The Bioeconomy – A Conversation with David Brandes

I learned as a trader that when estimating counterparty risk, I should beware of any company with the word `global` in its name. Therefore, I was sceptical when David Brandes, the co-founder and CEO of Planetary, contacted me on LinkedIn after reading two of my books, the Sugar Casino and The New Merchants of Grain. Global is one level, but Planetary is on a whole new scale.

My first question for David was, “Why – on Earth – did you call your company Planetary?”

“The company name has nothing to do with our ambition to go global,” David explained. “I founded the company in a previous life to invest in various start-ups and markets, but always with a planet-positive approach. Planetary health is the underlying concept behind Planetary. It is important to me and guides my every action. I knew that whatever I’d be doing, the name Planetary would fit well in any industry.

“The name has more to do with a promise to contribute to planetary health rather than to conquer the global production industry,” he added. “The name ‘Planetary’ suits the company well.”

“Imagine you are in an elevator – or lift – at a venture capital conference with a potential investor,” I said. “What is your elevator pitch?”

“How many floors do I have?” he asked.

“Let’s say the conference is in Manhattan, and you took the slow elevator, not the express one,” I said. “Take a deep breath.”

“Petrochemicals, factory farming, and agricultural monocropping are depleting our planet’s natural resources,” he started. “Agriculture produces over 20 per cent of global CO2 emissions and uses 30 per cent of the planet’s water. With the world’s population growing and biodiversity under threat, we must find an alternative and sustainable solution to produce foods, materials, and other commodity products.

“Using biotechnology, we can disrupt conventional methods and produce up to 60 per cent of agricultural commodities in a more sustainable planet-positive way. Planetary will power the bioeconomy by operating a global network of fermentation facilities, following the first success case in Switzerland.

“We enable the sustainable production of foods and materials from mycelium and precision fermentation while leveraging control bioprocess technologies and associated A.I. to drive down production costs. We can produce food, plastics, cosmetic agents, and other products at a fraction of the economic impact of conventional production. What’s more, fermentation allows the production of these materials almost anywhere using locally available feedstock and waste streams.

“A network of regional production facilities, integrated with the local socio-economic fabric, can drastically reduce supply dependencies and food scarcity. The same is true for systemically relevant materials. The shift to a “bioeconomy” will have a healing effect on global carbon emissions, water use, and habitat destruction.”

“Okay, good pitch,” I replied. You can breathe now! “Next question – what attracted you to the sugar business?

“I come from the food industry,” he told me. “I was a chief commercial officer for the internet operations of Migros, a Swiss supermarket chain, but left to cofound the cell-based meat brand Peace of Meat. The company took a medical application process and transferred it to the food sector. I successfully exited the company and saw an opportunity around microbial fermentation. Microbial cells are more straightforward to cultivate and scale than animal cells.

“I started the company with limited technical knowledge. I studied sciences, but I’m the business counterpart in our founding team along with Ian Morrison, a former professor of bioprocess engineering at EPFL and HEIA-FR. He is the Chairman, CSO, and co-founder.

“We got together, and I asked him, “Okay, so where do we now build our first factory? I’m the business guy. I want to build something, right? Let’s acquire the capital. Let’s build it.”

“He explained that these microorganisms consume carbohydrates to grow, and building a facility in colocation with the feedstock would make sense. Sucre Suisse (Swiss Sugar) owns two sugar beet factories in Switzerland – one in Aarberg and another in Frauenfeld. We approached them two and a half years ago and have since formulated a business model that incentivizes both parties. It’s the bioprocess that dictated the partnership.”

“When will the first plant be operating,” I asked. “And will you use sugar or beet pulp as your input?”

“We expect the first plant in Aarberg to operate in Summer 2024,” he answered. “This is the first generation, and we will work with sugar and related side streams such as molasses. Looking forward, we would like to use more waste streams. Carbohydrates don’t necessarily have to come from sugar, but the ones that do are the purest.”

“How does the bioprocess work?” I asked. “Please explain it as simply as possible,” I added.

“Aerobic fermentation is the metabolic process by which microbes metabolize sugars via fermentation in the presence of oxygen in large steel vessels called bioreactors.

“The microorganisms that reproduce through this process either yield the desired ingredient or are themselves the ingredient, as is the case with mycoprotein, which grows in a protein-rich biomass. We can then process this into various food and material applications.

“Depending on the technology, some microorganisms need DNA to be inserted to produce specific compounds, like whey proteins or lipids. Other organisms, like the one we are working with at our first production site in Switzerland, don’t need to be genetically modified at all. After the growth cycle, we separate and purify the product, usually turning it into a dried powder or wet biomass.”

“Where are you getting the funding?” I asked. “Do you have any backing from sugar groups?

“Our first funding came from venture capital,” David answered. “We raised $8 million in the seed round – the largest for food tech in Switzerland. We have since added around the same amount of non-dilutive funding, including support from the Canton of Bern. Also, Swiss Sugar is supporting the first plant installation. We will communicate more about our partnership during the Dubai Sugar Conference.”

“Are you going to wait to see if the first plant works before building more?” I asked.”

“You can’t build a plant in a day. It’s a long process. We have already produced mycoprotein and precision-fermented compounds at industrial fermentation volumes through external capacity. Our plant will go live this summer.  It would be unrealistic to install other equipment before then. We want real in-house production data before constructing the next facility, but we have an extremely high conviction that the process works. We’re not starting from zero.”

“What sort of tonnage in sugar equivalent will the plant use yearly?” I asked. “Is it something that the sugar industry should be slotting into their supply and demand statistics?

“Anywhere between 10,000 and 100,000 mt sugar equivalent per year per plant,” he replied. “Now, tell me if that’s a lot or not.”

“If you build many of these plants, it’s significant,” I replied.

“And don’t forget,” he added, “The whole bioeconomy might require as much as one billion mt of carbohydrates per year by 2035.”

David had mentioned earlier the possibility of using biomass rather than sugar as feedstock. There was a significant investment in the early 2000s into producing second-generation ethanol from bagasse. It didn’t work well, and I was interested in why David thought he would succeed where others had failed.

“Whilst feedstock is important,” he explained, “You must also look at the product’s value. The fuel industry is margin-compressed, low-value, and hyper-competitive. We’re talking about a differentiated higher-value product, an alternative protein that can be sold at anywhere between $6-10 per kilogram at 24 per cent dry matter. So, 100 per cent dry matter would be four times as much. You are under less margin compression with protein than with fuel.”

I wanted to talk further about economics. The sugar price has doubled from ten to twenty cents in the last four years. “Can the process be economical at these sugar prices?” I asked.

“We have done our calculations with a sugar price of 700 Swiss Francs per mt,” he replied. “That’s $800 per mt or 36 c/lb. That price delivers a fully loaded product margin, including overheads of just over 50 per cent. So, on the margin side, there’s still room for additional price increases and inflation.

“Energy is another big factor,” he continued. “I’m assuming that energy and sugar will face more southwards pressure in 2024. But then, who knows? There is still space for price increases on the production factors.”

“Can you use corn or other sugars?” I asked. “In Brazil, they’re increasingly making ethanol from corn.”

“The standard process for microprotein and precision fermentation uses glucose, which also comes from corn,” he told me. “Corn-based sugar is even easier than beet-based sugar. We will have higher efficiencies there.

“Does the world need extra protein?” I asked. “And aren’t there better and cheaper sources of plant-based protein?

“The answer to your first question is a clear yes, given the rising population and the growth of the middle classes. You probably don’t need more protein in Switzerland or some parts of the U.S., but on a global level, yes.

“I would also like to talk about the quality aspect of mycoprotein,” he said. “The protein digestibility–corrected amino acid (PDCAAS) score measures protein quality for human nutrition. Milk and eggs have a PDCAAS of 1.0, meaning they provide 100% (or more) of all the amino acids required in the diet.  Protein from yellow peas has a PDCAAS of 0.64, which means you must supplement it with additional amino acids in the diet. Our mycoprotein has a PDCAAS score of 0.96, even higher than beef.

“Our technology has significant merits in quality, sustainability, taste and local production.”

“How are you enjoying your time in sugar so far?” I asked.

“The food tech sector feeds on big promises and vision to drive investment. But in sugar, you hear real stories, for example, about the impact of climate and policy on production. You’re working with a commodity that is essential from a nutritional perspective. Sugar and the agricultural industry are closer to my nature than the hyped start-up environment. I am looking forward to the Dubai and Geneva conferences.”

“What three key messages will you deliver in Dubai and Geneva?” I asked.

“One: The bioeconomy is a business that will need one billion mt of carbohydrates per year. That is more than five times the total global sugar production today. Synergies with the bioeconomy should rank high on any carbohydrate producer’s agenda. Sugar itself is a bittersweet business that suffers harmful media exposure. There is an opportunity to turn that negativity into a beautiful story about the net positive effect on the planet of phasing out both the livestock and the fossil fuel production industry.

“Two: We discussed foods and proteins but didn’t discuss materials such as bioplastics and cosmetics. There are challenges in biofuels because of their low price point, but McKinsey estimates that up to 60 per cent of all physical matter could be produced using biological processes. We can use carbohydrates and turn them into planet-positive products.

“Three: There is an opportunity and a genuine mutually symbiotic business case in building collocated production infrastructure with existing industrial players such as sugar refineries.

“The third one is the big one,” I replied. “If you were only going to choose one, I would emphasize that one.” I was nearly at the end of my questions.

“Tell me one thing about yourself that is not on your LinkedIn profile,” I said.

“I can tell you lots of things,” he answered. “I have six younger siblings, was born in Japan, and can still count to 100 in Japanese.”

“Anything else,” I asked.

“I am a Marine Biologist by training. I once GPS-tagged whale sharks for a living.”

“You should fit in well in Dubai and Geneva,” I replied, “Although the delegates there will already be wearing name tags.”

For further reading, see:

Precision Fermentation Perfected: Fermentation 101 – TurtleTree

Biomass fermentation: the most flexible alt protein technology? – Bright Green Partners

What is fermentation for alternative proteins? | Resource guide | GFI

Planetary website

© Commodity Conversations ® 2024

Leave a Reply