Plant-Based Burgers – A Big Missed Steak?

Finding a credible alternative to America’s favorite meat sandwich: the burger.

Why Meatless Burgers?

We all know the importance of reducing fossil fuels in addressing climate change, but the effects of livestock production are often overlooked. Consisting primarily of poultry, pigs, cattle and buffalos, livestock discharge intestinal gases and manure through a digestive process that releases harmful gases in the atmosphere.[1] Combined with the human activities related to their production (i.e., fertilization usage, manure management, and meat processing), livestock contributes to 18% of global greenhouse gas emissions and 37% of global methane emissions (25x more potent than carbon dioxide).[2]

Cattle are the largest offenders, producing 5x the amount of greenhouse gas emissions than pork, the most consumed animal protein in the world.[3] The U.S. is a major market for cattle consumption and production – America consumes 25 billion pounds of beef a year and exports 10% of total beef production.[4] Reducing beef consumption will have a major impact on reducing dangerous gas emissions. Domestically, burgers seem like a good place to start – 3 out of every 4 Americans eat at least one a week.[5]

Beyond Meat, Inc.

Worried about this depressing trend, Ethan Brown took action. In 2009, he founded Beyond Meat, Inc., a start-up aimed at reducing meat consumption and ultimately America’s carbon footprint by providing a competitive alternative to meat using 100% plant-based proteins.[6] With no artificial ingredients, Beyond Meat transforms plant protein, oils, water, and other natural flavors into ground “meat” and “chicken” through a proprietary cooking and pressurization process. The Beast Burger, released in February 2015, is the company’s most compelling product to date in terms of rivaling the coveted beef patty in both price and taste.[7]

Beyond Meat has already started to gain traction. Last month, the company closed a Series F round with General Mills and Tyson Foods investing alongside Bill Gates and other venture capital firms.[8] Their products are currently distributed in 100+ Wholefoods stores throughout the Northeast and Midwest and, most importantly, you can find their ground “beef” alongside their authentic counterparts in the Wholefoods meat aisle, which is key.[9] Beyond Meat is tactfully attempting to differentiate from the slow-growing and small-sized $394 million U.S. market for meat substitutes, which consist mainly of soy- and gluten-based alternatives that carnivores often criticized for their lackluster taste, look, and feel.[10]

By positioning itself as “meat” rather than a “meat-like,” Beyond Meat appeals to a much broader consumer base and expands their potential for environmental impact. While another direct competitor, Impossible Foods, recently entered the market, the threat is low: right now the pie is big enough for multiple entrants as more players only increase awareness of this unique product. Moreover, Beyond Meat has a first mover advantage and with it, the empirical knowledge from consumer testing that inform creative ways to increase trialability, particularly amongst staunch carnivores. [11]

Will Fake Meat Go Mainstream?

The future success of Beyond Meat hinges on its ability to appeal to meat lovers and vegetarians alike. Herein lies the challenge: meat consumption preferences and trends are the biggest underlying driver and right now the message is mixed. While domestic beef consumption is modestly slowing, global demand for beef is on the rise.[12] These mixed signals extend to consumer trends: consumers are ingredient conscious, although meat lovers have demanding standards for what alternatives should taste like. Skepticism and ingrained preferences are hard to change.

The company’s emphasis on product endorsements by athletes suggest Beyond Meat is managing these challenges by trying to appeal to the health conscious consumer. While a potentially effective, it could be even more effective to layer on a targeted youth strategy. Relative to 20-69 year-old Americans, one study found that those between 12-19 years old tended to eat less meat and one could assume them to be less sticky in their food preferences as well.[13] This would necessitate a new distribution channel – the school cafeteria – and much more competitive prices at the wholesale level, but the potential longer-term benefits every new young, customer won over could be immense.

The other route Beyond Meat could take is to target specialty burger chains that either brand themselves as environmentally conscious or messaging ingredient sourcing to their consumers. Potential partnerships could include Five Guys or Shake Shack or even Chipotle who is exploring burger concepts.[14] It matters as quick service hamburger restaurants drive 70% of ground beef sales – entering this channel would be a game changer but would take time and require massive scaling.[15]

 

[1] World Watch Institute. “Livestock and Climate Change.” November/December 2009. http://www.worldwatch.org/files/pdf/Livestock%20and%20Climate%20Change.pdf

[2] Steinfield, Henning. United Nations Report. “Livestock’s Long Shadow: Environmental Issues and Options.” November 2006. ftp://ftp.fao.org/docrep/fao/010/a0701e/a0701e03.pdf

[3] Smithsonian Magazine. “Raising Beef Uses Ten Times More Resources Than Poultry, Dairy, Eggs, or Pork.” July 2014. http://www.smithsonianmag.com/science-nature/beef-uses-ten-times-more-resources-poultry-dairy-eggs-pork-180952103/?no-ist

[4] U.S. Department of Agriculture: Economic Research Service – Statistics and Information on U.S. Beef Industry http://www.ers.usda.gov/topics/animal-products/cattle-beef/statistics-information.aspx

[5] The NPD Market Research Group. “Restaurant Burgers Had a Banner Year in 2014.” January 27, 2015. https://www.npd.com/wps/portal/npd/us/news/press-releases/2015/restaurant-burgers-had-a-banner-year-in-2014/

[6] Company website. http://beyondmeat.com/about

[7] Company website.

[8] Crunchbase. Beyond Meat, Inc. https://www.crunchbase.com/organization/beyond-meat#/entity

[9] Company website.

[10] Wall Street Journal. “Meatless Burgers Make Their MLB Pitch.” June 25, 2014. http://www.wsj.com/articles/meatless-burgers-make-their-mlb-pitch-1403736799

[11] Ibid.

[12] Steinfield, Henning. United Nations Report. “Livestock’s Long Shadow: Environmental Issues and Options.” November 2006. ftp://ftp.fao.org/docrep/fao/010/a0701e/a0701e03.pdf

[13] Daniel CR, Cross AJ, Koebnick C, Sinha R. Trends in meat consumption in the United States. Public health nutrition. 2011;14(4):575-583. Table retrieved from: https://www.ncbi.nlm.nih.gov/pmc/articles/PMC3045642/table/T1/

[14] CNN Money. “Chipotle will now make burgers.” July 28, 2016. http://money.cnn.com/2016/07/28/investing/chipotle-burger-chain-tasty-made/

[15] The NPD Market Research Group. “Restaurant Burgers Had a Banner Year in 2014.” January 27, 2015. https://www.npd.com/wps/portal/npd/us/news/press-releases/2015/restaurant-burgers-had-a-banner-year-in-2014/

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Student comments on Plant-Based Burgers – A Big Missed Steak?

  1. I agree that the company could have a larger impact if they sought developing markets in terms of meat consumption.
    Since these nations are currently at the stage of developing meat consumption behavior, it could be beneficial for Beyond Meat to be an early entrant and establish consumption behavior toward plant-based protein.

  2. Your post reminded me about another article I had read some time ago about artificially grown meat, which is supposed to be indistinguishable from the real deal in terms of taste: https://www.washingtonpost.com/national/health-science/lab-grown-meat-is-in-your-future-and-it-may-be-healthier-than-the-real-stuff/2016/05/02/aa893f34-e630-11e5-a6f3-21ccdbc5f74e_story.html. The costs of developing this at scale are still prohibitive, but it might the option that is much easier to swallow and that overcome consumers’ aversion to meat substitutes, particularly in developing markets where meat consumption is misteakenly seen as an indicator of financial success.

  3. Though livestock (and activities related to raising them) is responsible for generating 18% of greenhouse gas emissions worldwide, don’t you think that the value they add helps offset potential alternative uses for the land on which they’re raised? For instance, assume a farm decides to rid themselves of their herd of goats. Once this decision is made, goats will no longer be contributing to the ongoing maintenance of the land (eating grass, etc.), tasks that must be replaced by man and machine. As a result, emissions are still occurring, potentially at a higher magnitude than before. These animals do provide benefits, or rather the tradeoff of not having them would still cause greenhouse emissions to replace the roles they served.

  4. First of all, I loved the title of the post – I was too chicken myself to come up with a good pun in my title.

    I’d be interested to learn more about how this company is able to market itself as “meat” as opposed to “meat-like”. E.g., how did they convince Whole Foods to sell them alongside meats as opposed to veggie burgers? There must have been some economic incentive for Whole Foods to agree to vend the Beyond Meat products at the expense of other options.

    I took a look myself, and I was impressed by their packaging on their website, which depicts the products just like any other meat burger. This is in direct contrast to “veggie burgers” which I have seen at super markets, which brand themselves with green packaging, and thereby lose the masculinized images of flames and grills that I think are key to getting buy-in for people to purchase a non-meat alternative. I would be willing to try this product, and that’s a big step because I generally think veggie burgers are gross. Thanks for opening my eyes to this product.

  5. Thanks for interesting post! I love the title.
    As I was reading the post and the numbers in your intro on “Why Meatless Burgers?” I was wondering about the level of potential for burgers to be replaced by non-meat? And why Beyond Meat, Inc. has chosen this as the focus for their business plan?

    I was blown away by the fact that according to research, 75% of Americans eat a burger at least once a week! This led me to wonder- What percentage do these burgers make up of the total US beef consumption?
    I think the answer might be super interesting in order to validate the company’s business model and whether or not they are gunning for maximum impact with replacing burger with non-mean? I assume the other alternative would be that they are going for a recognizable food that will be their entry point to other products down the horizon.

  6. Thank you for the enlightening post. As a health conscious eater who is trying to reduce her meat consumption yet still craves a great burger, I appreciate that the demand for delicious, healthy non-meat based burgers exists. However, Beyond Meat must be very careful about how they market the burger and to what audience. Students in cafeterias may be a large and receptive market but selling the burgers through this channel may ultimately harm the brand and hinder long term growth. If the burger is deemed “cafeteria food”, it will likely be considered lower quality. And, if the burgers are sold through 3rd party restaurants such as Five Guys or Chipotle, consumers may not realize that they are eating Beyond Meat burgers, impacting brand awareness. I believe that Beyond Meat’s current channel of Whole Foods is a strong start as Whole Foods customers tend to be health conscious, adventurous eaters with discretionary income who likely consider themselves to be “early adopters” of food trends. Perhaps the next stage of channels could be Sprouts Farmers Market or even the local supermarkets vs. restaurants or cafeterias? Your facts that 3/4 of Americans eat a burger at least once a week and total U.S. beef consumption is >25 billion pounds illustrate how big of a market exists so effective marketing is critical here.

  7. The market for protein is clearly evolving, but my impression is that these consumer brands may actually be too far out in front of the consumer, which might lead them to burn through cash in an effort to build out a market that doesn’t exist yet. The eco-conscious food consumer is not a large enough market, not by far, for Tyson et al to get the return they are looking for. In my mind, this product value prop has to focus on the health implications of meat consumption paired with quality taste and texture, thus no habit change required. Eventually the environmental consumers may be a large enough block in food to build a great business, but in the interim focusing on buyers that care about their own health, and the transparency of the businesses that they buy from, is the best bet.

  8. I would build on this article and comment about the presence of other disruptive players in the market offering similar products. There are actually several articles written this year:
    Example on Impossible Foods
    https://digital.hbs.edu/platform-rctom/submission/impossible-foods-the-intricacies-of-farts-and-burps/

    I’m really exited about this new trend. It seems that Beyond Meat’s value proposition vs the other alternatives is in it’s distribution.
    Threat: will the rest move in the same direction?

  9. Great blog post! It is always interesting to me when we look at meat alternatives but I also struggle with the concept. Shouldn’t we instead find ways to adapt to the climate issues related to cattle instead of trying to eliminate meat consumption? I must admit however that it is a great addition (vs full alternative) that will help decrease meat consumption. Also, is this really a way to adapt to climate change or more an opportunity to make profit off a cause?

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