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Tyson Foods announced Monday its investment in Memphis Meats, a company working to turn animal cells into meat for human consumption.

The California-based company's self-proclaimed "clean meat" is part of a growing industry of startups that claim their lab-grown meat is better for the environment than meat from feedlots and slaughterhouses.

Tyson, through its venture capital branch, has a minority stake in the business, according to a news release. Terms of the deal were not disclosed. The Springdale company also has an investment in California's Beyond Meat, a plant-based "meat" company.

"We continue to invest significantly in our traditional meat business, but also believe in exploring additional opportunities for growth that gives consumers more choices," said Justin Whitmore, Tyson's executive vice president of corporate strategy and chief sustainability officer.

Other Memphis Meats investors include Bill Gates, Virgin Group founder Richard Branson and Cargill Inc. They participated in a $17 million fundraising effort led by Draper Fisher Jurvetson, a venture capital firm. Cargill did not disclose its stake with the company.

Memphis Meats will use those funds for continued product development, according to Tyson Foods. While production costs have plummeted in recent years, it's still costly to make in vitro chicken, duck or beef. Production costs Memphis Meats about $2,400 per pound, The Wall Street Journal recently reported, down from $18,000 last year.

At first glance, Tom Hayes, president and chief executive officer of Tyson Foods, admitted the company's latest investments in plant-based products and lab-grown meats may seem counterintuitive.

"Admittedly, it seemed counterintuitive to some inside our company, too," Hayes said in a statement issued Monday.

But for Hayes, factors such as a projected increase in calorie consumption and global population growth have led Tyson to consider "a combination of innovative and traditional approaches" to processing food.

Tyson first showed interest in meat substitutes in December 2016, when it invested in Beyond Meat, known for its Beyond Burger made of pea and soy protein. Tyson raised its investment slightly last month from a reported 5 percent stake in Beyond Meat.

Tyson is paying close attention to consumer trends, said Ken Shea, Bloomberg senior food and beverage analyst.

Consumer demand for healthier, sustainably grown food has entered the meat market over the past few years. The U.S. market for substitute meat has grown about 8 percent annually since 2010, according to EuroMonitor data analyzed by Bloomberg, or double the rate of traditionally processed U.S. meats.

While the $2.5 billion global meat substitute market is a drop in the bucket compared to the $150 billion global processed meat industry, Shea said, growth rates show that by 2020 meat substitutes could represent 3 percent of the U.S. processed meat market.

This year the health-conscious trend isn't easing up, according to the National Restaurant Association. Top food trends for 2018 include plant-based proteins and vegetable carbohydrate substitutes.

Tyson has focused on sustainability under Hayes' leadership. In a recent Fox Business interview from the World Economic Forum in Davos, Switzerland, Hayes reiterated how important it is.

"Everyone's talking about growth [at the forum], but with growth comes a responsibility to do it sustainably," Hayes said.

Mervin Jebaraj, director of the center for business and economic research at the Sam M. Walton College of Business, said more people are switching to a vegetarian or vegan diet, and it's important for Tyson, a company more than 80 years old, to keep ahead of consumer trends.

"You want to be in that marketplace before you're usurped," Jebaraj said.

Tyson's moves to invest in Beyond Meat and Memphis Meat seem to be both defensive and offensive, Shea said.

It's cheaper for Tyson to invest before they really take off, he said -- and perhaps Tyson can learn how to convert its processing plants to handle something other than animals.

"Maybe [Tyson] can figure out how to do it on its own someday," Shea said.

Business on 01/30/2018

Print Headline: Tyson invests in lab-grown meat

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