CLIMATE SOLUTIONS | BUSINESS STRATEGY
Three Brands Leveraging Luxury to Fight Climate Change
Using high margin green products to create a new market
Tesla started it. It may not have been the very first, but it is the first company that lead, boldly, with a luxury-to-save-the-world strategy.
Today, we are seeing other brands use a similar approach, but it’s still a rare, perhaps because “luxury” and “good for the planet” seem at odds. However they don’t have to be.
Starting at the high end is not a typical strategy for startups. Entrepreneurs are encouraged to target the largest markets possible; after all, a small share of a really huge market sounds like a great way to start. It’s worked for some like Impossible Foods and Beyond Meat, which both started with one of the lowest common denominator of meat: burgers.
Outside of the world of sustainability, offering the latest innovations to the wealthiest customers is not that unusual. For example, big automakers for years layered innovations such as heated seats into their most expensive vehicles before letting them seep down over the years to entry-level vehicles.
The value of these luxury alternatives is that they are the gateway drugs to consuming cleaner products. They break the bond between green and begrudging.
Yet when those same automakers approached the largest innovation of all — a move away from the internal combustion engine — they started with lower end and, often, quirky looking vehicles. Looking back to the EV1 with its largely-hidden rear wheel, the Honda Insight which mimicked it and the Toyota Prius which never looked that like its ICE Toyota siblings, it’s clear automotive manufacturers assumed the buyers of electric or highly fuel efficient vehicles were more concerned with low drag coefficient than high style.
Aiming high: Luxe evokes lust
When Tesla’s founders Martin Eberhard and Marc Tarpenning approached the same challenge, they started with luxury. The first, non-functioning ‘pretotype’ used a Lotus Elise sports car chassis, oozing sex appeal. While the chassis was significantly modified by the time the first Roadsters came off the line in 2008 — the concept of starting with a high end sports car never varied. Why high end? For the same reason you rob a bank: because that’s where the money is. As CEO Elon Musk later said in a clip included in a CNBC documentary, “you’re not just buying a sports car, you’re actually helping pay for development of the mass market vehicles.”
Tesla’s initial focus on expensive early products not only funded development of electric cars, but also fundamentally changed how they were perceived. Like a made-for-TV makeover, the awkward early EVs were forgotten as the stunning EV sports car emerged. Suddenly, people wanted an EV not only because they loved the planet, but also because they lusted after the car. Sure, the market for Priuses still existed, but the market moved on its axis when Tesla entered because it was a desirable car first, low or zero emissions second.
Hair shirts or Hermes scarves?
One of the hurdles in addressing climate change in higher income countries is the perception that a lower emission life is a less comfortable life. Sure, killing the planet is bad, but most people don’t want to sacrifice anything. Many assume that a climate friendly version of anything is less tasty/ valuable/ enticing/ comfortable than the version consumed today. That’s not always true — I swear if Burger King changed to 100% Impossible Whoppers, no one would taste the difference — but the narrative that green = sacrifice runs deep.
But what if going green felt like sports cars, fois gras, diamond rings? Lorde would break into song and we’d all be living like Royals. Those who already have a green lifestyle may see it as unnecessary at best, obscene consumption at worst. Yet, it may be what’s needed to bump the keep-up-with-the-Kardashians class of consumers into lower carbon consumption. So for a further taste of the (relatively) guilt-free high life, here are two companies following Tesla’s lead with luxury-first innovation.
Putting the Faux in Fois Gras
When you think of the world’s most exclusive foods, a few things spring to mind: caviar, truffles and fois gras. Cultured meat innovator Gourmey is tackling the last.
Fois gras is a natural place to start: the smooth-as-silk real version is not only considered morally reprehensible by many but also banned in many markets. The moral issue arises from its production: geese are force-fed with corn, a practice known as gavage, to fatten the liver. It’s a practice banned in many countries, including Australia, Denmark, Germany, Argentina, and the United Kingdom, to name a few. But it can still be on the menu there; France, Hungary, Bulgaria, Spain and Belgium supply fois gras to many countries where the practice would be in direct violation of animal rights laws.
In a few other markets, the product is banned from sale. American foodie centers California and New York City (beginning in 2022) are among those that have banned selling or serving it, causing an outcry among some, celebration among others. Other bans have been short lived, but it remains a goal of animal rights groups.
So it’s desired, expensive, and sometimes banned… making it a perfect candidate for the cultured meat market.
Fooling the cultured critics…
Cultured meat is very different from the many meat substitutes already on the market. It’s not vegetables or fungi concocted to taste like meat, it’s actual meat cells that are grown in a lab. Think Frankenstein, but delicious. Although details are scant on Gourmey’s website, TechCrunch reported that its process involves feeding stem cells the right nutrients so they can grow in a temperature-controlled bioreactor. It’ll be an interesting debate in the vegan world whether non-sentient cells that made it to the plate with no slaughter will be considered vegan.
And so far, the product has elicited a rave review from one of the few food journalists allowed to sample it, Geraldine Amiel for Bloomberg. And with California’s vigorous high-end restaurant scene frequented by deep pocketed gourmands, it’s an ideal entry market.
Making the Most of Margins
So Gourmey’s faux fois gras is humane and bio-similar enough to fool a French-accented foodie, but is it green?
The carbon footprint of the foil gras market is small: it’s a low-production industry, takes up little real estate, and produces small amounts of carbon. And unlike cows, geese and other poultry don’t burp methane. But that’s not the point.
What’s important is that the product will command high enough prices that it will subsidize scaling the production method, which can then be applied to other meats that are significant greenhouse gas emitters. And while Gourmey’s stated focus is also on lab-grown poultry, it’s starting with the single most expensive cut of any bird. Why poultry? Despite having a relatively low carbon footprint compared to beef, poultry accounts for about a third of all meat consumed globally. By using the most expensive, exclusive poultry product as a beachhead market, the gourmands will subsidize the innovation that will enable scaling into other poultry products in the future.
The faux fois gras will also pave the way for regulatory change that will be needed for lab-grown meats to be sold. So far, Singapore is the first and only country to approve lab-grown meat, approving the sale of Eat Just’s cultured chicken. With Californian chefs eager to put fois gras back on the menu, they are likely to be stronger advocates for change than if the meat in question was a chicken nugget.
Captivating, carbon-capturing diamonds
Carbon capture and storage… it’s a concept that divides the climate world. Is it giving a free pass to fossil fuel companies to keep polluting? Is it ever going to be economic to suck it out of thin air? Or should the focus be capturing at the source? Regardless of where you come out on the topic, one thing is certain: taking carbon from where you don’t want it to where you do is good.
Carbon’s the periodic table of elements’ most flexible ingredient. While it only makes up 0.025% of earth’s crust, Encyclopedia Britannica says it “forms more compounds than all the other elements combined.” But capturing carbon will become much more attractive if there are high-value ways of using it. Enter Aether*.
Aether founders looked at carbon capture and realized that the economics would be greatly improved if there was a high value use for the carbon captured. And what’s more valuable than carbon in its strongest form: diamonds?
Their diamonds aren’t synthetic. Like cultured meat that is cell-based, Aether diamonds are considered real diamonds, and are virtually indistinguishable… except for them having zero chance of being from conflict regions and having a significantly lower water and energy footprint. They arrive with a certificate and grading report from the International Gemological Institute (IGI) and each one carat diamond removes 20 tonnes of CO2 from the atmosphere. There are other lab-grown diamonds on the market, but others source their carbon from fossil fuels.
Consumerism versus climate
Even if jewelry, sports cars and gourmet food can be better for the planet, does that justify their creation? After all, isn’t consuming less the best strategy? It is, however most people are not going to voluntarily lower their consumption. The value of these luxury alternatives is that they are the gateway drugs to consuming cleaner products. They break the bond between green and begrudging.
It’s about setting a precedent as much as creating a market.
We’ve seen this already in the automotive market, with Teslas paving the way for today’s plethora of EVs at various price points. After gourmet restaurants tempt meat eaters with cultured fois gras, the thought of other planet-friendly foods will be more easily digested. And after carbon markets see the sparkle of a high-value end product, carbon economics may tilt towards a better future.
The arc of the climate universe is long, but it bends towards action. A little luxury may bend it faster.
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Disclaimer: the author has a small investment in Aether through a climate solutions investment syndicate that she is part of.
