Hi everyone, I’ve been on a bit of a hiatus (or rather long one, last post Dec 2017!). My final posts documented the end of a previous journey and I’ve not been so inclined to blog about the current one. In hindsight I probably should have done, but I also didn’t have much urge to actually write. That is why my tech/startup musings have also been missing. Interestingly enough, the site still gets traffic, so clearly some of my ramblings are still relevant to folk out here. I hope you’ve enjoyed reading it! For those looking for a personal update, that will have to wait until another time. Suffice to say the startup journey contains many bumps than one expects; I call it character building!
I wanted to revive this blog on what is solid ground for me and looking at what is happening out there in the startup world. First on my radar, Veganism. Unconventional choice to restart this blog you might say, but I assure you, hang around for a while longer and you will see it is entirely consistent with this blog.
It’s all about the planet
From the environment to health and animal welfare, we are now more informed for the reasons to consider a vegan diet. Though I am not a vegan myself, I very much agree with our need to consume less to help save our planet. One of the big (and obvious) questions people face when thinking about taking the leap to a plant based diet is, ‘how will I replace meat?’. This question covers not only getting the required protein intake but also the textural, aromatic and visual of what meat is. Over the years substitutes like Quorn and tofu have been touted as the ‘meat substitute’, but they haven’t quite captured the imagination. This has left a clear opening for startups to disrupt.
Recreating the burger
If we made a list of top foods that a meat eater craves, burgers have to sit close to the top (a special mention goes to cheese). There is something about the beefiness of a burger that you would miss being vegan. That is also your problem statement – perfect the burger vegan style and you probably have a pretty viable business. In the words of the startup, Impossible it is ‘plants doing the impossible’.
Impossible started out in 2011 with a goal of creating a plant based meat substitute that has the smell, taste, texture of beef and they ended up showcasing this in a beef burger. Along with one of their primary competitors ‘Beyond Meat’ (founded in 2009), they’ve been soaring. Beyond Meat IPO’ed in early May 2019 with an opening share price of $25 and it sits now at over $80 >$4.5bln market cap).
Impossible are doing similarly well having just raised $300 million in fresh funds with a clamour of celebrities trying to invest.
So have they cracked it? Going by the hype you’d think so. Sadly as ever with flourishing startups there are no numbers actually available to see if people are ditching meat to buy their products. The only interesting tidbit I could find was on TechCrunch, where in the first half of 2018, Americans bought $670 million of meat replacement products, according to a Nielsen study commissioned by the Plant Based Food Association.
What seems to be a better focus is B2B – these are not cheap products, certainly more expensive than basic meat patties and selling in a restaurant or a fast food chain would make much more sense. To that end Impossible pulled off a coup with Burger King – the ‘Impossible Whooper’ is being rolled out across the States. This allows BK to provide genuine product differentiation without affecting the core business. People like having options and if you are a regular customer you now have something for that day you don’t quite fancy meat. For Impossible it is increasing their brand awareness as well as selling burgers. It will also strain their production capabilities and no doubt the fresh funding will be spent ensuring they keep up with Burger King’s demands.
Test tube cow
This is all very good, but only having burger replacements in itself cannot be the end game for protein. We need more than just mince meat substitute products. And thankfully there is a lot of creativity happening in the food-tech space.
Cheese as I noted earlier is another top consumer craving and to my surprise quite an easy one to ‘fake out’ – basically get creative with nuts.
I’d also argue that it doesn’t really count as an alternative protein source because nuts are well known source. For alternative protein we need to look to the laboratory.
Lab-grown meat has become a booming investment area because it is ‘meat’ without the ethical and environmental headaches attached. It may not be to your liking but it is definitely an alternative if it scales and meets regulatory requirements – not to mention the ethical discussion that will come out of this. The wider issue many investors will be looking at with lab meat is how it scales to satisfy Asian markets where people are consuming more meat (which is not sustainable) as well as poor quality meat (which is not healthy).
Looking even more laterally Perfect Day are a startup working on a dairy replacement using fermentation to make similar proteins. They ‘help craft animal-free dairy products that taste like the real thing’. Food tech is likely to remain a key investment area for VCs and industry.
Leaving an unsavoury taste
This is all very exciting but it also takes us slightly off topic as we look at the viability of these startups. Some cautionary notes need to be applied. Chiefly we have to question whether we are being caught up by all the marketing telling us that we need to ‘save the planet’ which in effect is creating a bubble. And if so could this bubble burst at any time?
There are a few things to consider:
- Firstly in the case of Impossible we must look at one particular ingredient, heme. This is the thing that gives their burgers the ‘meaty’ taste and ‘blood like’ ooze. It is also made through genetically modifying yeast and using fermentation to produce a heme protein naturally found in plants, called soy leghemoglobin. GM products are still a grey area top and regulators seem to agree. Pre-market approval is required going forward for using GM heme, though as this a total lab job product/startup you’d think Impossible can work through the issues.
- Secondly the EU seems rather unhappy with companies calling products with meat names despite containing no meat. This may be damaging branding wise and limit appeal. Clumsy naming ends up being a turn off to most consumers.
- Lastly and most importantly an Impossible burger is still a burger and is still fast food. A healthier alternative to a beef burger, yes, but not necessarily healthy. This is not a miracle product. In that context is a fast food company that are just making fake meat enough to justify vast valuations?
It makes me wonder whether simply recreating our favourite non vegan products (usually the unhealthy stuff) is enough for these startups to continue growing or if this all ends up in tears. I personally think we need to redesign how we look at food if we are genuine about cutting meat out of our diets (we haven’t even talked about bugs!).
Most likely these are the first steps – start with products we easily identify with to help us get over our insecurities before we begin to rebalance the global diet. The aims are lofty and noble and maybe in the future we are still able to enjoy the occasional ‘real’ burger or steak. I’d like mine rare please!