The Future of Meat
First was the toilet paper scarcity, then came the meat shortages.
Depending on where you live in the United States, you can pull up to a Wendy’s drive-through just to find that they are completely out of hamburgers, discover your favorite cuts of meat are sold out at your local grocery store, and learn that prices for meat products are increasing.
Breaking the Supply Chain
The COVID-19 pandemic has disrupted many industries and the meat industry is no exception. Since the start of the pandemic, at least 30 meatpacking facilities have closed. These closures are estimated to decrease 40 percent of slaughtering capacity, raising concerns about the future meat supply. In a full-page spread in the Washington Post and The New York Times, Tyson Chairman writes that “the food supply chain is breaking” and millions of animals intended for meat will be euthanized because of the closure of processing facilities. Along a similar note, a statement by Smithfield’s CEO warns that meatpacking facility closures are “pushing our country perilously close to the edge in terms of our meat supply.”
Since the 1970s, the U.S. industrial meatpacking supply chain has remained highly concentrated and efficient in its operations, processing millions of animals for food daily. However, the meatpacking supply chain relies on its components to work perfectly and precisely. For example, meatpacking workers have reported unforgiving schedules with insufficient time to wash their hands or take bathroom breaks. Some workers resorted to wearing adult diapers to avoid repercussions to the production line. Even deviations as small as unfavorably-timed bathroom breaks can cause a ripple effect through the system.
Furthermore, COVID-19’s disruptions to the meatpacking supply chain are causing public health crises and animal euthanasia disasters. In high concentration facilities without sufficient personal protective equipment, thousands of meatpacking workers have been infected with the disease and, unfortunately, at least 30 meatpacking workers have died as a result of COVID-19.
As COVID-19 infections and deaths increase among meatpacking workers, more facilities continue to close down and bottleneck a precisely-timed production line. Suppliers and large, vertically-integrated meat companies are accumulating surpluses of livestock and poultry without the sufficient resources to sustain the animals’ lives. Additionally, animals kept in the backlog quickly gain too much weight to be supported by their own legs or fit meatpacking machineries. Under these circumstances, suppliers and large meat companies resort to euthanizing animals without processing them for food. In a recent account, a poultry processor ultimately decided to euthanize approximately 2 million chicken after studying its alternative options.
This is a severely broken system. A country can project to euthanize 7 million farm animals in the next few months, lose out on billions of pounds of meat, all while experiencing meat shortages.
An Unsustainable Industry
From a broader perspective, a 2019 Research and Markets report estimates a global meat market size of nearly $1 trillion. The market is projected to grow as emerging economies, particularly China and Brazil, see an increase of meat demand and consumption. The Food and Agriculture Organization of the United Nations (FAO) estimates that we may need 70% more animal products by 2050 to feed the world.
However, current meat systems are inadequate in supplying an increasing demand as well as unsustainable to planet Earth.
We shall escape the absurdity of growing a whole chicken in order to eat the breast or wing, by growing these parts separately under a suitable medium.
— Winston Churchill, 1931
The Future of Meat
Signals surrounding the meat industries tell us that new meat products and plant-based alternatives have great potential to capture larger shares of the market. A market report estimates that the market value of plant-based meat is an estimated $12.1 billion and will double in the next 5 years. Highlights of success in the emerging plant-based meat industry include Beyond Meat’s historic 2019 IPO launch and Burger King’s nationwide launch of the Impossible Whopper, fueling its best quarter in four years.
In a futures-oriented three horizons framework, animal-based meat (processing whole animal carcasses for meat) serves as Horizon 1. Plant-based alternative meat emerges as Horizon 2, the near-term future. Nevertheless, the larger potential disruption lies just further down the line with cell-based meat as Horizon 3.
Cellular agriculture is an emerging field where agricultural products, like cell-based meats, are cultivated from animal cell cultures instead of slaughtering live animals and processing their carcasses. Through cellular agriculture, cell-based meat can be harvested, without the use of animals, in a sterile and controlled environment such as a lab or manufacturing facility.
Unlike plant-based alternatives which mimics the qualities of meat, cell-based meats can choose to have the exact same qualities as traditional animal-based meat. Cell-based meat is capable of being indistinguishable to animal-based meat in taste, texture, smell, all the way down to cellular composition. Cellular agriculture can also open up many opportunities for new kinds of meat products, such as hybridized meats and healthier meats engineered to have specific health benefits.
Supply Chain Benefits
Cell-based meat provides the opportunity to produce for customer demand, rather than facing the many challenges of having to process the whole animal carcass. Despite future pandemics and disruptions, cell-based meat companies can prevent animals from being slaughtered, euthanized, or becoming food waste.
Cell-based meat uses similar processes and equipment to clinical and research labs that practice cell culturing. Cell-based meat workers have the opportunity to adopt similar biosafety standards as research and clinical labs, making for safer and more sterile environments for workers.
Lastly, multiple studies project that cell-based meat could have significant reductions in land, water, and energy uses, and greenhouse gas emissions.
Positioning Analysis
Because of technical, scaling and cost challenges, many experts disagree on when cell-based meat will be ready to enter the market. Nevertheless, a leading cell-based meat startup, Memphis Meats, raised enough funds earlier this year to build a pilot production facility. If the future of meat solves its technical challenges tomorrow, will it be ready to compete in the marketplace? How does cell-based meat position against animal-based meat and plant-based industry players?
Industry — A nascent industry of cell-based meats, focusing on beef, poultry, pork.
Competitive Rivalry, Low — In 2019, the Good Food Institute counted 27 cell-based meat and seafood startups around the world. Because of technical challenges, companies have yet to emerge as definitive industry leaders with first-mover advantage.
Threats of New Entrants, Low — Players who may be interested in producing cell-based meat are large animal-based meat companies, plant-based alternative meat companies, and even biotech companies with cell culturing departments. Large meat companies, such as Tyson and Cargill, have invested in Memphis Meats and currently take on a supportive role. Nevertheless, it is highly probable that large meat companies will want to eventually build or acquire their own cell-based production facilities.
Threats of Substitution, High — Depending on product prices and customer perception, threats to substitutes can be high. A variety of meat products and alternatives vie for a slice of the trillion dollar industry. Cell-based meats will compete with animal-based meat, plant-based meat, and even possible emerging meat types like insect.
Bargaining Power of Suppliers, Low — In addition to advanced technologies and vertical integration, the challenges that cell-based meat companies are focused on solving today should position them to be largely independent of suppliers.
However, cell-based meat companies are still challenged with high operational and equipment costs which creates barriers to affordably-priced meat products and the ability to scale operations. The first unveiled cell-based hamburger in 2013 was estimated to cost an equivalent of $332,500 U.S. dollars. In 2018, Memphis Meats reported that one pound of meat took them $2,400 to produce and, in 2020, their CEO believes they have a clear path to competitive pricing. FDA-USDA joint regulatory oversight may play a crucial role in helping transition from high cost bio-medical equipment and production inputs to lower cost food-grade equipment and inputs.
Bargaining Power of Buyers, Possibly High yet Potentially Low — Achieving widespread adoption of cell-based meat is not only a supply chain challenge, but as significantly a customer perception one as well. Cell-based meat companies need to take charge of the marketing and perception of their products and cellular agriculture’s emerging industry. Many players in the cell-based industry have done independent terminology studies but cannot agree on a shared language. Other commonly used names for cell-based meat include cultivated meat, cultured meat, cell-cultured meat, and in-vitro meat. From my end, I settled on “cell-based meat” as the best option to describe the shifts in meat horizons and contrast against animal and plant-based meats. If cell-based companies do not take control of the narrative, other parties can popularize less accurate or polarizing names such as lab-grown meat, clean meat, slaughter-free meat, “fake” meat, or opt to remove “meat” from the name entirely. The industry can benefit by agreeing on a term that is accurate, non-polarizing, and most importantly, appetizing.
So far, about a dozen states passed laws that prohibit cell-based meats to be labeled as “meat.” These laws can create customer confusion if the name of the product does not clearly reflect its cellular composition. For example, labeling may not clearly communicate to customers with meat allergies that they will experience allergic reactions to cell-based meat just like animal-based meat.
Cell-based meat companies can best use customer-centric, design strategy methods to scope customer segments and go-to-market strategies. Design research can provide insight into how cell-based companies communicate environmental, technological, food safety, health, animal ethics, and/or taste benefits to align with customer values.
When cell-based meat companies achieve high bargaining powers and overcome customer perception challenges, then they can achieve sustained, competitive advantage and widespread adoption.
References:
Aubrey, Allison. “Ready for Meat Grown From Animal Cells? A Startup Plans A Pilot Facility.” NPR, 22 January 2020.
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La Monica, Paul R. “Impossible Whoppers are a huge hit at Burger King, fueling its best quarter in four years.” CNN Business, 28 October 2019.
Lipshultz, Bailey and Singer, Drew. “Beyond Meat Makes History with the Biggest IPO Pop Since 2008 Crisis.” Bloomberg, 2 May 2019.
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New Harvest. “What is Cellular Agriculture?”
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Rischer, Heiko et al. “Cellular Agriculture — industrial biotechnology for food and materials.” Current Opinion in Biotechnology, vol. 61, February 2020.
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Stephens, Neil et al. “Bringing cultured meat to market: technical, socio-political, and regulatory challenges in cellular agriculture.” Trends in Food Science & Technology, vol. 78, August 2018.
The Good Food Institute (GFI). “State of the Industry Report, Cell-based Meat.” June 2019.
Tyson, John. “A Delicate Balance: Feeding the Nation and Keeping Our Employees Healthy.” The Washington Post, 27 April 2020.
United Food and Commercial Workers (UFCW). “Trump Order to Re-Open 14 Meatpacking Plants Fails to Increase Coronavirus Testing and Safety Measures Needed to Protect Food Supply & Workers.” 8 May 2020.
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