealand, where Daisy is based, most of the milk produced and exported is powdered or broken into key ingredients – rather than sold as fluid milk or artisanal cheeses. To do this, dairies now must produce the milk via cows and then break it down at the molecular level. Precision fermentation, however, directly produces it at the molecular level so it can be more quickly produced, processed and shipped.
Daisy is fundraising for a pilot plant
To help dairies and other potential partners better understand the proposition and benefits of precision fermentation as a complementary business and production method, Daisy is raising US$5 million (or NZ $10 million) to help build a pilot plant.
The plant would allow the company to scale its technology to a 1,000 liter batch size, which would “unlock its ability to begin generating revenue through global IP partnerships with existing dairy processing companies,” according to the company’s pose on AgriFutures GrowAg.
Miller explains the plant also will function effectively like a show room and serve as a place where Daisy can work with partners to identify strains and protocols and explore the full potential of partnerships.
Ultimately, she reiterated, she does not see precision fermentation as a direct competitor that will one day put farmers who produce cow dairy out of business. Rather, she stressed, it is a complementary offering that can diversify companies’ portfolios and expand their consumer base to reach shoppers who are not currently buying dairy milk from cows.
