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The Future of the Food Industry with Jim Mellon

Welcome to the Investing for Beginners podcast. In today’s show we discuss Moo’s Law with Jim Mellon:

  • The coming disruption in the food industry from cell ag, or creation of meat products in a lab
  • Impact on the dairy, meat, and seafood industry, plus how this all impacts the environment, the results might surprise you.
  • The disruption already underway in the diary industry
  • Other aspects of disruption such as the leather industry and its impacts
  • Areas to invest in this coming revlolution

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Transcript

Announcer (00:01):

What’s the best way to get started in the market. Download Andrews ebook for free@stockmarketetf.com. I love this podcast because it crushes your dreams and getting rich quick. They actually got me into reading stats for anything you’re tuned in to the Investing for Beginners podcast led by Andrew Sather and Dave Ahern with step-by-step premium investing guidance for beginners. Your path to financial freedom starts now.

Dave (00:44):

All right, folks, welcome to the Investing for Beginners podcast. We have a very special guest with us tonight. We have Jim Mellon from England and Jim is an entrepreneur and he works with human longevity and alternative food products and creates food for the future. So, Jim, I would like to thank you very much for taking the time to come to talk to us today. And as a restaurant guy, I guess I’d like to kind of dive into your new book, Moo’s Law, and talk a little bit about food creation and how that is looking like it’s going to change. So could you tell me a little bit about that as, as kind of an overview of a basic idea?

Jim (01:24):

Yeah, sure. Well, thank you both for having me on. I’m essentially; my background is in biotech and Moo’s law. The book that you kindly referred to is a description of how food can be made and materials, for that matter, can be made in laboratories and using biotech processes, which have been around for a long time. And the thing is that this is no longer science fiction is happening. Now, you know, many companies have got prototypes, many companies will hire us on the market within a year or so. And as usual, most of the best companies come out of the United States, where you have the greatest convergence of venture capital university research and entrepreneurship. And so a lot of the companies that we’re involved in are US-based companies, but in a, in a very brief nutshell in 10 years, the dairy industry, as you know it. And as I know it, and we remember when we were children growing up milk from cows cheese, from cows, you’ll get from cows and so forth will be gone, will literally be gone.

Jim (02:39):

All of the milk that will be drunk will be produced in what’s called a precision fermentation laboratory conditions, or it will be plant substitute milk, like the ones that you’re familiar with in the States like almond milk, soy milk, oat milk, rice milk, et cetera. And so the entire dairy industry around the world will be no more. That’s the first prediction. The second is that the meat, the, you as the restaurant guy are using half of it around the world will come from lab-produced factories effectively or from plant-based meats along the lines of beyond that impossible, which you’re very familiar with within the United States. So there is a huge revolution underway in the world of food, and you can you know, people have different reasons for either liking that or opposing it, but it’s happening in terms of liking it.

Jim (03:41):

We know at least most of us know that climate change has been caused by a variety of things, including transport home heating things like the manufacturer cement, but the biggest contributor to climate change is intensive farming of animals. Because as you know, cows produce a lot of meat in vain, which is a big contributor to global warming. In fact, about one-fifth of all global warming can be directly attributed to the way in which we intensively farm animals around the world. So reducing the intensity farming of animals is a big plus for the environment; on top of that, you’ve got 80%, eight, 0% of all antibiotics go into farmed animals. You know, we don’t want to go through another one of these pandemics, but if we had a pandemic that wasn’t viral, that was golden bacterial helpers, because as I said, we’re using far too many antibiotics in animals.

Jim (04:47):

Those animals are eaten by human beings. They come back; they cause back antimicrobial resistance and human beings. And if there was a bacterial disease that evaded and to be optics, then we’d have somebody like the blank death. And, you know, in the blank desk, somewhere between the third and half the world’s population died because there was absolutely no treatment for it. And we could have that, and it could be because of animal-to-human transmission. And indeed, the current pandemic we’re in at the moment is the result of what’s called zoonosis, which is animal to human transmission as indeed of all pandemics in the last 20, 25 years. So we need to do something to sort out the over the large intensive farming industry, and we need to do it quite quickly and luckily for our sciences here. So the first wave of this revolution is in plant-based foods.

Jim (05:51):

And I think everyone knows that these plant-based foods have got better. In some cases, you tell the difference between a burger produced by beyond meat or impossible meat and the regular burgers that everyone’s familiar with. And you’ve also you know; you’ve got things like corn in the UK, where are, or meatless farms in the UK, which are gaining market share very quickly over here in Europe. So the plant-based revolution is the first one, but then following behind it is the idea that you can make the best of meats, the best of fish, the best of materials in lab conditions. And ultimately, you can make them cheaper and of higher quality than the stuff that comes directly from an animal and where we’re there. So the reason I call my book news law is because Gordon Moore invented a law 50 years ago when he founded Intel, which said that the price of semiconductors would go down and their efficiency would rise on an 18-month cycle, approximately hiring in price and doubling inefficiency. And that’s remained the same since then. And moose law is very similar. It’s other words, the price of this stuff is coming down rapidly, and the scale is increasing dramatically. So that’s, that’s in a nutshell where we are the bold predictions, but it’s happening, and you know, we need to get used to it.

Andrew (07:23):

Wow. That’s a lot to unpack, Jim. I want to thank you for coming on to share this with us, knowing Moore’s law and how accurate it has been. We’ve spoken on the show about that previously. So long-term listeners know about Moore’s law. And so for you to say that moose laws are potentially going to be a lot similar really kind of peaks my interest and kind of, kind of like makes my antenna go up in a way. So for me as a father, the biggest thing, when you say that is disappearing as a concern for, you know, nutrition essentially for children. And so knowing absolutely nothing about kind of some of these topics, how does that play into the whole dairy situation?

Jim (08:14):

Yeah, that’s a great question. So milk has a number of ingredients, that’s cow’s milk. But the two most important ones are compounds called Whey and Cassius CA S S E I N. And companies like perfect day from California or no quote from Chile have worked out how to produce those exact ingredients in laboratories without reference to counts. And so if you imagine that you know, milk is basically water plus these key ingredients, you basically produce the key ingredients in lab, lab, laboratory condition now, and you add water. So you, you, you transport the powders of the key ingredients around the United States and then ultimately around the world, and you add water wherever needs to be produced, and you have a perfect replica of milk with all the nutritional content of milk. And you can actually add more nutritional content if you want it to so that no one as a parent or anyone else for that matter needs to worry about whether the children are getting adequate, you know, dairy diet versus it’s identical.

Jim (09:36):

It’s exactly the same as they would get from a cow. But not in the sun, slightly sort of antiquated way in which we use cows at the moment. I mean, you know, the cows don’t go out mostly into fields of fat in feedlots, and they’re constantly kept pregnant, as you probably are aware. And the others become enormous because they have to produce milk on a continuous cycle. And a lot of them, the others are so big that that breaks their backs. And that’s why dairy cows have a very short life expectancy compared to cows that were just left out in the field, but you don’t need to go through that process anymore on this. This is why I can actually confidently predict the dairy industry, the first industry, which has already being disrupted; your two biggest food dairy producers, which are boredom and Dean foods in the US, have gone bust in the last year is going to go.

Jim (10:36):

And so nearly a quarter of the US milk market is already alternative. It’s already almond. It’s already soya. Those are plant-based kinds of milk, as they probably aware that’s happened in the last ten years. So when the exact replica of milk comes along, you know, the chances of the dairy industry surviving are literally zero, in my opinion. And you know, if you’re a dairy farmer, you should stop producing food for humans to consume because you get much better margins. You know, that plants you know, the, for the humans to consume. So this is my number one prediction. The second prediction is that the fish market, I don’t know if you guys have watched this Netflix recent documentary called Sea Conspiracy; it’s absolutely shocking as worth watching if you’ve got time, but basically, the oceans are over-fished. The abuse of sea treasures is incredible.

Jim (11:37):

You know, something called bycatch, which is what is picked up alongside the fish that the fishermen actually want to get and then killed unnecessarily, is enormous. It’s about half of the whole catch. Half of all fish is eaten in the world is farmed. And those fish are fed to a certain extent, at least to a large extent, by wild-caught fish, heavy use of antibiotics, destruction of species, et cetera. Now here’s thought right in the United States, probably by the end of this year, one of your companies will be selling a Mahi maki. He fills it, which is identical to the best smile he might fill it because there is a more human he fill it’s made in the laboratory next year, we’ll be doing the same thing with tuna. And it won’t have any contaminants like mercury or micro-plastics or antibiotics or hormones, and it won’t be contributing to the destruction of the ocean habitat.

Jim (12:33):

So the fish industry within five years will be completely disrupted. I’m not saying that all fish will be produced in lab conditions cause they weren’t, but it will be a high percentage. And then we move on to me, and that’s a tougher one. But it’s happening quite quickly for the first burger produced by what they called cell ag. And I just, for your listener’s sake, we’ll describe what salad is. You take a sample from, let’s say, account if you want beef, and you can do the same with a chicken or any other type of meat. You take a sample; it’s the size of my smallest fingernail. And the car doesn’t feel anything from that. A sample comes STEM cells, which I guess your listeners are familiar with, which are all progenitor cells that differentiate into everything we’re made up of, and the same for an animal you extract the STEM cells that you want.

Jim (13:35):

So that would be B cells or muscle cells, or connective tissue cells. You put them into separate buyer reactors, which are big stainless steel containers. And you bathe them in nutrients, which are roughly equivalent to what an animal would eat on a feedlot or out in the field. You know, the starches proteins, amino acids, you introduce what are called growth factors, which encourage the cells to double, and they double quickly. And at the end of 44, zero-days, you get the equivalent to seven or eight cows worth of meat from that one tiny little sample compared to the cows that, you know, you would rare in order to be slaughtered, which would take 28 months to produce the equivalent. And that’s where we’re at. That’s what’s happening now. So all these companies have prototypes, they have products, they have so many, you can feel taste or whatever. And it’s just a question of scale and execution now,

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Dave (16:42):

That is amazing. So I’m not going to lie. You’re selling me on this. So I came into this a little skeptical. I’m not going to lie because as a, as a restaurant, poor, poor restaurant person who worked with food for a long time, this sounded a little bit scifi, if you will. But I, I, I, you know, everything that you’re laying out here sounds extremely logical. So as somebody who has worked with food appearance is important. So I guess for somebody that’s not familiar with this, does the steak that’s grown in the laboratory look the same as the one that you buy at the grocery.

Jim (17:18):

Yeah, that’s another great question. So the answer is no. And so, and in terms of meat in the United States, 60%, six, 0% of all the meat that you guys eat is ground. So it’s in the form of sausages or burgers, or, you know, whatever way you eat ground meat. So only 40% is in the form of structured meat. So, you know, the familiar steak or the lamb chop, that sort of thing that is much harder to do to produce that. And that will be some years away, but the ground meat we’re here now. All right. So that’s the big, low-hanging fruit in terms of meat. And I mean, I just want to tell you that also, if you’re thinking about meat, think about leather. All right. So you know, Wally, where does leather come from? Well, the best ultra-quality leather comes from, you know, made into handbags as an example or accessories, best belts or whatever comes from carves.

Jim (18:27):

And most of them are grown in Austria of all places because the carves can’t be anywhere near bombed wire insects that might affect the, you know, the way in which their hide looks once it’s been tanned. And so it’s a fiddly old business, but it’s a very lucrative business. Anyway, there’s a company, again, a US company, which is producing leather and a laboratory, and it’s producing it as identical to the best quality leather. But the great thing about it is that you can make that leather in any size you want, you could make it the size of a house, but at the moment, the size of the hide is the determining point as to how big that piece of leather can be. So this is magnificent. And, of course, the leather comes out of the lab. It is identical. It is leather. It’s not some sort of GM or Frankenstein-type product and comes out of the lab, and it doesn’t have any hair on it because you only extract the STEM cells to produce the leather, not to produce the hair. And so the tanning process is only one 10th of the process of, you know, regular leather and tanning is a really environmentally destructive thing inexpensive as well. So, you know, we’re not just producing food, ranging from any type of food that’s related to an animal, but we’re also producing materials, leather threads cotton, you name it. It could be produced in a laboratory, and it can be produced much more efficiently and cheaply without environmental destruction—so super exciting area. Most people have no idea about it.

Andrew (20:12):

So two-part question to this, and then maybe after we can move on to some of the effects on companies in the food industry for investors, with investments in there first with you mentioned the leather does the leather retain that nice smell coming from a lab? And then are their characteristics, cause you mentioned dairy, you mentioned me talking about materials. Do they share characteristics in the sense that they will all look the same or they will all, is every alternative slightly different in taste, appearance, And other characteristics, or are they all kind of uniquely different from their kind of generic version?

Jim (20:56):

That’s a good one. So basically, in terms of leather, yes, because it is leather, it’s not full leather; it’s real leather. It retains the smell. That’s familiar to all of us; you get into a new car, you smell that new leather scent that is retained in terms of the meats. Basically, I don’t know if you know this, but one in six people in America every year, the finger is high in Europe as well, but not quite as high has to seek medical treatment because of food poisoning. And most of that food poisoning comes from contaminated meat. And so, the meat that comes out of these lambs will never be contaminated. It’s not genetically modified in any way. It’s the best of the best of any species that you care to have. So, you know, you get the best chicken from which you take your sample, or you get the best cow from which you take your sample, and you could produce if you want Wagyu beef or you could produce you know Aberdeen, Angus beef, you can produce any type of beef you want, but based on the donut of the cells.

Jim (22:12):

And so yes, the tastes will be the best of the best of any particular species that any company chooses to make. And the same in seafood, you know, as I said the company is called blue Nalu. It’s based in San Diego, and its first thing is Mahi-mahi. He and I were not familiar with my EMR here in Europe, but apparently is a big thing in the United States. But then obviously tuna, we’re very familiar with, it’s very expensive fish, and that’s the next one. Either the stocks they can literally take based on the platform technology, any type of fish, and produce it without the weights. You know you don’t, you don’t extract the STEM cells produce the scales, the eyes that had the tail or the entrails, you just extract the STEM cells needed to produce the bits that people want to eat, which is the fill it. And the same with meat, you don’t produce the, you know, the tail, the hand, the what are the bits we don’t eat, or typically don’t eat are not made. And so there’s no waste. The yield is very high, in other words.

Dave (23:17):

Yeah. That’s, and that’s incredible, especially for people that are working on the restaurant side of it; the better yield you get, the more money than they can make. So let’s, I guess, shift now on talk a little bit about how does somebody gets invested in this? How do we, how do we participate in this as it goes?

Jim (23:38):

Yeah, that’s okay. That’s a million-dollar question. So basically, there are at the moment no companies of this type that are public in the United States or anywhere else for that matter. And, but it moves all, I list every single one of the companies as of the end of January, basically, or yeah, but right in January and provide all the details for people to contact them if they want to. I also rank them according to the ones that I think have got a better chance of economic success than the ones that don’t. So anyone who’s seriously interested in investing might want to have a look at moose law. And by the way, all the money for moose little goes to the charity, the good food Institute, which is an advocacy group for this industry. So I don’t make any money out of this.

Jim (24:28):

And, but we did put London listed company. So company listed on the London stock exchange called agronomic ex a couple of years ago. And the biggest investor in that, and that invest in many American companies, but companies in the UK and Israel and Asia the Holland Holland is another big country for this and a that that stock has done extremely well. So I think it’s up five or six times since it was listed. It’s not exactly Tesla, but it has gone up a lot. And so that’s the only way that I know that investors who may not have many millions to invest can invest in this area, but I’ve got no doubt that some of these, you know, the high-performing companies in the US and I’ll just tell you which ones. I think that the United States is the highest performing potential performance.

Jim (25:25):

You’ve got Memphis Meats. You may have heard of BluNaNu, which is a fish company. You got Vitro Labs, and the leather company you’ve got deep, just which is part plant-based is a big line of egg substitutes in the United States. And then part sells a base of producing chicken nuggets in a, in a laboratory. Those are the ones I think are more likely to go public in the US in the relatively near future. So investors should really watch out for them. And, you know, let’s just put this in terms of market size. If you take meat, dairy, seafood, and you add the materials I mentioned, which are cotton, leather threads collagen together, the total addressable size of that is $5 trillion, or about two times the size of the UK economy, nearly four times the size of the Spanish economy.

Jim (26:25):

And about a quarter of the size of the US economy. It’s a huge market. It’s bigger than the electric vehicle market, as an example. So it’s massive because every single day we need to eat food. And every single day, we use one or other of these materials. So this is a non-trivial market. This is vast, and the big food companies are getting interested in it. So the Tysons, the Cargills, the Unilever Nestle, Dan, on those sort of companies are very interested in this area. And some of them were making investments because, frankly speaking, I’m not saying that they don’t care, but they are agnostic about where the food comes from, as long as it’s legal and as long as people want to buy it. So, they are investing in this area to hedge their bets, basically.

Andrew (27:14):

So that was actually going to be my next question. I’m a long-term shareholder of Hormel. And so what it sounds like to me, so in Hormel’s case, I know they have a lot of different kinds of stakes in the fire. It sounds to me like what you’re saying is it’s going to depend on the company, and for a lot of these more traditional food companies, like a Hormel or a Tyson, if they really don’t care where it comes from, then as long as their business model is, is more kind of in the middle of the value chain and more just kind of slapping a label on it that they should be able to adjust to these tailwinds. Whereas someone like Dean food, who went bankrupt last year, is not able to adjust, which I, I was familiar with Dean foods. I didn’t know exactly what they did as a business model but was it maybe Dean foods was more on the production side, whereas some of the other survivors are kind of more in the middle of the value chain. How do you see that as kind of the industry expert here?

Jim (28:18):

Well, I would say that the companies that are involved in essential marketing and distributing and manufacturing are more likely to survive than those that are rearing animals and, you know, in a very capital-intensive way. And I don’t know about Hormel specifically. I do know that Hormel was one of the factors in the second world war that helped the UK because you’ve made the Hormel-made Spam. Yeah. And a spiced ham, I think it stands for. And, but I don’t know about that particular company, but it’s you know, I think if you’re a marketer like Unilever is a good example. I think it’s one of the world’s biggest. It is the world’s biggest food company. And it basically is a marketing and distribution company. So one way of looking at this is to say that, you know, I’m in a farmer suit to go a biotech business, is that the big pharma companies like Pfizer or Johnson and Johnson typically buy in innovation, they look at little biotech companies, and they see something exciting.

Jim (29:24):

They buy the company, and then they act as the marketing and distribution arm around the world. A good example is Pfizer buying the vaccine from BioNTech in Germany. You know, Pfizer didn’t develop the vaccine that’s being used in the US and elsewhere around the world. It was developed by the German company, but they’ve come to an agreement, and they spoke the economics of it. And I think the same thing will happen with this food. And the great thing about cell ag, as opposed to plant-based foods, is that you know, the three of us could set up a cloud-based food company tomorrow. We’ll call it whatever we want and go out there and try and sell it. It’s a marketing game. It doesn’t have a high IP. Typically doesn’t have a high IP element to it, but in cell ag, you know, it’s they, they have tacked into States. They have their way of protecting their moat. And that’s why we like it better than the plant-based stuff typically. So I’m, I think that some of these companies will be bought by the big food companies for the innovative technology and the big food companies will do what they do, which is to go out and sell it to Safeway, Kroger, et cetera, in the US and you know, in the UK Tesco are equivalents basically.

Andrew (30:39):

Yeah. That totally makes a lot of sense. And I’m really; this is a fascinating discussion. I want to thank you for your time, Jim. If people out there are wanting to learn more about this topic, learn more about you. You mentioned your book; where would you recommend people go if they’re very interested in this?

Jim (30:55):

Well, there is a website and thank you for asking that question. There is a website called Mooslaw.com, and they can go there, and we put up, you know, interesting articles or news that that talks about this whole industry. And then we also recommend the good food Institute, which is based in Washington, which has lots and lots of you know, seminars and educational stuff on its website, and is a good organization to get tuned into. If you believe that there is a revolution going on. And I certainly believe it. And, you know, everyone has their own motivations, but we haven’t eaten meat in our household for a long, long time. And that’s because we are, we’re committed animal lovers, but other people have different views, but ultimately the consumer will determine whether this is successful or not. And it will be according to whether it’s convenient, it’s textured, same as they used to the taste is the same. But most importantly, the price. And so, you know, the price has got to come down to a level that people can afford. And also, that is comparable to conventional foods. And that’s why I’m very excited about this because I think that’ll happen faster than people expect that.

Andrew (32:17):

Awesome. Thank you so much, Jim, for coming and talking to us today; we really appreciate all the insights that you shared with us, as well as all the great knowledge and everything about cell ag and everything that’s going on with that. I agree with you. And I think it’s a, it’s a fantastic opportunity and, and you’re, you’re converting the I’m not going to lie. So I appreciate you.

Jim (32:37):

I appreciate you taking the time. I enjoyed talking To you both, and thank you so much for the good questions and for having me on.

Dave (32:44):

You’re welcome. You’re welcome. Thanks. You have a, you have a good day, Jim, and take care.

Jim (32:49):

Thank you very much. Bye-bye. Bye.

Dave (32:50):

All right, folks, we’ll that is going to wrap up our conversation for this evening. I wanted to thank Jim again for taking the time to come talk to us. That was amazing. We learned a ton of stuff. So without any further ado, I’m going to go ahead and sign us off. You guys, go out there and invest with a margin of safety emphasis on the safety. Have a great week, and we’ll talk to you all next week.

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