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Nice to Meat You It's Fourth of July weekend. For many Americans, that means three things: fireworks, family time, and food. And not just food, but meat. But as people from Portland, Oregon to Portland, Maine suit up for grill duty, navigating the menu has become increasingly complicated. The neighbor's kid just finished their first two semesters at Berkeley and a nephew recently watched a harrowing climate change documentary — meaning the morality of meat consumption is on the table, so to speak. That's where Beyond Meat, dedicated to plant-based meat substitutes, seemingly has the upper hand. The Los Angeles-based outfit became the first vegan meat company to list publicly in 2019, climbing 160% on its first day of trading. The company then had a brief run as a pandemic darling as more and more meat-eaters became conscious of their dietary habits. But of late, much of the sizzle of the alternative meat investment thesis has vanished into thin air, leaving Beyond's stock down a whopping 82% from its 52-week highs. So, how exactly did Beyond Meat rise and fall so quickly? And does it have a future in a world that may be turning to indistinguishable, bleeding, lab-grown meat as the prime alternative to the status quo? That's what we're looking at in today's deep dive. So grab a (meatless) snack, and let's jump in. To Infinity and Beyond…
The idea of meat alternatives isn't new. Veggie burgers, bean patties, and tofu have been around for decades. But, depending on how hippie-friendly a neighborhood you live in, these alternatives weren't necessarily always on the menu at the typical burger joint and were typically reserved for only the most hardcore of herbivores. Times, of course, have changed. Even habitual carnivores can now tolerate (maybe even enjoy) a meatless meal now and again. Veggie, bean, and tofu patties, however, share something in common: to some, they may taste swell, but they certainly don't taste like an actual burger. This is precisely why Beyond Meat was able to make such a big splash: it looks like meat, it feels (for the most part) like meat, and it tastes (again, for the most part) like meat. By the time the pandemic rolled around, consumers, trapped in their homes, had the opportunity to reevaluate their diets. Doctors have long warned about heart issues associated with over-eating red meat. And beef, in particular, is known to leave a carbon footprint roughly six times larger than pork and ten times larger than chicken, according to Our World in Data. Meanwhile, meat production overall accounts for 15% of global carbon emissions. |
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Crucially, consumers had plenty of time to experiment with new foods. That meant a massive spike in demand for meat alternatives: - According to data provider SPINS, sales of plant-based meat jumped 80% in March 2020 and 46% in 2020 overall.
- Funding for plant-based meat companies increased, too, from around $700 million in 2019 to around $1.7 billion in 2020, according to the Financial Times.
- At its peak, Beyond Meat's valuation soared to more than $15 billion, representing a valuation multiple on par with the most elite and disruptive of software companies.
And...back down to earth: All that goodwill has since come crashing down and analysts and investors have been left to analyze whether Beyond — and the other 800 meatless meat startups around the globe — have a sustainable business model or if they're simply a flash in the pan. Analysts note that Beyond's pandemic sales boost may have simply been a function of supply chain dynamics hitting the grocery meat aisle and leaving consumers with no alternative but alternative meat.
While milk substitutes like almond and soy have carved out a respectable 15% of the dairy market, sales of vegan meat products represent just 1% of total meat volume, according to Forbes. Indeed, while many consumers are willing to try anything once or twice, building a reliable customer base is decidedly more difficult: - Of 3,000 US adults surveyed last December, 40% said they do not eat plant-based meats, and would not eat them in the future, according to a report from food strategy consultancy firm Changing Tastes.
- But in that very same survey, 39% of US adults claimed they wanted to reduce their intake of red meat. Plant-based meats faced "an extremely high negative for such a new idea," Arlin Wasserman, founder of Changing Tastes, told the FT.
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For Beyond Meat, the reckoning has been sharp and painful. The company managed to eke out just 1.4% revenue growth in the last quarter, and, as of earlier this year, its stock was the most heavily shorted of any company in the Russell 1000, according to data provider S3 Partners. Famed short-seller Jim Chanos told the FT, "the problem in Beyond Meat's case is that it's stopped being the case. It's a juxtaposition of the reality versus the hope…that's been the short opportunity." Artificial Intelligence
Beyond Meat may now mostly serve a sizable though not market-shattering niche, but that doesn't mean the world's hunger for a more sustainable alternative to meat has been completely satisfied. Instead, the world is simply turning more and more toward a meat-alternative solution that's slightly more… familiar. As the plant-based meat fad wanes, interest in lab-grown meat — that's meat cultivated in a lab, originated from a small cluster of real animal cells, and sometimes even 3-D printed — is exploding. Because, let's face it — no matter what the most militant vegan in your life says, sometimes it is difficult to bite into a Beyond patty and not detect subtle notes of potassium chloride, mung bean protein, and methylcellulose. |
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While there may be a bit of a dystopian aura surrounding frankenmeats, proponents say the food technology could be a revolutionary step forward in delivering meat across the world without the cruelty or carbon footprint of the current paradigm. Even as the industry awaits approval from both the FDA and the Department of Agriculture — which agreed to joint oversight for the emerging food group — interest and funding have already taken off: - About $2 billion was invested into lab-grown meat companies in 2020 and 2021 combined, according to Crunchbase.
- One company, Eat Just, earned the world's first regulatory approval in December 2020, with Singapore granting it the right to sell its lab-cultured chicken. The company is hoping for US approval by the end of this year.
Still, building out the infrastructure to truly serve hundreds of millions of Americans — let alone billions across the globe — will take some time. "This isn't inevitable," Eat Just CEO and co-founder Josh Tetrick told CNBC in January. "This could take 300 years or it could take 30 years. It's up to companies like ours to do the real work of building the engineering capabilities… and communicate directly with consumers about what it is and isn't and how it can benefit their lives." For now, it seems your backyard barbeque will still mostly consist of meat, real meat, with perhaps a few Beyond alternatives for the one or two conscientious objectors in your life.
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