I recently had the pleasure of sitting down with Matt Newberg from The Feed podcast to discuss AQUA Cultured Foods and the mission to revolutionize the seafood industry.
As former CEO and co-founder of AQUA Cultured Foods, I shared insights about the critical challenges facing traditional aquaculture, our innovative biomass fermentation technology, and how we’re partnering with high-end restaurants to bring sustainable, high-fiber seafood alternatives to market at competitive prices.
Our conversation covered everything from the environmental devastation caused by industrial fishing to the exciting potential of creating whole-cut seafood products that rival traditional options in taste, texture, and visual appeal—all while addressing the growing global demand for protein as we approach 10 billion people on Earth.
Podcast
Listen to the full podcast here.
Key Takeaways
Here are some key takeaways from our discussion.
The Global Seafood Crisis is Accelerating
With 70% of the world’s seafood consumed in Asia and rising middle-class populations driving increased demand, we’re facing a perfect storm of overfishing and climate change that’s rapidly emptying our oceans.
This isn’t just an environmental issue, it’s a looming food security crisis.
Industrial Fishing Creates Damage
Bottom trawling alone releases as much greenhouse gas as the entire aviation industry by scraping up ocean floors and destroying carbon sinks.
The bycatch problem means dolphins, sea turtles, and sharks are being killed alongside target species, while discarded fishing nets become the primary source of ocean microplastics.
Seafood Safety is Compromised
Every human on Earth now has microplastics in their system from eating ocean fish.
Heavy metal poisoning, mercury contamination, and antibiotic-resistant superbugs from fish farming are creating serious health risks that will only worsen as ocean pollution increases.
Solving Multiple Problems
AQUA’s biomass fermentation platform can work with various protein sources, such as fungal, yeast, pea, soy, or even cellular agriculture.
This flexibility allows us to optimize for taste, texture, appearance, and, most importantly, achieve price parity or better than conventional seafood right from our pilot facility.
Visual Appeal Matters
Since seafood is primarily consumed during celebratory occasions in restaurants, the visual presentation is crucial.
Our whole cut products, including saku blocks for sushi and individual scallops, replicate the beauty that chefs and diners expect, ensuring no compromise on the dining experience.
Six-Week Shelf Life
Unlike conventional seafood with 2 day shelf lives, our products maintain integrity for six weeks fresh.
This eliminates massive food waste (the rice goes bad before our seafood does), reduces supply chain risk, and enables broader distribution without freezing requirements.
Fine Dining Partnership Strategy
By launching with Michelin starred chefs like Laurent Manrique, we’re building credibility and getting crucial feedback before scaling.
When top chefs put our products on their menus, it sends a powerful signal about quality to both industry and consumers.
Nutrition Enhancement Through Fiber
Our products naturally contain significant fiber, something completely absent in traditional seafood.
This addresses the Standard American Diet’s fiber deficit while creating more satiating, lower calorie options that support gut health and overall wellness.
Price Parity Enables Adoption
The biggest barrier to alternative protein success has been premium pricing.
By achieving cost parity or better at pilot scale, we’re positioned to capture mainstream consumers who’ve been priced out of the plant based market, especially during inflationary periods.
Decentralized Manufacturing
Our technology doesn’t require expensive bioreactors, enabling us to build smaller, regional facilities closer to major seafood markets. This reduces shipping distances, lowers carbon emissions, and creates a more resilient supply chain while maintaining our cost advantages.
The conversation reinforced my conviction that we’re not just building a better seafood alternative, we’re creating a necessary solution for feeding 10 billion people sustainably while protecting our oceans for future generations.
Conclusion
As our conversation wrapped up, it became clear that we’re at a pivotal moment for the future of food. What excites me most about AQUA Cultured Foods is that we’re not asking consumers to compromise, we’re offering a genuine alternative that meets people exactly where they are, with the same taste, texture, and dining experience they expect.
The path from my finance background to founding AQUA taught me that the most impactful solutions make economic sense alongside their environmental benefits. When we can achieve price parity while solving sustainability challenges, that’s when real change happens at scale.
We have 26 years to figure out how to feed 10 billion people sustainably. That’s not a lot of time, but it’s enough if we start now and remain open to the partnerships and innovations that can accelerate positive change. The future of seafood isn’t just about preserving what we have, it’s about creating something better.
Transcript
Matt Newberg: What’s up, world? I’m Matt Newberg from Hngry, and this is the Feed. Each episode, we’ll dive into conversations with the industry insiders who are leveraging technology to shape the way we eat. On today’s episode of the Feed, I sat down with Anne Palermo, co-founder and CEO of AQUA Cultured Foods, a startup developing whole muscle cut alternatives to seafood using biomass fermentation. In this episode, we’ll talk about the health and sustainability challenges facing traditional aquaculture and how AQUA is partnering with high-end restaurants and the market opportunity to offer high-fiber, low-cost seafood alternatives. This podcast is brought to you by Hngry, a media and research platform dedicated to the intersection of food and technology. For more information, please visit Hngry.tv. That’s Hngry with no “u,” and click subscribe to join the weekly newsletter. All right, and it’s awesome to have you here. I would love to just kind of kick it off by starting with your background in finance, kind of how you got into the food industry, and then maybe you can walk us through the genesis of AQUA Cultured Foods.
Anne Palermo: Yeah, I’d love to. So you’re right, I started my career in finance, which I used to think was very non-traditional, but the more actively involved I get in the startup community, I see that it’s a really solid path forward because it gives you those fundamentals as you move forward, and just having the basic understanding of finance and fiscal responsibility is really crucial to any startup. But I started my career—so I was at Morgan Stanley, then I went on to a hedge fund, and then after that, I was at BMO Capital Markets. It was a really solid career; however, it was always very entrepreneurial, and so I decided to go back to school and learn more on the health and wellness side, with product development being really key for me as a path forward because I always knew I wanted to have my own company and wanted to have a startup. But I also knew that my passions truly lay in health and wellness, and I was a very mission-focused and oriented person, and so anything I did, I wanted to make sure had a solid give-back. And so, after graduating, I started my first company. It was a healthy snacking platform, and it did have that give-back component to it. We donated a percentage of all proceeds. But I didn’t think it was enough. And so, I was just really actively looking through ways that I could continue that give-back factor. But it wasn’t until I started to get really deep in the alternative protein space. While I was doing the product development, I was learning more about different types of proteins and different types of non-protein isolates in particular, and different proteins that weren’t refined that way. And part of the reason for that was because these products were in the candy aisle at the grocery store. And to be in the candy aisle and have nutritional call-outs, there are just certain ingredients that you couldn’t have—protein isolates was one of them. And so, when I was exploring different types of proteins, that’s when I really started to learn about what’s going on globally. And that is just a really true, solid spike in population growth. And the thing is, though, it’s not just that there is a spike in population growth; it’s the fact that most people are going to be born in Asia. And in this part of the world, about 70% of the entire world’s seafood is consumed. 70%. That’s massive. Right. And so, what we’re seeing is a population spike due to not only that population increase in global population but also the rise of the middle class. And historically, when people have a little bit more money, they tend to celebrate more. And when they celebrate more, they tend to purchase more animal proteins. And so, there’s a spike in demand for seafood. But the problem there is met with overfishing. And climate change is really emptying our oceans of fish. So I wanted to be part of that solution. And so, I decided to make that switch and pivot my resources. My time, my energy, towards the creation of AQUA Cultured Foods – a product that could be truly impactful and truly has a way to prevent, you know, what could potentially be a mass starvation event just by bringing up a solid food product to the market that people not only enjoy eating but can afford to eat. So, price is also really important for us as well.
Matt Newberg: Fascinating. I really want to dive into the product side, but before we do that, let’s dive a little bit more into the problem. Overfishing aside, what are some other issues with conventional seafood from a health and environmental perspective, and kind of who do you think you’re going after with an alternative product?
Anne Palermo: Yeah, so these are great questions. So first of all, what I want to say is that there’s always going to be a place for seafood for certain people in the market. We’re not going after anybody. We’re just trying to provide a solution for more people to have and maybe make a little bit more sustainable options. Because what we’re seeing right now with most fish, how they are captured, is there are real true issues with how they are being fished. It’s not the small one-off farmer, fisherperson that’s going out with their own fish or pole. The problem is with industrial fishing and the massive amounts of nets that they’re going into the ocean; they’re casting nets, they’re coming back with all different types of seafood. It’s not just the very few seafood species that humans actually consume on the regular. It’s different types of fish that are maybe more bony. And so there’s just no retail market for it. But on top of that, it’s the sea turtles, it’s the seals, it’s the dolphins, it’s the sharks, it is birds. It’s a real problem. So you see the fish come up, but it scrapes up everything. Then on top of that, there are bottom trawling issues. And I don’t know if you know or if your audience knows, but the ocean is the world’s largest carbon sink. And so when the nets go down, they scrape up the ocean floor; they scrape up all the plant life, they. Scrape up all the bottom feeders on the bottom of the ocean. And just while they’re pulling it up and scraping it up and disrupting the ocean floor, what’s going on is they’re releasing all the carbon that’s stored down there, and bottom trawling—only bottom trawling itself. It’s a practice that releases as much greenhouse gas emissions as the entire aviation industry. And that’s a massive amount of carbon emissions that are being released. And so, just by trying to make a healthier, more sustainable choice, consumers have a way to truly impact what’s going on and make a difference. But then, besides just the method and ways of fishing and impacting, there are problems with just inhumane practices and how the individuals are being treated on ships. There’s slave labor that’s being used. What you’re also seeing too is that with fish farming, particularly with shrimp farming, there’s a problem with the overuse of antibiotics. And just because of the really gross practices that are used, they have to pump all the seafood and sea life and fish life, and salmon and shrimp are filled with so many antibiotics that those practices are truly contributing to the superbugs and super viruses and the overuse of antibiotics, even more than just—I think it’s something like 90% of all antibiotics are used for animal husbandry purposes, including aquaculture purposes. So there’s a lot going on.
Matt Newberg: Yeah, that’s no bueno. And then, like, what about the microplastics or what people are actually consuming when it gets into their body? Let’s talk about that.
Anne Palermo: I can’t believe I almost forgot to talk about microplastics and heavy metal poisoning. Oh, my word. There’s just so much. So, yeah, microplastics. Most of the microplastics that you’re eating in the oceans come from discarded nets from the fishing industry. We have that Great Barrier Reef of waste. It’s escaping me right now. I can’t remember. It’s my industry. I should know this, but I just forgot right now. But there’s just so much garbage in the ocean, and that’s ending up in the fish we eat. And that, in turn, is ending up in ourselves. There’s actual data that says that every human on Earth has microplastics in our system from eating in the ocean. And the problem, too, is that it’s even going through breast milk. And so babies are now having it. And this is something that is a true problem. It’s a documented problem, and it’s a problem that’s affecting everybody. And that also carries over into mercury and heavy metal poisonings. The larger the fish, the larger the predator, the more toxins and the more heavy metal poisonings are in that species. And so the only way to really avoid having heavy metal absorption from seafood is just to stop eating those apex predators. And I, I don’t know what we’re going to do as a species unless we really look to food tech to help provide viable solutions.
Matt Newberg: Interesting. So, kind of on that thread, who do you see as the target consumer of your products? Is it, you know, people who are plant-based? Is it flexitarians who are concerned about the health issues? Is it both? How do you kind of carve that out and define it?
Anne Palermo: Yeah, that’s a great question. So for us, we’re really, we’re just trying to provide a solution that will really meet the needs of everybody. So for us, our target consumer is the flexitarian. But even more than that, it’s the general meat and seafood-eating consumer that just wants to be able to make a little healthier choice. What we’ve been able to do is. Create our products that are able to really replicate that same eating experience for taste and texture. And what’s so special on top of that is with seafood being consumed as a celebratory occasion, you know, in the US, seafood is consumed mostly out of home in restaurants, and most of the time they’re consumed at restaurants when people are either going on a fun date night or celebrating a birthday or an anniversary. So it really is just a celebratory food or occasion. And what we’re finding is that the visual appeal of the products is just as important as how they taste or the texture of that bite too. When you’re having a celebration, you want it to be prepared very beautifully because, you know, as humans, we eat with our eyes first, and so with our products we’ve been really able to match across the board from that entire eating experience, which is quite significant and it’s quite unique. And it’s really special, and it’s part of the reason that we’re getting so much excitement about our products from our chef partners.
Matt Newberg: Very interesting. So I, yeah, talking about the product, I’d love to kind of just start with the process, which is, you know, microbial fermentation, fungi-based meat category. That is, I would say, like the players that get mentioned a lot are like Meaty, which is doing, you know, steak and chicken, Nature’s Find, which is doing a mix of dairy and breakfast patties, and then Quorn, which is kind of the OG player in the space. It’s about the same age as me. That’s really big in the UK. So for those who are unfamiliar, can you just talk about what that platform is and kind of how you’ve taken it and how you’re different from some of those players?
Anne Palermo: Yeah, our products at AQUA Cultured Foods are really different. So I want to say that we’ve developed a technology; it’s very novel, it’s very differentiated, but we’re not only limited to a fungal protein. So we could use a fungal protein, or a yeast protein, or a pea protein, or a soy protein, or a dairy protein, or even, you know, cellular agriculture. And that’s really what helps our products stand out, is that we’re able to tune everything from the taste, the texture, and the appearance. And because we’re using a really novel manufacturing method, we’re able to create something that’s so different. And it’s also part of what we’re able to do; we’re able to tune that manufacturing process in order to enable AQUA Cultured Foods to sell our products at price parity or even less right out of our pilot facility. And so for us, what’s really key is creating that fine 3D structured product. That’s the whole cut product. It’s created very similarly to just how you would make sourdough bread or make cheese or brew beer. So it’s very, very similar to just traditional manufacturing processes. And so because of that, we’re able to have the price get down to an area or an acceptable pricing level where our consumers can actually enjoy the products more often. But our technology, what’s so neat too, is that we have those similarities to traditional, but we’re also using more of a biomass fermentation. And so biomass fermentation is a little bit more similar, or it’s to the type of fermentation being used by the Medias and the Nature’s Fynd of the world. But our products are just structured a little bit differently, and through that structuring process, we’re able to increase the hydration level. And so that’s how we’re able to match the texture of like raw seafood. It’s because we’re able to really absorb and capture that hydration and the juiciness and the succulence.
Matt Newberg: Yeah, I find that a lot of these players that I mentioned really thrive on the texture, and they’re just able to absorb more moisture and lock it in. Then it just comes down to flavoring it, essentially. It’s a blank slate as far as flavor and natural flavor. You have to do the work to actually make it taste like chicken, like beef, color it, etc. And use natural things. So I’m curious if we could talk a little bit about the nutritional aspect, you know, what the trade-offs are for consumers eating one of your products versus traditional seafood and kind of what we’re getting from the actual microbiome of the ocean, you know, all the omega-3s and fatty acids there from seafood.
Anne Palermo: Yeah. So for our products at AQUA Cultured Foods, everything has to be added downstream. And so what that means is that after we harvest the process, and we wash it and we pasteurize the products, we have to add in different types of flavours, proteins, and colours. Everything is very natural, and everything is just animal-free. For us right now, I mean, there’s a path forward where we may potentially be able to work with cellular agriculture companies in order to use our product as a scaffold to really replicate that eating experience while using that kind of technology. But for us and where we are today, we’re really focused on having that completely remove animals from the food system. That’s where we are with our Horizon 1 products. But that’s how we’re adding a lot of nutrition to our products. And then on top of it, what’s something that I like to call out is the fact that we’re able toMake a source of good, a sort, a good source of fibre claim on our products. And that’s really, really important because through the years, just the way the standard American diet is moving a little bit away from having the fibre intake that we really need, there’s not as much diversity in our foods that we’re having. And so gut microbiome and gut health isn’t really where it should be. And a lot of our consumers are struggling to eat more fibre. And so with our products just naturally having a little bit more fibre, we’re able to assist in that gut microbiome health. The products are very satiating because of that high amount of water and high amount of fibre. And so what we’re also seeing is that we can positively contribute to an overall healthier diet. There are lower calories in our products. Any fats that we have in our products right now are added downstream as well. So with those Omega 3s, they had to be really added in or manipulated in later at some point. But our products are arguably better for you in different categories because we do have that addition of fibre, which I just, I can’t express strongly enough is just vitally important to get more fibre in our diets.
Matt Newberg: Right. The Standard American Diet acronym is SAD. And yeah, we’re not on a good trajectory. But diving a little bit more there. Like what? Well, how much protein? I mean, I guess we’re going to dive into the SKUs. But generally, are you going to be able to get the protein levels that you would be getting from traditional aquaculture? And, you know, what other kinds of—like how does it kind of stack up at a high level when it comes to macronutrients?
Anne Palermo: Yeah. So where we’re at today at AQUA Cultured Foods, we’re not quite there yet. But our target and our R&D and technological pipeline is really one of our main goals: to get that one-to-one match on the tech on the nutritional side as well. We’re not there today, but we have a lot of partnerships with some corporates in order to help us accelerate the timeline for where we’re going to get that match, pretty similar to most alternative companies.
Matt Newberg: Yeah. I mean, algae is definitely one of those high-protein sources that you could potentially work with.
Anne Palermo: Exactly. Yeah.
Matt Newberg: So, okay, I know everybody’s probably—we know we’ve spoken a lot about kind of framing the problem and talking about, you know, the platform that you’re built on and the nutritional side. I think people are very curious to know what this actually might start to look like. You hinted at—what did you call the first iteration of your product?
Anne Palermo: Our Horizon One product.
Matt Newberg: Horizon, yeah. Horizon One, yeah. So, yeah, why don’t you talk about kind of your types of seafood that you’re going to go to market with and kind of the go-to-market strategy when it comes to those SKUs and channels?
Anne Palermo: Oh, definitely, yeah. So we’re going to be launching with our tuna and our scallops, and these are all really beautiful whole cut pieces of products too, because, as I mentioned before, you know, you eat with your eyes first. And so having something that replicates that true beauty for the celebratory occasion is really important too. And so just understanding how the US consumer eats is the US right now is our first market because this is where we are. All of our launch partners are based in the US, and so our strategy is to work with the fine dining restaurants first. And part of the reason for that is until we can have true commercial scale volume, it makes the most sense for us to work with the fine dining partners. And that way, we can get really crucial customer feedback and see if there are any particular areas or things that we need to do to tweak in order to make the product more, you know, fit into the back of house of restaurants a little bit more simply for their supply chain. But what we’re seeing is that our products have a really great match to how a chef would work with a conventional seafood protein. And the reason that that’s so important is because there’s no learning curve. And if there’s no learning curve, it helps. It just helps to ensure the quality of the product is the same from how it’s cooked and prepared at home to how it’s cooked and prepared at a restaurant to how it’s cooked and received by that end consumer in the restaurant. And so we’ve been able to get some really exciting progress there. And we have our initial launch partners already lined up. There’s always room for more, of course. And so that’s really exciting. But we’re not going to announce who they are today and when that timing of the launch is going to be because we want to save that for a little. Yeah, we want to save it, but I’ll let you know.
Matt Newberg: Okay. Yeah, we’ll be following along closely. So help me envision kind of what this looks like. You have scallops, like traditional individual scallops, and then you have tuna, like ahi tuna steaks, or what does that look like?
Anne Palermo: Yeah. So we call them saku blocks. And a saku block is basically what’s used at a sushi restaurant in order to make a really beautiful piece of sashimi. It’s just cut nice and thinly sliced there. And part of the reason that we call it a saku block versus like a tuna steak is because of the shape convention of our products, but also because they’re currently optimized to be eaten raw. Our Horizon 2 products will be cooked. But today, our product, what we really want to highlight is that unique moisture level and that eating experience of raw seafood. So some of the applications that we’ve been working on are tuna tartare, scallop crudo, or, of course, sushi.
Matt Newberg: Very interesting. Yeah. I was recently celebrating a friend’s birthday. He’s vegetarian, or I don’t know what he calls himself, but we went to this place called Planta in LA, which is, I think they’re kind of around the country now, and they have a lot of plant-based sushi, and I’m seeing even some omakase spots pop up that are just doing plant-based sushi. I mean, I’m a sushi snob. I’m not going to compare it to like the Japanese food I just had last night in Torrance. But like, it’s definitely an interesting category, and it actually tastes good in and of itself, like not necessarily comparing it to the analogue.
Anne Palermo: Yeah, well, at some point I would love to have you try ours because I would put our AQUA Cultured Foods products up against the traditional or conventional seafood any day. It’s that good. So I would love to have you try it.
Matt Newberg: Yeah, I’m very curious. I’ve tried lots of fungi-based products, including the latest yogurts from Nature’s Fynd and all the meaty stuff. And so I’ve never tried anything. I mean, I’ve tried, I’ve never tried any real seafood alternatives that are built on a technology platform, really, like outside of, you know, going to these places that are using like watermelon or, you know, hearts of palm or, you know, random natural stuff that nutritionally doesn’t really get you there.
Anne Palermo: Yeah, that, you know, getting the nutritional steps in place is really crucial, and that’s part of the reason why we’re not limiting ourselves to just one protein source. We’re not limiting it to just like a fungal protein. We’re also entertaining different types of proteins as well. You have to try to take a look at the problem and find a creative solution to how you can create the best products that you know your customers are going to love and enjoy that also have the ability to sustain them, their nutritional requirements, but then also the planet Earth.
Matt Newberg: So these are all raw products. Like you’re not going to do a cooked scallop. It’s going to be mostly like sashimi or sushi.
Anne Palermo: For now, yes. Yeah, for now. Yes, it is. What’s interesting, though, is that because our products are so special and look and replicate the traditional protein so well, we find a lot of that. Our chef partners, we say, please don’t go cook them. They all do. And I kind of, you know, I kind of love them for that because that’s what makes them so creative, is their creative mind that likes to think differently. And so we find that if they put them with a fat like a miso butter, the product can perform very well with a slight sear, which is nice. We’re not encouraging that to date, you know, that’s our horizon too, is the cookable part of our product. But we just think it’s really important to deliver on something that’s really special and unique now.
Matt Newberg: So I’d love to talk. I saw that AQUA Cultured Foods has a partnership with a chef named Laurent Manrique. I’m not sure if I’m pronouncing his name correctly, but yeah, I’d love to talk about who he is and how you came to work with him and kind of the feedback he’s been giving you so far.
Anne Palermo: Oh, yeah, he’s wonderful. Just truly, just a wonderful human being. Not only is he a fantastic chef, but he’s also a really incredible businessman as well. So he gives us advice across the board, but when it comes to our relationship. So first of all, he was the executive chef of a two Michelin star restaurant called AQUA, based in San Francisco, which is just a happy coincidence. And so he is just so well known throughout the culinary scene globally. It is just such an honor to have him as a partner and as our culinary advisor. But he has helped us across the board when it comes to the acceptability of the product. Do we need to tweak taste and flavor? Is this oceanic enough? Do we need to add more salt to the products? Is it sweet enough? If it’s a scallop, is there too much of a corny undertone? So it’s really helped us to tune the products with that taste and the texture and the visual acuity of the products. So what’s really interesting too, by working with a chef, you understand the color range that you really want to match. And he gives us advice about how a true super fresh bluefin tuna is going to have a really, really deep color. But that deep color, when we bring it to a consumer who is used to having like a grocery store sushi roll, is very much not aligned. And so what we’re finding is that it sometimes makes more sense to have a product that’s more tuned towards who your chef partner is. So if you’re going to want to have and sell products to Michelin star restaurants, you might need to look at what they’re used to versus when you want to have products sold in retail. You’re going to want to have what the everyday consumer is really interested in, a little bit more familiar with. So he’s been giving us wonderful advice just across the board.
Matt Newberg: Interesting. And you find that whatever he’s suggesting seems to hold up right now with your early kind of other partners within the fine dining landscape.
Anne Palermo: Yeah, yeah, yeah. He, and he’s just like so well known. His reputation is really, really well known throughout the culinary scene too. So excited to have partners like him on our team.
Matt Newberg: Cool. I’ll be watching closely just to hear who else you announce. And then the goal is to eventually get this into retail. It sounds like, you know, someone like a Snow Fox at Kroger, that kind of thing.
Anne Palermo: Yeah, exactly. So for us at AQUA Cultured Foods, our plan would be food service. Would be created through Snow Fox for Kroger still are considered a food service even though it’s at a retail establishment just because it’s already prepared. And when it comes to sushi rolls, some individuals like to and have the skill to make it on their own at their own homes. But I think in the US, most sushi eaters buy their products prepared. It’s just a skill that not everybody has, myself included. I don’t know how to make the rolls. We have somebody here, a product developer, who does that for us and does an exceptional job.
Matt Newberg: Right, makes sense. I saw an article sometime last year about the whole, you know, pre-prepared sushi market and grocery stores talking about Snow Fox and some of the other players, and it blew my mind. And it’s been growing very, very steadily for, you know, over a decade, you know, for probably a few decades. So it’s something that I didn’t really fully appreciate until recently.
Anne Palermo: Yeah. Like Kroger, for example, is the largest seller of sushi in the U.S. Wow. So, yeah, it’s a big market. It’s a really big market.
Matt Newberg: And then at some point in the future, you might, you know, when you get to that cooked product, you know, release like a frozen or something in the refrigerated section where it’d be like a vacuum-sealed kind of piece of, you know, fish alternative that someone could just sear up at home.
Anne Palermo: Yeah, definitely that one is a little bit outside of our immediate go-to-market strategy at AQUA Cultured Foods. Just because we, until we scale up to commercial volumes, it makes more sense to be more hands-on with the restaurants. But yeah, eventually, once we do enter into the retail market, the product would be sold fresh or frozen. The really desirable part about our products is that they have a six-week shelf life when they’re fresh. And so we could freeze our products. But just to be able to have a product that could be in the refrigerator for six weeks and still maintain its integrity. And then just be able to go through the regular refrigerated versus frozen supply chain, there are a lot of advantages to that.
Matt Newberg: So like traditionally, most seafood comes in frozen. I mean, pretty much all of it. Right? If, even if you’re eating at like the most fancy, you know, sushi restaurant, it’s all coming in frozen off of, you know, a boat somewhere. And then from that point on, the shelf life is like very short. Is that right?
Anne Palermo: Yeah, the shelf life of, for example, a diver scallop’s shelf life is only two days.
Matt Newberg: Wow.
Anne Palermo: And so anytime after that, you start to risk getting sick from the product. And so for our product, having that long a shelf life, one of the real benefits is the fact that you don’t have to worry about the waste. If a store has, for example, a sushi roll with our product in it, the rice is going to go bad before our product does. And so it cuts down; they’re not selling pounds of unsold sushi rolls because we have a much better shelf life. And so grocery stores or food service or restaurants are really able to meet their sustainability initiatives because they don’t have that recurring waste from unsold goods.
Matt Newberg: Right. So the listeria poisoning comes from, like, the risk of something like that happening as it sits out longer.
Anne Palermo: What happens the longer products sit out is there’s always going to be a, like, more and a higher likelihood of getting sick from those products. Our products go through a pasteurization step, which really helps to prevent any kind of illness. There’s a risk with any food, period. But with ours, it’s so much decreased because we do have the pasteurization step. In order to maintain the shelf life of six weeks. And that’s fresh. Six-week fresh shelf life.
Matt Newberg: Really fascinating. I love the fact that the rice goes bad before the seafood. Most companies can’t say that. And I think a lot of people are also trading down. I think one of the trends I saw last year was food inflation for food away from home. You know, restaurants caused some sort of trading down towards prepared foods from Kroger’s or even some of the higher-end specialty grocers. So I think that the blurring of kind of food service and grocery is something, you know, grocerants. You said, you know, Kroger is the number one sushi restaurant or sushi provider of sushi in the country. You know, that’s a huge deal.
Anne Palermo: Yeah, it really is. It really is. Customers don’t want to give up on quality, and they don’t want to give up on experience. And so if you’re able to get a really fantastic experience out of your local grocery store and just have a fun date night in at home, why not?
Matt Newberg: Make it some sake on the side too?
Anne Palermo: Nice.
Matt Newberg: Okay, so let’s talk about this plant-based industry. You know, you worked in capital markets before. You know, where are we today? We, you know, there was a lot of struggle with companies like Beyond and Impossible. And you know, I just read a piece from my friend Larissa Zimbabwe about Eat Just, and you know the time horizon for a company like that is just so far out into the future. The picture of the cell-based chicken looked very rubbery. I mean, she said it tasted good. I kind of questioned that. Why should we be excited about what you’re doing at AQUA Cultured Foods and your fermentation-based peers amidst this kind of investor coldness towards the space?
Anne Palermo: Yeah, well, what’s so exciting across the board with our products is, you know, one, the technology is here, and so we don’t have to wait and have a 20-year time horizon. Our products are going to be priced at parity or less. So basically that means that we’ll sell our product at the same price as a traditional scallop or traditional tuna, or it’ll even be dropped in cost. So right now we’re able to deliver on these costs at our pilot scale, which means that as we grow and experience a significant increase in volume, the price is going to go down even more. And that has been one of the major hurdles with mass adoption in the plant-based space – the fact that the other alternative products are always more expensive because there are extra ingredients that go in, there are extra labour costs, there are extra costs across the board. And so to sell a product that’s not quite as good as the traditional thing in some consumers’ eyes, that they have to pay a 20 to 40% price premium on, has been a real challenge in order to get that mainstream consumer adoption. Especially in this current environment where inflation has just gotten a little bit out of control, and it’s making consumers have to make choices based purely on affordability. And so the only way to get alternative proteins to that mass adoption scale is going to be to be able to price them where consumers can afford to buy them and make that transition for them easier. And so one of the things that’s so great about our products at AQUA Cultured Foods is that at pilot scale, we’re already able to price at or better than – like at price parity or cheaper than the traditional products. And so there’s only a path to decreasing the costs further ahead. And so we’re having the same eating experience with taste, texture, the visual looks of the products, and the price. It’s a winning proposition. And so a lot of our investors and a lot of our customers, a lot of our chefs have been really rallying behind the product, which just helps to make the word of mouth and just grow the brand and grow the excitement around the product that much stronger. Because we’re able to meet our customers where they’re at. You know, there’s something to be said about when you launch your products into restaurants. The great thing about doing that is it’s hard to get a chef’s attention. And if you’re creating a product that’s good enough for these chefs to put on their menus, that’s a really loud and resounding vote of confidence. And so customers are really following, and they are voting with their dollars in these cases. And it’s kind of exciting.
Matt Newberg: What are we seeing from the analog side of traditional seafood as far as price inflation over the last year or two?
Anne Palermo: Yeah, price inflation for traditional seafood is a great question because, as I mentioned before, with climate change and the overfishing of the oceans, what we’re seeing is that the supply and demand curve is really spiking on the cost side, so costs are dramatically going up because we’re just running out of fish in the seas. And so what we’re seeing is that the prices are not going to go down. Prices are continuing to go up. Restaurants are facing a lot of supply chain instability because of this. And so with the supply chain instability, they can’t always keep their top products or top menu items on the menu. They have to have them as a special because they can’t get their hands on several of these species. Some of the top-selling or top in-demand species of seafood are being red-listed right now. And so restaurateurs just can’t get their hands on it. So there are those supply chain issues, which result in pricing going up for those products. So with the alternative seafood space, we’re able to solve for all those problems and give them a solid, consistent supply at a consistent price.
Matt Newberg: So on that thread of pricing, let’s talk about your manufacturing facility – what are your needs today to get to that pilot that you’re launching? And then what does that look like as you ramp demand as far as locating these geographically throughout the US and what those space and technology requirements are for those facilities?
Anne Palermo: Yeah, so right now AQUA Cultured Foods is a Chicago-based company, and we have a pilot facility based in Chicago right now. It is fully equipped, and we have been producing some products out of it. Right now, most of the products that are being made have been used internally for tasting events and early sales in order to go ahead and have our meetings with our chef partners, but then also for R&D uses as well. We are in the process of scaling that up more in order to meet demand for our restaurant launch, which will be coming up. And then after that, what we’re doing is we’re trying to create a copy-paste model in order to move our continued demand and continued production demand off-site. Right now, we’re kind of evaluating two different models and whether or not we should use a contract manufacturer, which could help us have more products to sell faster. But then we’re also looking at and evaluating the modeling of a fully vertically integrated system. Does it make sense for us just to have a secondary off-site facility that is devoted to manufacturing only our products? We’re not really sure what the proper path for that is, but we’re modeling it out. We are creating that plan in order to do so. Because what’s really fantastic about potentially doing it this way is we’ll be able to have multiple facilities across the US. And then once we eventually enter new markets overseas, we’ll be able to take that same plan and use it internationally or in our other off-site facilities.
Matt Newberg: Interesting. So with the co-manufacturing, what does that look like? Are we talking about the same kind of traditional biofermenters that you would see at some of those other companies I mentioned that kind of look like big beer brewers, or are there some other special requirements that you require to produce your product?
Anne Palermo: Yeah, so that’s one of the really special things about our technology, and what really sets it apart is the fact that we don’t need to have bioreactors. We can use them when it comes to creating our seed stock, but it’s not required. And so we’re looking at ways that we can grow our manufacturing very capex efficiently, which in turn means that we’ll be able to have more of them, which in turn means that we won’t have to ship the products as far, which is significantly more sustainable and has a really strong impact on carbon emissions. So for us, what a facility would really look like is it’s a little bit more hands-on work. A lot of times it could be automated, but right now we’re just focusing a little bit more on having hands-on attention with our products as we grow and scale it.
Matt Newberg: And then I imagine because it has a six-week shelf life, you don’t need to be, you know, obviously you want it to be sustainable; you don’t want to be shipping it from country to country or from the east coast to the west coast ideally, I guess. But you have enough shelf life that gives you some wiggle room as far as where to locate these facilities as far as the retailers that you end up partnering with.
Anne Palermo: Exactly, exactly. And as long as we’re able to figure out and have all the pieces in place to have a decentralized manufacturing system, it’s going to enable us to have facilities located close to where the top seafood-eating demographic areas are within the US and outside the US.
Matt Newberg: All right. And this has been a really fascinating conversation. Kind of as we come towards the end, I’d love for you to kind of put your thinking cap on and give us some of your predictions for the next decade when it comes to, you know, your peers and other alternative protein startups. You know, what do you think we can expect to see there, and then what do you think the major incumbents will do to adopt and adapt to these challenges behind sustainability and health?
Anne Palermo: Yeah, so I think there’s going to be a continued drive towards products that have a healthier ingredient list. Just which means more pure, more clean, less shortened ingredient lists. There’s going to be a drive towards enhanced nutrition. There’s going to be a drive towards corporate partnerships. And what we’re really seeing is that some of the largest corporations in the world have kind of known about these sustainability issues for quite some time, and so they’re really actively searching out companies that could potentially be a really good fit. And so for AQUA Cultured Foods, we’re looking to grow our company through some of these partnerships, and what we’ve found is that it’s really helping us to accelerate our go-to-market timeline that’s only going to get stronger, those kinds of partnerships as companies continue seeking out startups for partnerships. And so one of my biggest predictions is that we’re going to see a lot more growth in those areas in particular.
Matt Newberg: So when it comes to the partnerships, that looks like you, you know, AQUA Cultured Foods is kind of like a branded ingredient or maybe even just like a white-label kind of product for these seafood companies or something that’s more productized, like a seafood roll, a sushi roll of sorts.
Anne Palermo: Yeah, sure, that’s a great question. And you know, I can kind of see both, to be honest with you, I could see both. I think the power of a strong brand is really important, but at the same time, certain corporations might not want to have a co-branded product. So we would be open to either. We would prefer to have something with our name on it. But just given the fact that in the US we’re growing and developing our name, but internationally, a lot of these companies’ work is that there’s so much faith and trust in the heritage brands that in certain markets, it could be quite challenging for a newcomer to gain market share. And so just by partnering with some of those heritage brands or incumbents, it is going to help accelerate that path to market.
Matt Newberg: Yeah, I think one of the biggest challenges that we’ve seen, and Perfect Day is a good, is a perfect example, no pun intended, of this: building a tech platform is hard in and of itself. Building a tech platform and a brand is, you know, it’s like walking and chewing gum. It’s, you know, I guess you can do it, but it’s difficult for some people, and you know, it takes a long time to build consumer trust and build a brand. And it also takes a while to perfect technology and kind of get all that right, and not running out of capital has proven to be difficult for a lot of companies versus going the more B2B partnership approach that you’re talking about.
Anne Palermo: Yeah, and that’s the thing; you just have to figure out what’s going to give you the most impact and how does your consumer eat, and does your consumer want to eat the product? Do they want to have the brand product? Is there consumer loyalty for brands? There’s a lot that goes into the equation, and it’s very different depending on what company it is. And so there are a lot of paths forward, and for AQUA Cultured Foods, we just think it’s important to evaluate all options thoroughly based on who we are, what our technology is, who the partner is, and ultimately what our customer wants and what they are looking for, and how we can deliver it to them.
Matt Newberg: Some final thoughts on the self-cultivated space because, you know, this is a very hot topic within the alt protein space, and you mentioned earlier that you might provide the scaffolding for some of these products, and a lot of them are also even, you know, even the Eat Just product. It’s called Good Meat, I believe, or something good, although I’m not sure it’s actually good, but it is using a mix of plants and cells, and so it’s not 100% cell cultivated. It’s a hybrid product. You know, the chances of you getting it to be 100% or I don’t know if that’s ever going to be possible, but I guess my question is: what does that exploration look like? You know the time horizon for that. What would be the benefit of being the scaffolding for that?
Anne Palermo: Yeah, you know we’ve just found ways that we could potentially make that happen, and so it’s not a top priority for us today. We’re trying to remain laser-focused on our Horizon One business goals. But it’s something that we can do and something that we can really see a path forward doing. It’s just, like I mentioned, so important to just remain laser-focused, and we don’t want to be solely an R and D company. We want to be a commercialized company that has a solid, strong, growing, active R and D arm for those Horizon 2 and Horizon 3 products that we’re mentioning. I think there is, I think that when it comes to feeding the world sustainably, the only way we’re going to do that is to have a lot of different verifiable options because there are going to be 10 billion people on the earth in 27 years, 26 years now. And there can’t be one solution. And so I think a solution like ours is very viable. I think a solution like cultivated meat is very viable. I think both these solutions have a place in our food system. I think that the only way that we’re really going to be able to feed this world sustainably is to stay open and try new things and try new partnerships.
Matt Newberg: Okay, well, I guess I need to be a little bit more open-minded. The USDA has actually recently come out and said that we absolutely need cell-cultivated meat. I’m all for it if the investors want to keep funding it. The question is when they’re going to give up on that. I don’t know, but fascinating stuff all around. I want to give you the space right now to kind of plug away where we can kind of follow along as you get ready for your public launch or beta tasting. I’m sure there are people in the Chicago area maybe listening who want to be on that list. So now’s your time to kind of plug away: website, socials, etc. Or any job postings. Any things as well. If you have any openings that people want to work with AQUA Cultured Foods.
Anne Palermo: Oh yeah, 100%. So, restaurant partnerships, restaurant launch, just job postings. We are so excited to talk to each and every one of you that want to go ahead and reach out. You can do that on our website. It’s aquaculturedfoods.com. All of our socials – we’re active on LinkedIn, we’re active on Instagram. Go ahead and send us a message and DM us. My Twitter is not very active, unfortunately. I think it’s hard to do that much work on all the platforms. But please, we’d love to have you reach out and, you know, send us any thoughts you might have.
Matt Newberg: Okay, awesome. I can’t wait to try your tuna tartare. I’ll be first in line for the beta taste. Just let me know where and when. 100%, thank you so much for taking the time. Glad we got to do this.
Anne Palermo: Oh, thanks, Matt. Yeah, I really appreciate it. This is a great conversation, and I’m a big fan. So thanks for having me on.
Matt Newberg: Okay, awesome. We’ll be following along. Thanks for tuning in.
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