Precision fermentation is a biotechnology process that utilizes engineered microorganisms like yeast, fungi, bacteria or algae to produce specific proteins or bio-based ingredients, in the production of sustainable food ingredients and alternative proteins.
It is believed that precision fermentation can become cheaper than animal farming once this process is scaled-up. Fermentation can be highly efficient as it produces the target product without any wastes, unlike animal farming which requires feed, labor and other maintenance costs.
With growing global shift towards sustainability and environmental-friendly ingredients, precision fermentation will see growing investments and adoption.
According to the Good Food Institute, the overall fermentation sector attracted US$651 million in total funding in 2024. With more investments, start-ups and other companies can scale-up their production facilities and improve their bioreactor efficiency.
Nevertheless, despite technological advancements in recent years, the cost of producing precision-fermented ingredients remains relatively high compared to conventional animal or plant-based counterparts. In addition, alternative protein technologies like traditional fermentation and plant-based solutions have shorter development and lesser regulatory requirements.
Due to these challenges, not many companies are willing to venture into this niche segment in the past. However, in recent years, this number has grown signifying higher interest to venture into this high-technology category. In 2024, there were 80 companies involved in precision segment, similar to the number of companies in biomass fermentation (see Chart 1.0)
From 2024 to 2031, demand for precision-fermented ingredients is expected to grow at a double-digit CAGR of 38.9% from US$1.06 billion to US$10.59 billion respectively with Proteins to contribute more than half in terms of applications followed by Alternative Fats & Oils (see Chart 2.0).
The main growth drivers in the Precision Fermentation segment is the Protein category, primarily due to high interest in precision fermentation dairy proteins such as whey and casein, as they seem to be very identical in terms of taste, texture and nutritional profile compared to the conventional dairy segment. For example, the growing interest in Lactoferrin.
In the future, we can expect more innovations in the dairy-free space for cheese, yogurt, ice cream and milk offering almost the same nutritional and taste profile to conventional products, yet with lower environmental impact. In addition, lactose intolerant as well as vegan consumers can also look forward to this innovation space with much to cheer on in the near future !
