Impossible Foods and Beyond Meat: The Business Model of ‘Alternative’ Meat
It’s been a fun year so far for the alternative meat market. Impossible Foods, the creators of the ‘Impossible Burger’, a vegetarian alternative to the meat burger which aims to replicate the taste, texture and ‘bloodiness’ launched the second version of their recipe at CES this year as well as a recent collaboration with Burger King. British scientists are working on cultivating stem cells from pigs to produce bacon, and an enterprising silicon valley startup is growing bluefin tuna in the lab.
Recent innovations in food technology, approvals by the FDA for new plant-based ingredients like soy leghemoglobin (the stuff that makes vegetarian burgers ‘bloody’) and changing consumer habits are creating opportunities in the consumer food market.
Lean Canvas Takedown
The Problem
- Traditional meat has a major negative impact on the environment
- People want to consume meat products without harming animals
- Demand for meat is increasing worldwide and we may not be able to provide an adequate supply
Twenty-eight per cent of consumers report having reduced meat consumption, and another 14 per cent are interested in reducing the amount of meat they eat. Perhaps the number one reason people are reducing consumption is how environmentally taxing meat production is in terms of resources and creation of greenhouse gases.
According to the United Nations Food and Agriculture Organization (FAO), animal agriculture occupies about 30% of the world’s ice-free land.
Growing plants for livestock accounts for 25% of the world’s freshwater usage. Livestock generates 7.1 gigatonnes of GHGs (Greenhouse gases) per year: about the same as the entire global transportation sector and about 15% of all human-induced greenhouse gas emissions.
Over the past year, consumers have demanded more plant-based foods, with sales rising by 20 per cent in the states, to more than $3.3 billion. Non-dairy milk sales rose 9 per cent over the past year, to $1.6 billion, making it the biggest sector of the category. Plant-based meats were up 24 per cent, hitting $670 million in sales. In the same year, cow milk sales fell 6 per cent, by dollar value.
Customer Segments
- Flexitarian's
- Consumers exploring ways to reduce meat consumption
- Vegetarians, vegans
- Health-conscious consumers
- Environmental impact conscious consumers
People change dietary habits for many reasons — animal welfare, environmental sustainability or health considerations. Although you may think products like the Impossible Burger are targeted at the vegetarian/vegan market, it’s more likely appropriately targeted at the larger meat-eating population or the emerging flexitarian customer segment.
Paraphrasing Mintel’s senior food analyst Emma Clifford — The flexitarian trend carves a very accessible and unrestricted middle ground between simply meat eaters and non-meat eaters. And on top of the various benefits (animal welfare, health and environmental), it’s also become aspirational, with social media playing an important role in its promotion.
Solution
- Produce meat-based products from non-meat sources
- Synthesise meat products artificially
- Market products alongside meat-products
Focusing on the meat-eating and flexitarian customer segments, part of the solution is producing enticing meat-free alternatives aiming to replicate the experience of eating meat. This is where innovations such as putting artificial haemoglobin in your burgers, exploring ways of processing plant products to replicate texture or just synthesising meat in a lab become a great way to differentiate your product.
The more important challenge, however, is branding. ‘Meat-free’ or ‘reduced meat’ gives the impression that consumers are getting short-changed, while ‘healthy’ conjures up feelings that it’ll be less tasty or filling. An appealing catch-all for plant-based foods has proved elusive. To prevent negative stereotypes, some market analysts suggest meat-free products should be placed next to their meat-based counterparts with an emphasis on health benefits, calling attention to sustainability efforts and using traditional packaging considerations.
Unfair Advantage
- Producing meat alternatives which can replicate or improve on the taste, texture and experience of eating meat products (quality)
- Branding
- Production costs
Being able to produce a superior meat-alternative product which can replace or improve on the experience of eating meat is a great market differentiator. Not only does it make it easier for consumers to select your product, but provides the opportunity to differentiate based on ethical and environmental considerations. This in itself is great branding and something that Impossible Foods are using to draw attention (Vegetarian Burger King Whopper).
Revenue Streams
- Restaurants
- Retail outlets — butchers, supermarkets
- Direct to consumer
- Franchising the technology
Anywhere food is sold there is an opportunity to enter the supply chain. Until the vision of the mass market can be achieved, getting your product into restaurants (or the hands of chefs) and specialised food retail stores is a good starting point of brand building. Alternatively, partnerships with a chain of restaurants is a great step as a means of educating the market about your brand and start a first-mover advantage.
Alternatively, if you have a unique proprietary way of producing your product, it may be a better idea to franchise the technology or act as a manufacturer producing white-label versions of your meat.
Business Costs
- Laboratory
- Research and development
- Marketing and branding
- Raw materials
- Distribution
- Storage
Apart from the usual business and administration overheads, depending on your product's solution ongoing costs are likely to include manufacturing, buying raw materials, laboratory research, storage, distribution and marketing.
Final Thoughts
From Adrian
I personally am most persuaded by the health benefits of these products. The sooner we start producing alternatives which lower the barrier of entry to healthier food alternatives while not sacrificing taste and experience, the better for everyone.
A bad diet kills more people globally than tobacco, according to research published Wednesday in the Lancet. It concluded that a better diet could potentially prevent one in five deaths globally. We are in desperate need for a food system transformation.
From Jenny
What I am most curious about is how the lab-grown meat will position itself in the market. Speaking from personal habits — I enjoy meat, few things can beat a good tomahawk steak, this said I refuse to buy meat from supermarkets where the majority of beef, pork and chicken comes from factory farms. I am a staunch supporter of butchers who know where their meat comes from and small farms. Coming from this background I believe that lab meat should not compete with the top end of the market and artisanal butcheries. But rather try and replace factory farming meat.
