The clean meat revolution redux

When I first took over as Editor of Exponential Investor one of my first articles was about the “clean meat” revolution.

To this day, it remains one of my most popular, and had readers and co-workers alike writing in and voicing their opinions.

Now, more than a year and a half on, “the clean meat revolution” as I called it really has become, well… a revolution.

You can read the original article here.

The main thing that’s changed since then is the part I wrote about here:

Even if we put the ethical considerations of eating animals aside (personally, I eat meat and probably always will) the amount of pollution it causes, and the amount of space it takes up, is a massive problem.

And let’s not forget, this is a multi-billion, if not multi-trillion, pound industry. So the companies that solve these problems will make a lot of money in the process.

They will also change the way we think about food forever. So, how are they going about it?

By growing the meat in labs.

Lab-grown meat has come on in leaps and bounds in the last few years. It’s now at a point where it’s becoming commercially viable.

In fact, one of the leading companies in this area – Impossible Foods – is already able to produce four million lab-grown burgers a month.

At the moment these lab-grown, or “clean meats” as the makers prefer to call them, fall into three categories.

  1. “Meat” made from various vegetable products that are mixed together to taste, look, feel and cook like real meat. It even “bleeds” like real meat. For some reason the makers see this “bleeding” as a plus.

  2. Actual lab-grown meat, cultured from muscle biopsies, which don’t harm the donor animal.

  3. Actual lab-grown meat, which is created from the DNA in yeast and other microbes.

The above Impossible Foods example falls into the first category. It’s not really meat, it’s different bits of plants mushed together.

And it costs about the same as a normal burger. Impossible Burgers are widely available in the US, but harder to find over here in the UK. I’m yet to try one, but they apparently taste very real. Apparently.

Since then two of the main companies in that first category – meatless meat – have become big name brands worth billions of dollars.

Impossible foods struck a deal with Burger King to get its impossible burger in every Burger King outlet in the US. That’s around 17,796 outlets all serving impossible burgers seven days a week.

What’s more, the Burger King Impossible burger has increased demand to such an extent that Burger King will soon be bring it to its UK outlets, too.

Given its success, you can be sure the other major fast-food outlets and burger restaurants won’t be far behind with their own meatless meat burgers.

In May Impossible Foods underwent another funding round and raised $750 million, putting it at a total valuation of over $2 billion.

According to Impossible Foods’ CFO, David Lee, it is not in any hurry to IPO:

“We believe in self-reliance. Being ready to go public is a priority for the company because we need to be operating at the highest level of rigor.

“But we are not in a rush, nor are we announcing an IPO filing,” he told Reuters.

Impossible Foods’ chief rival (other than the meat lobby) is Beyond Meat.

If you keep up with investment news, you’ll probably know that Beyond Meat recently had an IPO, raising $1.5 billion.

And then something unexpected happened. Instead of dropping in price, as tends to happen with hyped up IPOs, Beyond Meat’s stock price rocketed.

Right now, less three months since the IPO, Beyond Meat is valued at a staggering $9.39 billion.

Its stock price is up 528%… in less than three months. That would be a good return for a crypto in that amount of time, let alone a normal stock.

It’s like I said, since I first wrote about it, the meatless meat revolution really has become a revolution.

From Vox:

What happened, and how did it happen so fast? Experts told me they see a virtuous cycle, where consumers — more concerned with health and sustainability than ever before — demand the products, which then feeds publicity, which then fuels more customer demand.

Ricardo San Martin, who studies meat alternatives at UC Berkeley, told me that many restaurants and food manufacturers had been waiting to see whether the popularity of plant-based meat was a fad. As consumer interest has grown, “companies have become more aware that this is here to stay” — and they’re placing their own orders. That generates more publicity, which makes more consumers interested in the products and convinces other companies that the trend is for real.

Michele Simon, the executive director of the Plant Based Foods Association, saw the same pattern — that publicity meant more consumers were aware of the products, which increased demand.

“It’s a combination of increased consumer interest in healthier eating in general, and then combined with innovation and an explosion of more great-tasting meat alternatives for consumers to choose from. With that has come the mainstreaming of these types of foods,” Simon told me.

Now the burst of publicity is “getting consumers more familiar and breaking down some of the myths around them, like that they won’t taste good, that you’re sacrificing something by giving up conventional meat.”

What happens when meatless meat can undercut “real” meat?

Last week I tried a Beyond Burger for the first time, and, to say I simply cooked it at home, it was okay.

It wasn’t as good as a gourmet burger from somewhere like Patty & Bun, but it was certainly better than a frozen burger from somewhere like Birds Eye.

The only downside is it was slightly more expensive than your average burger. Not much more, not enough to put me off. But still slightly.

Apparently Impossible Burgers are even better than Beyond Burgers, but they are really hard to get hold of in the UK. Once Burger King starts stocking them I’ll give them a try.

But back to that pricing issue.

Surely a plant-based burger should ultimately be cheaper than a beef one. If we look back at the stats I quoted in my 2018 article…

The facts Andersen dug up about the pollution meat eating causes are pretty incredible. Here are the main ones:

  • Animal agriculture is responsible for more greenhouse gas emissions than the combined exhaust from all transportation.
  • Livestock and their by-products account for at least 51% of all worldwide greenhouse gas emissions.
  • Growing feed crops for livestock consumes 56% of water in the US.
  • 2,500 gallons of water are needed to produce one pound of beef.
  • Livestock or livestock feed occupies 1/3 of the Earth’s ice-free land.
  • A farm with 2,500 dairy cows produces the same amount of waste as a city of 411,000 people.
  • Animal agriculture is responsible for up to 91% of Amazon destruction.

Those stats may seem unbelievable. But they are all well backed up. You can see how he reached these conclusions here.

How can something that takes 2,500 gallons of water to produce be cheaper than a plant-based burger? Especially given the amount of space that animal husbandry requires compared to crop farming.

Well, given what the CEO of Impossible Foods told Vox, it really shouldn’t be (emphasis mine):

A big driver of interest in meat alternatives is meat’s effect on the environment. Livestock cultivation is one of the most greenhouse gas-intensive activities out there.

This is the driving motivation of Pat Brown, the CEO of Impossible Foods. In a recent interview with Business Insider, asked why he cares so much about replacing meat, he said, “We are now in the advanced stages of the biggest environmental catastrophe that our planet has ever faced, and overwhelmingly the largest driver of that is animal-based food technology.” (In fact, about 15 percent of greenhouse gas emissions are from livestock.)

Plant-based foods have the potential to have a vastly lower carbon footprint. In general, you have to feed an animal 10 calories of plants to get one calorie of meat, so you can expect plant-based foods to have about a tenth the carbon costs of animal-based foods.

That’s an extremely rough guideline, but it’s surprisingly close to the results you get from a much more careful calculation. An analysis of the Impossible Burger 2.0 found that its carbon footprint is 89 percent smaller than a burger made from a cow. It also uses 87 percent less water and 96 percent less land. That’s an improvement from the 1.0, and Impossible Foods hopes it can slice the carbon footprint even more as it scales its operations.

It turns out the reason these meat-free burgers are more expensive than traditional meat right now is simply because the companies are new and are trying to get their production capabilities up to scratch.

From Veg News:

Vegan meat may soon become cheaper than its animal-based counterparts, According to a new report compiled by Liz Specht, PhD, senior scientist at food nonprofit Good Food Institute.

In the report, Specht outlines the obstacles that plant-based food producers face when aiming to compete with meat companies. When it comes to profit margins, companies such as Beyond Meat and Impossible Foods are currently charging as much as the market will bear in order to funnel profits into expanding production capacity to meet surging demand.

“Lowering prices would just lower their revenue, which would, in turn, hurt their ability to scale and meet demand,” Specht said. These companies are also at the mercy of using ingredients derived from a bigger supply chain such as soy and pea proteins which are primarily grown for other uses, including animal feed and oil.

Specht believes that once plant-based companies are big enough, they will flip this factor and drive the optimization of raw ingredients, creating side streams for other companies.

Additionally, these companies’ current manufacturing facilities are built to handle smaller scale production but Specht anticipates an exponential development in this area, as well.

“There are major and minor elements of the manufacturing facility and production process design that make sense only for production volumes 10-fold or 100-fold larger than the capacity of the existing plant-based meat facilities, and these changes can facilitate radical increases in efficiency and thus decreases in cost,”

That all makes perfect sense. The bigger question is, should we believe the hype?

Is this meatless meat revolution here to stay, or is it just the latest food fad?

The meatless meat revolution has a lot going for it and really ties into the current cultural zeitgeist.

One of the biggest topics out there right now is pollution and climate change, and as many people now know, animal agriculture contributes a significant share of that pollution.

Adding to this is the movement towards “health” over the last few years. Drinking and doing drugs isn’t as cool as it once was. Being fit and healthy is the new cool.

And there is no denying that a plant-based burger can be much better for you than a meat one (although they do tend to have more sodium).

And that’s before you even get into any moral argument against eating meat. (As I said, I am not a vegetarian, but I can appreciate why people are).

Investors certainly seem to think plant-based meat is here to stay, as we can see from Beyond Meat’s stellar stockmarket performance.

But some big names are still holding back.

McDonalds – the world’s best known food brand – has been keeping very quiet about its thoughts on plant-based meat. At least it has in the US. But not in Germany.

It turns out McDonalds has been making a “Big Vegan” burger for its German market since April.

From Forbes:

McDonald’s introduced the Big Vegan to Germany on April 29. An ad for the Big Vegan plays up the burger’s ethical and environmental appeal, showing a tree-occupying protester facing off against a man with a chainsaw, which references the recent occupation of the Hambach Forest in western Germany by activists.

At €3.69 ($4.15), the Big Vegan is not as big as a Big Mac; it’s on par with a Quarter Pounder—without cheese. The soy and wheat patty, colored with beet juice to make it look juicy, is topped with coral leaf lettuce, tomato, red onion and pickles, plus the classic ketchup and mustard. It is a permanent addition to the menus of 1,500 restaurants across Germany, one of McDonald’s biggest international markets.

So what’s next for the meatless meat revolution?


More on that tomorrow.

Now, as I said, Beyond Meat’s share price performance so far has been crypto-like.

528% in less than three months is astounding. Or at least it is to most people. However, for Sam Volkering, that’s just par for the course.

In fact, he has tracked down two crypto plays that could make land significantly more than that.

We’re talking about the kind of return that could turn £50 into as much as £10,000.

To find out what they are, and why Sam believes in them so strongly, you need to get your name down for his special presentation on 16 July.

It’s free to watch, so long as you get your name down here in time.
Until then,

Harry Hamburg,
Editor, Exponential Investor

Category: Genetics and Biotechnology

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