I’ve been a “vegetarian” for just over two years now. I put the word in quotes it because I don’t consider it party of my identity. I cheat a lot. My girlfriend and I still go out for steak, now and then. Our morals made us cut meat out of our diet. But sometimes our cravings get the best of us, or our options are too limited. We’re somewhere on the spectrum of a new category of eaters—convenientarians. Vegetarian, but only when it’s convenient.
The good news is that it’s easy to be vegetarian these days. When people ask me what it was like to stop eating meat, I can honestly reply that my diet hasn’t changed very much. I still enjoy burgers, bolognese sauce, chicken wraps, and many of my favourite meat dishes thanks to a growing selection of imitation meat.
It wasn’t always this easy. Sure, veggie burgers have been around for while. But they were a more of a safety valve than an honest substitute. A box to keep in the freezer just in case someone brought their vegetarian friend to dinner. I worked at a popular restaurant in high school and there was such a box—buried in the back of the walk-in freezer. Once or twice a year, I had to dig it out and grill one of its freezer burnt blocks of soy for some poor vegetarian that got dragged to Applebees.
Things are different now. Environmental and animal welfare are increasingly driving product choices—leading to a growing market of convenientarians. We want to make more ethical decisions, but we’re creatures of habit. It’s hard to change. If we can substitute real meat with an ethical replacement—with no discernible difference—our habits can stay the same.
Beyond Meat, a growing plant-based food company, is capitalizing on the growing dissonance between our habits and our morals. Their flagship products—plant-based burgers and sausages—are perfect for the convenientarian crowd. They look like meat, taste like meat, and you can bring them to a BBQ without raising an eyebrow.
Beyond Meat went public in 2019 and has been doing quite well—with revenue rising 250% year-over-year. The pandemic has inevitably slowed that growth. Close to half of their revenue was coming from restaurant sales. But they’ve kept their momentum by leaning into retail—increasing their product offerings (Ground beef! Meatballs! Breakfast sausages!) and even launching their own online store.
Beyond Meat is not the only company trying to profit from the paradigm shift to ethical protein. There is healthy competition. Impossible Foods, a privately owned plant-based food company, has raised almost $1.5 billion in venture capital. Investors are betting that the rapid growth these companies are seeing will continue. It’s a good bet—there is a lot of room for growth. They are not just trying to win over vegetarians and the veggie-curious, they are trying to disrupt the entire meat industry.
We should be rooting them on. Not only is factory-farming an affront to animal welfare, the meat industry is also a major source of greenhouse gases. Despite an increasing abundance of vegetarian offerings, meat production world-wide is on the rise. On their website, Beyond Meat claims that their plant-based burger uses 99% less water, 93% less land, and 90% fewer greenhouse gases than a beef burger. If we want to seriously combat climate change, then we need to shift the average diet away from meat and towards more sustainable foods like plant-based protein.
Winning over the world’s meat-eaters is a daunting task. I think it’s possible, but it rests on a couple of assumptions: (1) Artificial meat can be engineered to be indistinguishable from real meat, and (2) the cost of producing it can be dramatically reduced. If the only difference for consumers is price, then the cheaper product will win. Once you throw in healthier, more ethical, and better for the environment, ditching real meat sounds like a no-brainier.
But we’re not there yet. Beyond Meat’s burgers and ground beef have been satisfying my carnivore cravings ever since I tried their burger at A&W. But their products are still more expensive than the real thing. And I’ve yet to encounter a convincing plant-based steak or chicken wing. However, Beyond Meat, Impossible foods and the investors funding them are hoping that with enough growth, these problems can be solved.
As these companies scale, manufacturing efficiencies will lower the per-unit cost of production. Plus, conventional meat has unavoidable inefficiencies from the need to feed and raise animals. Plant-based meat can skip the animal entirely. This suggests that the production of plant-based meat will eventually be cheaper than that of real meat.
Growth in revenue also means more money to spend on research and development. Beyond Meat has been funneling more capital into research every year. CEO Ethan Brown, talking about their R&D lab, has said, “Everything here is an investment toward that goal of making it indistinguishable [from real meat].”
Research has compounding returns. Innovation in food engineering will lead to more convincing plant-based food products. More products will lead to more growth, and more growth will generate more money to fund research.
But can Beyond Meat continue their current growth? Crossing the Chasm, a popular book about marketing tech products, provides a useful framework for the challenge ahead. The market for a new, disruptive technology can be divided into two segments: the early market and the mainstream market. The technology adoption life cycle, shown below, essentially tracks people’s willingness to try new things.
The early adopters are the most passionate—the folks willing to accept higher prices and lower quality because they believe in the mission. For Beyond Meat and other plant-based food companies, the early market consists of vegetarians and convenientarians—the people who were already looking for vegetarian options. The challenge now is in “crossing the chasm” to the mainstream market. The carnivores.
Beyond Meat is doing a good job so far. They’re putting a lot of resources towards making their food indistinguishable from real meat. Their products can be found in the meat section of the grocery store, not the health-food and organic sections. They are partnering with fast food chains, not just the hippie restaurants in vegandale. These are not the moves of a company marketing to vegetarians.
I watched an episode of South Park recently that poked fun at the plant-based food industry. In it, Cartman resists his school’s push to ditch red meat and serve more sustainable foods. The school tries to fool him by sourcing their food from a plant-based meat company. Cartman eventually finds out, but he’s not bothered. He has learned that the plant-based meat was made in a factory, just like all the other “processed crap that comes in a box” that he usually eats. Cartman—a satirical representation of the late majority market segment—just wants to “eat the same garbage” he always has. He does not care that it is more sustainable or ethical.
If we want the world’s food to be more ethical and sustainable, then we need to win over the Cartmans of the world. Beyond Meat and Impossible Foods are leading the way, showing that there is money to be made with plant-based meat. As incumbent food companies recognize the upside of meat without the animal, more of them will enter the plant-based space—many already are. Further competition will come as lab-grown meat becomes a viable alternative.
More competition will make it harder for Beyond Meat to maintain their market lead. But it’s great for the rest of us. Competition will drive down prices and encourage more innovation. Plus, because of shifting habits, winning over consumers won’t just be about price and taste, but about health and environmental impact as well.
Capitalism and market forces may have given us factory farming, but now the same market forces are working to undo it.
Full disclosure: I am a Beyond Meat shareholder.
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