A Stock Market Fad Now, Israeli Food-tech Is Riding a Revolution in Eating

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A food technician tests a cooked 3D printed plant-based steak produced by Israeli start-up Redefine Meatin Rehovot, last year.
A food technician tests a cooked 3D printed plant-based steak produced by Israeli start-up Redefine Meatin Rehovot, last year.Credit: REUTERS/Amir Cohen

If you need any evidence of how much the food-technology business is exciting investors these days, look at Bio Meat Foodtech, a research and development partnership traded on the Tel Aviv Stock Exchange.

On Sunday, it announced it had signed a memorandum of understanding to form a joint venture with an unnamed partner to develop cultured fish meat. Bio Meat’s share price has since skyrocketed, rising more than 52% in three days of trading, boosting the tiny company’s market cap of about 43 million shekels ($13 million).

It went public at the beginning of March in a 25 million shekel initial public offering.

Investing fads come and go in the stock market, but Gilles Gamon, Bio Meat’s CEO, is sure that meat substitutes aren’t a passing trend. The consumer transition to meat substitutes based on plant sources and further down the line on cultured meat is just a matter of time.

“The world of fast and processed food is over,” he said. “People want to eat correctly and to eat well. This change alone will push the food-tech Industry forward and cause people to identify and develop solutions for the industry,” he said.

Israel, he said, is already a food-tech-innovation greenhouse. It has a lot of knowledgeable and experienced entrepreneurs and a host of high-tech accelerators focused on food-tech. There’s also a strong push here from the consumer side.

“Today, regulators not only require ingredients on packaging but labels that highlight foods saturated with fat and sugar, which requires makers to lower sugar, salt and fat content. You can no longer fool consumers. The consumer is much smarter than he was a decade ago. Awareness is changing,” said Gamon.

Bio Meat is one of several food-tech businesses that have gone public on the TASE in the past year. Others include Millennium Foodtech, SavorEat, MeatTech and Nextferm Technologies. All of them are seeking solutions amid widespread predictions of food shortages as the world’s population continues to grow.

For instance, the United Nations warns that starting from 2025 the world faces an annual shortfall of 60 tons of proteins, which today come chiefly from meat. Raising cattle damages the environment in many ways, including producing greenhouse gases, and requires large amounts of land and water, so many companies are looking for meat substitutes.

Bio Meat was formed by a group of people with food-tech experience. Its chairman is Itzik Saig, a former CEO of the Israeli food maker Osem, and its controlling shareholder is Solbar Food Technologies, Israel’s largest soybean crusher and soybean-oil refiner. Solbar is controlled by Nir Peles and Shimon Barkama.

Impatient investors

The trend toward meat substitutes is underway, but the question is whether stock market investors will have the patience for Bio Meat’s portfolio companies to become profitable.

“We have a strong investments committee with experienced people,” Gamon said. “Our strategy is very clear. Going forward, I believe that anyone investing in Bio Meat won’t have to wait for years to make money from his investment. Our criteria for investing in a company includes examining its ability to generate a return.”

Gamon said that Bio Meat’s model enables investors to reduce risks while getting a piece of the action in an emerging industry. Bio Meat’s portfolio today includes Rilbite, More Alternative Foods and OVO Technology.

Rilbite, in which Bio Meat holds a 14.8% stake, is developing meat substitutes based on plant proteins. More Alternative Foods, in which Bio Meat holds 7,3%, is also developing meat substitutes, but in this case, they are based on proprietary high-protein yeast blends.

OVO, in which Bio Meat also has a 7.3% holding, develops technology aimed at influencing the process of differentiation in chicken eggs, with the aim of producing male chicks to be used as broilers when they turn adult. The company’s proprietary formula is injected into fertilized eggs in the first days of the incubation process.

The 25 million shekels Bio Meat raised in its IPO is the minimum amount the TASE required for R&D partnerships. Gamon said that was intentional.

“Going forward, we’ll raise more money and we’ll see investor interest. Our goal is to build a stable business. I don’t come from the stock market world, but from the world of industry. It’s important to me to see our [portfolio] companies moving forward with the help of our investments. If you raise 100 million shekels, you see things differently,” he explained.

In any event, the Israel Securities Authority is seeking to toughen terms for future IPOs, among other things doubling the minimum amount that must be raised, to 50 million shekels, and increasing the time before insiders can sell their shares.

Gamon said he believes that the products developed by Rilbite and More Alternative Foods will be competitive with products already on the market.

“I eat meat, but my wife is a vegetarian, so over the years I’ve tasted all kinds of substitutes and wasn’t impressed,” he said.

“Rilbite has found something that offers something for everyone – appearance, substance and flavor. Its price is ultra-competitive because they don’t need to build a $100 million factory or make use of all kinds of powders. Rilbite uses natural ingredients, and their chopped meat is competitive with chopped meat made from real meat by every metric.”

Rilbite is erecting a manufacturing facility in Ashdod that will begin operating next October or November, Gamon said. Its production capacity of one ton an hour will be enough to serve the Israeli market.

“More Alternative Foods uses side products from the food industry [edible oils] and has produced something very similar to a strip of meat. Here, too, there’s no technology involved that involves big investment, just marketing ability,” he said.

Both companies’ products are “clean label,” a term for food products that have fewer and often simpler ingredients. That distinguishes them from the products of the current industry leaders, such as Impossible Foods and Beyond Meat.

Lab meat lags

Gammon holds that meat substitutes made from plants have an edge over cultured meat (that is, synthetic meat produced in a lab).

“The cultured-meat segment is more complicated and in my opinion manufacturers in the segment will face more obstacles, one of which is the price,” he explained. “The manufacturing process today is quite expensive, although that’s the case with all new technology at the beginning.”

OVO occupies another segment of the food-tech industry, with its technology for increasing the chances of producing male chickens, the preferred kind for broilers. Male chicks take a few days less time than females to mature, saving the industry tens of millions of dollars a year. Increasing the rate of male chicks also enables growers to reduce the density of birds in their coops.

You could do this genetically and improve the rate by a few percentage points,” said Gamon, but OVO’s system increases it by 10%.

“Think of it as if there was a 8200 [Israel Defense Forces intelligence] unit based in a moshav’s chicken coop, and it’s thinking all day how to improve the differentiation of chickens through technology, which is pretty natural as it goes,” he said. “Yael Alter, its CEO, is a top expert in the field and has conducted experiments in the animal world, which isn’t at all simple.”

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