The Genius of Plant-Based Meat
How we can use market factors to help solve difficult problems
Since its founding in 2011, Impossible Foods along with other companies like Beyond Meat have been pioneers in the process of perfecting plant-based meat. Their innovations have not only enticed the hungry stomachs of millions of Americans but also have attracted the interest of investors like Bill Gates, Google, and even Leonardo DiCaprio. With its average growth rate (CAGR) expected to be around 18% year on year over the forecast period from 2019 to 2025, let’s take a look at what makes this industry so successful.
Necessity is the Mother of Invention
Like many start-ups industries, the most obvious explanation for the success of the plant-based meat industry is its product’s ability to effectively solve a socioeconomic problem. In this case, it offers an alternative to the controversial prevalence of animal cruelty in factory farms while at the same time minimizing the negative environmental impact of the meat industry.
Though documentaries like Food Inc. and public information campaigns have generally exposed the maltreatment of animals within the meat industry to the public, the environmental impact of farming meat is often untold. According to a study done by the Food and Agriculture Association of the United Nations, livestock contributes to a whopping 14.5% of the world’s total greenhouse gases. This has been largely due to the inefficiency of meat farming in comparison to plant farming when considering per unit of energy produced for human consumption. While eating plants directly transfers energy from plant to human, eating meat from a plant-eating animal causes the animal to become an energy middleman, wasting energy growing unused organs such as the bone and skin.
Plant-based meat thus reduces the resource cost, freeing up resources to increase the caloric production of food for the world’s growing population.
This cascading filtering effect results in the meat industry consuming extensive amounts of resources, such as fertilizers and water to grow animal feed and land for grazing. An oft-cited statistic is the usage of 1,799 gallons of water to produce one pound of beef, compared to only 108 gallons for corn. However, with the oligopolistic meat industry dominated by a few large firms like Tyson, economies of scale often decrease the true resource cost when expressed in terms of dollars to the average consumer. Plant-based meat thus reduces the resource cost, freeing up resources to increase the caloric production of food for the world’s growing population.
Economic Power
Yet appeals for the environment are often not scalable to society as a whole if not backed up by market incentives or if the status quo disincentivizes change. Going vegetarian may appeal to a select few to protect the environment, but meat’s role as the centerpiece of the American diet and its relatively low cost has resulted in the majority of Americans remaining omnivores and not undergoing the hassle of being vegetarian. Under the circumstances of the current meat industry, that means that an emphasis must be placed on easing the transition from meat to meatless for the majority of the population alongside economic incentives for the individual.
Plant-based meat meets (pun intended) the majority of these requirements, as it solves an important problem in a way that is minimally intrusive in changing the daily lives of Americans. In terms of nutrition, it basically matches real meat in key areas like protein, calories, and vitamins. But simply being just as nutritious isn’t enough, as we have seen in the ill-fated attempt to mass-market vegetarian patties to the general public. Perhaps more important to its market success is the similarity in taste, texture, and general look and feel of the plant-based meat in comparison to real meat. This is the category that truly defines the power of plant-based meat, as consumers are able to switch seamlessly from a meat-based diet to a plant-based one, at least theoretically. Restaurants and even local grocery stores have thus introduced the products of plant-based meat companies on their menus and shelves respectively as more and more Americans begin to reduce their meat consumption in favor of plant-based meat.
That being said, plant-based meat still has a few hurdles to jump over before it can truly replace meat on a national scale. It isn’t quite there yet in terms of taste, with consumers often describing it slightly different from actual meat. When considering nutrition, its high levels of sodium also discourage consumers while the heavy processing required chips away at the health benefits of the plant-based ingredients when compared to eating the ingredients alone. Finally, plant-based meat currently costs more than real meat, further economically disincentivizing the average American from switching.
But while the formula for plant-based meat may not yet be perfect and its cost may be high, the rapid innovative growth of the industry is auspicious for resolving these issues. Further research and innovation, which is the backbone of the plant-based meat industry will hopefully only better the product both in terms of taste and nutrition. Meanwhile, the rapid growth of these companies in an oligopolistic market structure will result in increasing returns to scale, allowing them to take advantage of economies of scale. This conclusion is only logical when considering that giants in the real meat market like Tyson (market capitalization of 22 billion) inherently use far more resources than companies like Impossible Meat due to growing actual meat yet seemingly paradoxically charge lower prices. At the same time, the focus on innovating better products espoused by the plant-based meat industry result in temporarily higher costs of the product to support the expensive R&D. These are some of the main characteristics of plant-based meat that have fueled its rapid growth and increased optimism for its future.
Using the market for good
Thus, instead of necessitating legislation to disincentivize the status quo in the market (like for fossil fuels) and incentivize change, market forces will eventually decrease costs and actually automatically incentivize consumers to switch to plant-based meat
The use of plant-based meat as an effective near substitute for real meat is an interesting concept when compared to other attempts to solve environmental issues. Whereas renewable energy sources are an imperfect substitute for replacing fossil fuels as a source of energy in many industrial tasks, due to issues like intermittency of energy sources and the necessity to switch nearly all machines to consume clean energy instead of fossil fuels, switching plant-based meat requires little societal change and is highly scalable for mass production.
Thus, instead of necessitating legislation to disincentivize the status quo in the market (like for fossil fuels) and incentivize change, market forces will eventually decrease costs and actually automatically incentivize consumers to switch to plant-based meat. This is a 180-degree shift from the previously held notion that market forces are the source of the climate change problem, an inhibitor to change, and something to be regulated. In the case of meat, the market for consumers will naturally shift in favor of the no-compromise plant-based meat.
Finally, with individual consumers constituting the vast majority of the demand for meat, the corporate lobby power of established companies against such a change in the meat industry is greatly reduced. The relatively democratic nature of meat consumption means that rather than needing to push for legislative change like in the case of renewable energy, the status quo in politics will actively benefit the shift to plant-based meat.
The Future
With further research and increased investment, not only will the quality of meatless meat increase, but also the variety. As of now, the current products on the market are replacements for ground beef and pork, but with research focused on other forms of meat like chicken, plant-based meat may be able to completely replace the meat in our diets in the near future.
This is especially important when considering the growing demand for meat as countries develop and incomes rise. Meat consumption in China, for example, grew sevenfold over the last three decades and a half. Even today, a lack of land for animal pasture has resulted in mass deforestation and wasted resources, such as in the example of poor cattle farmers slash-burning the Amazon to create more pasture for their animals. At this rate, with billions more being able to afford meat in the near future, demand for meat is certain to outstrip sustainable supply.
With less land and water necessary for plant-based meat, our planet can meet this growing demand for meat in a way that is sustainable for generations to come. Who knows, perhaps one day the Big Mac index may be replaced by the Impossible Meat or Beyond Meat Index.
