Moooove over: How yeasts are doing the work of dairy cows

BERKELEY, Calif. — The first course was a celery root soup lush with whole milk. The last was a spice cake topped with maple cream cheese frosting served with a side of ice cream. And then a latte with its fat cap of glossy foam. In all, a delicious lunch. Maybe a little heavy on the dairy.

Only this dairy was different. It was not the product of a cow or soybean or nut. The main ingredient of this milk was made by microbes in a lab, turned into tasty and recognizable food, and then served to a hungry reporter.

Lab-grown meat is coming. But lab-grown dairy has already arrived.

Dozens of companies have sprouted up in recent months to develop milk proteins made by yeasts or fungi, including Perfect Day, the California-based dairy company that laid out this unusual spread. The companies’ products are already on store shelves in the form of yogurt, cheese, and ice cream, often labeled “animal-free.” The burgeoning industry, which calls itself “precision fermentation,” has its own trade organization, and big-name food manufacturers such as Nestlé, Starbucks, and General Mills have already signed on as customers.

The rapid advancement in this area has sparked hope for a revolution in the dairy industry, and not just because it’s kinder to the cows. Precision dairy doesn’t have cholesterol, lactose, growth hormones, or antibiotics (though those with dairy allergies should beware). And cattle, for beef or dairy, is said to be the No. 1 agricultural source of greenhouse gases worldwide. Consumers concerned about climate change or animal welfare have been anticipating the U.S. launch of cultivated meat, which is grown in labs from animal cells, but cultivated dairy could have just as much of an impact on the environment — with fewer regulatory hurdles to clear.

Despite widespread acceptance of soy, oat, and almond milk, U.S. consumers, even vegan ones, continue to be underwhelmed by plant-based cheese options: Mostly made of starch and oil, they often lack the flavor or texture (no gooey strings, not enough bounce) of real cheese. And cheese is especially bothersome for the environment, more so than its liquid counterpart: Making one pound of cheese requires 10 pounds (or about five quarts) of cow’s milk. The World Economic Forum and many scientific reports suggest cheese generates the third-highest emissions in agriculture after beef and lamb.

For Ryan Pandya, chief executive of Perfect Day, those are the problems he's solving. But it really started as a bagel problem.

Studying chemistry and bioengineering at Tufts, he'd gone vegetarian but still had a craving and taste for animal products.

"I had a bagel with vegan cream cheese that was so bad that it led me to investigate. What's so hard about this? A lot of dairy alternatives are not made of food," he said with a wince.

He hit upon a process called precision fermentation, similar to what has been used for decades to brew beer, make insulin for diabetic patients, or produce rennet for cheese.

"Rather than using 22nd-century technology to produce meat, we're using 20th-century technology to produce milk protein," he said.

There are bubbling stainless steel fermentation tanks, software that maintains temperatures, agitator motors and oxygenators. And after the microbes eat their sugar solution and are programmed to make the desired proteins, there's a lengthy process to separate the milk protein from the medium, then to wash it and dry it in a spray dryer so the powder can be used to make food.

Beyond the fermentation process, making usable milk proteins is similar to that at regular cow dairies, which have stainless steel tanks, spray dryers and freeze dryers, pasteurizers and vacuum pumps, chillers and steamers. "We get to the same powder, but these are the cows," said Irina Gerry, chief marketing officer at Change Foods in Palo Alto, Calif., pointing to the fermenters in their San Jose lab.

The world’s demand for dairy keeps going up. But it’s not necessarily for liquid milk. The cheese category has grown 19% since 2017, according to Mintel’s Future of Cheese 2022 report, with plant-based versions making up a minuscule part of that market.

General Mills, which produces household brands such as Betty Crocker, Pillsbury, Annie’s, Nature Valley, and Häagen-Dazs, launched a series of Bold Cultr cream cheeses, first using precision-dairy milk proteins from Perfect Day, then from Israeli foodtech start-up Remilk. (Last month, General Mills said it was “deprioritizing funding” for these cream cheeses, so its future is uncertain.) Perfect Day’s ingredients are being used in Brave Robot ice cream in the United States; Modern Kitchen cream cheese in the United States; California Performance Co. protein powder in the United States, Singapore and Hong Kong; and Coolhaus ice cream products in the United States and Singapore.

Perfect Day, the first to market in the United States, is also partnering with Mars, Nestlé, Starbucks, Graeter’s, and other companies to provide milk protein for products. At its Berkeley, Calif., facility, it has fermentation and separations teams, analytics and regulatory experts, legal and logistics teams, as well as two full-time chefs to prototype products and dishes in a sleek exhibition kitchen. In addition to its Berkeley facility, the company operates a 90,000-square-foot production facility in Bangalore, India, and a 58,000-square-foot factory in Salt Lake City.

Precision dairy's growth has to happen fast to be price competitive with traditional animal dairy and to gain widespread adoption, said Ravi Jhala, Perfect Day's global head of commercial. Recent bobbles in plant-based meat sales are a cautionary tale.

But will customers buy it? It is delicious? Most of the 28 precision dairy companies gearing up globally are selling their milk proteins as ingredients to other food companies, so the finished products are only as good as the food companies making them. That could be a recipe for a sad schmear or pint, something that could turn shoppers off to the whole category.

Traditional cow dairy has pushed back against plant-based milks using words like milk or cheese in a series of largely unsuccessful lawsuits. At the end of February, the FDA announced that oat, soy, and almond drinks can keep the word milk in their names, but squabbles around precise language will likely recur when more of these precision dairy products reach the market.

The International Dairy Foods Association opposes any explicit or implicit use of the term dairy for precision products without qualification in their marketing and merchandising, said spokesperson Matt Herrick.

"Our position is that FDA must develop a uniform, mandated disclosure approach to this technology to ensure labeling is truthful and not misleading for consumers," he said.

Development of these products comes at a time when there's huge interest in finding alternative protein sources to feed a skyrocketing global population more sustainably. Still, for an industry in its infancy, the way forward could have significant roadblocks.

The dairy industry, with its clout and hefty lobbying budget, may not agree there is room for everyone: In 2022, U.S. cow dairy had ceded 16 % of all retail milk sales to plant based, according to data from SPINS and the Plant Based Foods Association.

Plant-based milk companies also may not welcome the competition, especially if cultivated dairy products are positioned as more sustainable and less resource-intensive. (A glass of almond milk takes 23 gallons of water to produce, according to the nonprofit Water Footprint Network.)

The industry is also likely to run up against Americans' increasing discomfort with processed food. The cow dairy industry and plant-based companies could team up to paint these newcomers as Franken-foods made by mad scientists in a lab.

And the regulatory path ahead is not assured for this fledgling industry. As a comparison, CBD-infused food and drink products burst onto the scene a few years ago as more states decriminalized marijuana and hemp. But after deliberation, in January, the FDA refused to regulate it and asked Congress to step in. For now it's still illegal, and CBD food companies are in limbo.