Baillie Gifford
Updated 26 May 2023
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This is a non-independent marketing communication commissioned by Baillie Gifford. The report has not been prepared in accordance with legal requirements designed to promote the independence of investment research and is not subject to any prohibition on the dealing ahead of the dissemination of investment research.

The value of your investment and any income from it can go down as well as up and as a result your capital may be at risk.

Some images stick in your imagination and shape who you become.

Dr Uma Valeti is UPSIDE Foods’ co-founder and chief executive. He recalls an early moment that propelled him towards creating a company that makes meat without the need for animal slaughter.

Aged 12, he attended a neighbour’s birthday party in South India. The front of the house was full of people eating and dancing. At the back, Valeti stumbled upon others killing chickens and goats to feed those at the event.

“There’s intense happiness in the front of the house celebrating a birthday. And there’s a profound amount of sadness and suffering in the back of the house, where it was a death day for the animal,” he told Scottish Mortgage deputy manager Lawrence Burns on the Trust’s Invest in Progress podcast.

The challenge of meat

Meat is central to most of the world’s cultures, traditions and daily meals. But it is becoming ever more unsustainable. Some 70 billion animals are raised yearly to feed humanity, and demand is expected to double by 2050.

“We’ll have to think about finding space for 150 billion animals… the greenhouse gas emissions, and the water pollution that comes from having that many lives every year to feed humanity,” explains Valeti.

It’s a dilemma for many consumers. They like the taste of meat but want transparency, humanity, and sustainability in food production.

Valeti relates. As a medical student, he became a vegan.

“I said, ‘I love this product, but I’m going to stop eating meat.’ And every single day after that, I kept missing the taste of meat. I would say, ‘Oh, I’d love to have this on my table.’”

Perhaps Valeti would have resigned himself to a restricted diet were it not for an idea he had when working as a cardiologist.

“We were working on stem cells,” he explains. His team were injecting them into patient when they came in with a heart attack or cardiac arrest. “And that’s where this idea came from.”

Real meat, vegan approved

Valeti makes it clear that his firm makes ‘real’ meat that is genetically identical to what’s on millions of people’s plates. The difference is that UPSIDE cultivates it, ‘growing’ it in a laboratory from the highest quality animal cells.

“What we do is we identify the highest quality cells and provide them with the nutrients that the cells need to grow. And we provide that in a very clean, controlled environment,” says Valeti.

“The cells are doubling and doubling…And ultimately, after two to four weeks, we have enough meat that’s formed because the cells are essentially the building blocks of meat. We then shape it into a product that a consumer is used to seeing. It could be a chicken breast, chop or burger.”

UPSIDE Foods is not alone in pursuing this idea. But Valeti believes his company is at an advantage. “I think about it as four legs of a stool or a table, the taste, the team, the technology and our track record.”

In late 2022, UPSIDE became the first cultivated meat company to receive confirmation from the US Food and Drug Administration that its chicken meat is safe for consumption.

The next step is to get the US Department of Agriculture’s (USDA) approval.

That will allow UPSIDE’s meat to go on the menus of select high-end restaurants with world-famous chefs.

Feeding hearts and minds

Valeti acknowledges that consumers will need to be educated and convinced. But he believes concerns about animal welfare and the environmental impact of farming livestock at scale play to UPSIDE’s favour.

“We have multiple species we are working on,” he says. “We’ve shown that the science works [for chickens]. We’ve shown that we can grow real animal cells into meat that tastes good. And we’ve shown that we can do it in a safe way. The path ahead involves us trying to make this scalable, bring it in a cost that is affordable, and also show people that it is worth investing in it on a large scale.”

“In the next 50 years, if cultivated meat captures about a third of the market, it’ll have a meaningful impact on animal welfare and a huge impact on the opportunity to save human lives.”

Scottish Mortgage’s investment in UPSIDE typifies the Trust’s approach, backing a company that has developed a disruptive innovation beyond the concept stage and now has a chance to grow rapidly by creating transformational change.

Claire Shaw
Portfolio Director, Scottish Mortgage

This content does not constitute, and is not subject to the protections afforded to, independent research. Baillie Gifford and its staff may have dealt in the investments concerned. The views expressed are not statements of fact and should not be considered as advice or a recommendation to buy, sell or hold a particular investment.

Baillie Gifford & Co and Baillie Gifford & Co Limited are authorised and regulated by the Financial Conduct Authority (FCA). The investment trusts managed by Baillie Gifford & Co Limited are listed on the London Stock Exchange and are not authorised or regulated by the FCA.

A Key Information Document is available by visiting scottishmortgage.com

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