What’s the story?
Last week, Beyond Meat, a company producing plant-based meat alternatives, had the most successful US IPO since before the financial crisis. Its share price closed up 163% on the first day of trading, valuing the company at $3.8bn. A few days later it’s already at $4.8bn as investors clamor to get a bite of the action.
Can meat alternatives replace meat altogether? Can they solve the challenge of the increasing food demands of a growing global population? Will they live up to the hype? Or is this another fad and will the world continue to feast on animals?
Meat alternatives might just become the prime example of Amara’s Law:
“We tend to overestimate the effect of a technology in the short run and underestimate the effect in the long run.”
Roy Amara (1925 – 2007)
A wave of IPOs
The news comes in the midst of a tech IPO tidal wave. Lyft, Zoom and Pinterest have all gone public -with mixed fortunes- in the last month. Several others, including Uber, AirBnB, WeWork, Slack, Asana and others will follow soon.
These others companies form a relatively homogenous couple of groups. Lyft, Uber, AirBnB and Postmates all operate in the sharing economy space. WeWork, Slack, Zoom and Asana sit in the work productivity and gig economy space.
Beyond Meat
Beyond Meat on the other hand is part of a completely different area that’s grabbing a lot of attention. Namely that of meat substitutes. CBInsights have put together a great overview of this growing market.
The hype behind it can be readily observed from the list of people and firms getting involved. Leading venture capital firms such as Khosla Ventures and Kleiner Perkins have backed start-ups in the space, as have Google Ventures and Temasek. Bill Gates has investments in three of the main meat substitutes firms, investing in Memphis Meats, Impossible as well as Beyond Meat. Richard Branson is in. As is Leonardo diCaprio. And of course a number of specialized venture capital firms.
Most notably perhaps, Big Food companies, like Cargill and Tyson have invested in meat alternatives start-ups. When major VCs, corporate ventures, some of the most successful entrepreneurs, Hollywood royalty AND incumbents are all taking notice, you know something’s cooking.
Why?
It’s not hard to understand the appeal of the space. Start with a growing global population and ever increasing demand for food and protein.
Add the fact that people are becoming increasingly conscious of the environmental footprint of the meat producing industry.
Sprinkle on a younger generations with a strong moral sense, questioning the ethic behind killing animals for human consumption. As well as a keen interest in healthy food.
Mix together with the fact that technological advances have started to make alternatives feasible and it makes perfect sense that investors are showing interest.
Alternative sources of protein
There are numerous different approaches being investigated to produce animal independent sources of protein. Beyond Meat and Impossible are creating meat from plant protein, whereas the aforementioned Memphis Meat produces lab grown meat alternatives from stem cells.
Others are producing fake chicken, fish and shrimp. These sit alongside existing protein alternatives, such as soy and plant protein based products, and other potential sources of protein such as insects.
The different approaches are in various stages of their development. The first lab grown hamburger was launched only 6 years ago by Mark Post from Maastricht University in the Netherlands, developed with backing from Google.
Plant protein based approaches like those of Beyond Meat and Impossible a few years back were still producing rather questionable products. In recent years however they have come a long way. To the point that they have come remarkably similar to the real thing.
Challenges
There are however still significant challenges facing the short to midterm success of meat alternatives, as highlighted in the CBInsights article.
Cost is still a major factor. Unsurprisingly, lab grown or plant protein produced meat is still more expensive than animal derived meat. Scalability is another factor.
As are questions about the actual environmental benefits. Water and land use, as well as greenhouse gas emissions might be down. However, these positive impacts might be offset by negative environmental costs of lab produced meat alternatives, such as increased electricity use. Questions are being raised in the same way as they are about the actual net benefits of electric vehicles.
Overcoming the perception challenge
The main challenge however might be one of perception and societal willingness to make a radical shift. People like meat. Alternatives have been available for a long time, but people still go for meat. Countless documentaries have shown us the atrocities happening behind the doors of meat producing companies. People still eat meat. We like meat too much. Simple.
Meat alternatives need to overcome a significant perceptual hurdle to fully displace meat products. To convince meat eaters to switch once and for all.
The concept of something being a fake version of something also goes against the current societal desire for real, genuine things. The increasingly health conscious population is looking for whole foods. They are moving away from processed options. A lab grown burger or piece of chicken artificially manufactured in a factory from plant protein feels about as far away from that as can be.
In order to overcome this, meat alternatives need to be either sufficiently alternative, or sufficiently similar. They either need to be something that people don’t compare, or something which is completely comparable. Distinguished, or indistinguishable.
Once that is the case though, there is no reason why it wouldn’t be possible to switch to a virtually meat free society. And this is coming from someone who rarely goes a day without eating meat.
Amara’s Law – Overestimating the short term & Underestimating the long term
I believe meat alternatives could become one of the prime examples of Amara’s Law. This states that in the short term we tend to overestimate the effect of a technology and in the long run underestimate it. It’s also what underlies the shape of the hype cycle.
The current buzz around lab grown and plant derived meat alternatives is clear. People however won’t just suddenly stop eating meat from one day to the next. These things take time. This is due in part to us being creatures of habit. To mix some animal metaphors, it’s hard to teach an old dog new tricks and a tiger doesn’t change its stripes.
Older generations who have grown up their whole lives eating meat are unlikely to feel incentivized to change now. Even if a suitable alternative comes along.
However, when a younger generation grows up in a world where there is a choice between an animal sourced meat option and a very comparable non-animal sourced meat alternative this could all change.
Technological advances will continue to drive the cost down. They will overcome concerns about the environmental impact. Over time, solutions to scalability challenges will be found. Efficiencies in production will reduce the environmental impact.
And If society want the bloody texture of meat to be replicated, biomaterial scientists will create this. Or if society wants the taste and smell but not the textural reminder of its animal origins, they will create that instead.
And as they do, it’s hard not to imagine us -in a few decades from now- looking back somewhat perplexed at the time that we still used animals to produce our meat.