Hormel, a global leader in meat production, is taking its biggest step to date into the growing meat-substitute market in partnership with a California company.

Austin's Hormel Foods Co. and Sacramento-based Better Meat Co. announced the joint venture on Wednesday. The California food startup developed a meat alternative it calls Rhiza, an all-natural whole food mycoprotein produced through a process of potato-based fermentation.

"It's critical that we give our consumers choices. Plant-based products are one choice, traditional meat is another choice," Fred Halvin, Hormel's vice president for corporate development, said in an interview. He said the company will "continue to align our portfolio with consumer trends, and we believe plant-based is a significant consumer trend."

A June report by Allied Market Research, a global market research firm based in Portland, Ore., projected that the worldwide meat substitute market would reach would generate $8.82 billion in revenue by 2027, up from $4.5 billion in 2019.

That growth is seen as being driven by multiple factors: growing consumer awareness of the health detriments of a meat-heavy diet, increased worry about the climate change implications of meat production, and advancements in the science of meat alternatives.

At the same time, demand for traditional meat products also continues to grow. "U.S. consumers have never eaten more meat and poultry per person than currently," Wells Fargo agricultural economist Michael Swanson wrote in a recent blog post.

"The problem is that while we have to reduce our reliance on animals for food, the demand for meat just keeps going up," said Paul Shapiro, the founder and CEO of Better Meat Co. He started the company in 2018 with a goal of creating a more sustainable food system by pioneering new alternatives that still provide carnivores with what he called "the meat experience."

Shapiro tried to describe the science in layman's terms: "What we do is take microscopic fungi and feed them potatoes, it takes that potato and converts it into a mycoprotein that has a taste and a texture like meat. This process happens in a matter of hours. A cow, you have to feed for a year before you can slaughter it for meat."

The company advertises that the product has more protein than eggs, more fiber than oats, and more iron than pork, chicken, turkey or beef.

Better Meat Co. previously partnered with Perdue Foods to create Perdue Chicken Plus, a nugget that's a mix of chicken and plant protein.

Hormel is investing in the partnership through its venture unit, called 199 Ventures, though it didn't disclose how much. The company formed 199 Ventures two years ago as an financial incubator for forward-looking food products.

Bryan Kreske, the general manager of 199 Ventures, said it's too early to say what kinds of products might be manufactured using Rhiza.

Asked whether there might someday be a plant-version of Spam, Hormel's well-known canned meat product, Kreske said, "We've got a lot of talented research and development folks. No specific plans, but who knows?"

Hormel has already made a few steps into the meat-alternative business, with a line of plant-based restaurant pizza toppings through Burke Corp., its food-service subsidiary. And the company made a major foray into plant-based food earlier this year with its $3.35 billion acquisition of the Planters nuts brand.

Given the continued rise in demand for traditional meat, it's not clear whether meat substitutes like Rhiza or more established brands like Impossible Burger will at some point take a bigger bite out of meat sales. Hormel's Halvin noted that alternative dairy products like oat milk, soy milk and almond milk now comprise more than 10% of the total dairy market.

"Who knows if plant-based protein can get to that level?" Halvin said. "But the overall segment, we see as significant."