How price plays into the future of precision fermentation-derived products

Precision fermentation may be the new buzzword in the alternative dairy space. But the buzz has a dollar limit, according to a new study.

Precision fermentation is a technology that involves using microbial organisms that contain a specific DNA sequence to produce functional ingredients. In dairy products, the microbial organisms contain a DNA sequence that’s used to create ingredients traditionally derived from cows, but without the animals.

By creating ingredients that are identical to animal-derived ingredients, makers of precision fermentation products contend their products can emulate the same taste consumers appreciate in traditional dairy products, but without negatively impacting the environment or animals.

For many consumers, the technology is a win-win.

Market research affirms the growing consumer interest. Recent data from The Hartman Group shows 40% of Americans, amounting to more than 90 million people, said they are immediately ready to try products made with precision fermentation technology.

The survey of 2,500 U.S. adults, which was commissioned by Perfect Day and Cargill, projected the U.S. precision fermentation market will grow to over 132 million adults by 2027.

The burgeoning interest is echoed by a surge in start-ups and other food businesses that are jumping at the opportunity to bring the technology to market.

New Culture, a maker of precision fermentation-derived cheese, unveiled in July its mozzarella cheese at Los Angeles-based restaurant Pizzeria Mozza. The company reported it will bring its cheese to the Pizzeria Mozza menu in 2024.

Also in July, Perfect Day, maker of precision fermentation-derived ProFerm, a functional whey protein that can be used in a range of applications, partnered with Unico Nutrition to launch Apollo II Protein Powder. The product combines traditional dairy with Perfect Day’s animal-free whey protein.

Vivici B.V. reported in August it completed its seed funding round in preparation to bring animal-free dairy proteins made with precision fermentation to market. The company was incorporated in the Netherlands in 2022.

Despite growing interest in “animal-free” dairy derived via precision fermentation, a new study of U.K.-based consumers published in International Food and Agribusiness Management Review, predicted animal-free dairy cheese developed via precision fermentation would glean 22% market share—only if the price is right.

The predicted share of 22% is based on a markup of 25% compared to premium conventional cheese.

If the price of precision fermentation-derived cheese jumps to double the price of premium conventional cheese, only 2% of consumers indicated they would be willing to make the purchase.

These findings align with The Hartman Group research, which found about 10% of consumers said they’re willing to pay up to 50% more for precision fermentation products, and about 20% said they’re willing to pay up to 25% more.

Among consumers who said they’re at least somewhat likely to purchase precision fermentation products, that number jumps significantly: about 60% of this group said they’re willing to pay up to 10% more for the products.