Where's The Beef? Beyond Meat, Impossible Foods, and The Alternative Meat Industry
Where's The Beef? Beyond Meat, Impossible Foods, and The Alternative Meat Industry
Kannan Ramaswamy
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The true north is a global protein company. Some of the larger protein companies are $40 billion-
plus in revenues. As a goal, I always have that in my mind. It’s a ubiquitous presence we’re most
after—that you can go into a McDonald’s and get a Beyond product, or KFC, Taco Bell, Pizza Hut,
and it is seamless for people who want to transition toward a plant-based meat. We have to make
the product indistinguishable from animal protein. We have a lot of miles left before we get there.
Ethan Brown, CEO of Beyond Meat,
Wall Street Journal, July 7, 2021.
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As the world was still in the throes of COVID-19, it was abundantly clear that there would be no going back
University of Oxford and Global Change Data Lab, reported that roughly 71% of the world’s agricultural land
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(approx. 140 million km2) was used to support livestock accounting for 18% of global calorie supply (see Exhibit
1).1 Consumers, primarily driven by health concerns, were also searching for meat alternatives. A McKinsey
survey reported that 95% of people surveyed said that health was one of the primary reasons driving them to
seek alternative protein sources.2 This confluence of shaping forces had attracted over 800 companies or divisions
of companies to the plant-based food business globally.3 The global meat business was estimated to generate
roughly $1.4 trillion in revenues of which the U.S. accounted for $270 billion.4 U.S. per capita consumption of
meat was 214 pounds (see Exhibit 2).5 The market for alternative meats had been steadily rising (see Exhibit 3)
and accounted for roughly $6.6 billion in the U.S. with an annualized growth rate of 15.8%.6 According to the
Global Food Institute, the plant-based foods market grew by 27% between 2019 and 2020 and was estimated at
roughly $7 billion with plant-based meat reaching a 39% penetration rate among U.S. households (see Exhibit
4), reflecting an increase in penetration of 24%.
In the United States, the battle for market share in the alternative protein industry was exemplified by two
new rivals that had emerged with the sole intent of disrupting the meat industry with plant-based alternatives.
Beyond Meat (BYND), a U.S. domiciled alternative meat company that went public in 2019, was working on a
meat substitute derived from mung bean, pea, and brown rice proteins. Its product suite spanned a wide range
from hamburgers to sausages, and meatballs to beef crumbles. Its products were distributed through 112,000
outlets ranging from grocery chains, fast food chains, and fine dining restaurants across the U.S. Impossible
Foods, an alternative meat startup, had also rocketed to prominence among meat enthusiasts. Founded in 2011
by Patrick Brown, a Stanford University professor, the company focused on the heme molecule found in soy
as the foundation for its line of burgers, sausages, and related products. Its distribution footprint had grown
exponentially, increasing by 100X in 2020 alone and covering over 33,000 locations by 2021. Patrick Brown
recounted how he was able to convince Michelin-starred chef David Chang, the founder of the famous Momofuku
chain of restaurants, to serve veggie burgers made by Impossible Foods. Chang remarked, “I was genuinely
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was written by Professor Kannan Ramaswamy for the sole purpose of providing material for class discussion. It is not intended to
illustrate either effective or ineffective handling of a managerial situation. Any reproduction, in any form, of the material in this
case is prohibited unless permission is obtained from the copyright holder.
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Exhibit 1. Global Land Use for Food Production
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Purchased for use on the Strategic Management, at IES Abroad Barcelona.
Source: Ritchie, H. 2019. Half of the world’s habitable land is used for agriculture. https://ourworldindata.org/global-land-for-
agriculture. Data source: UN Food and Agriculture Organization.
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Source: Schulman, G. 2021. Meat, Beef & Poultry Processing in the US. Industry Report 31161. IBISWorld.
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Exhibit 3. The U.S. Plant-Based Food Market at the Retail Level
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Source: Good Food Institute (GFI) 2020 Plant-Based State of the Industry Report.
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Exhibit 4. Household Penetration of Plant-Based Foods in the U.S.
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Source: Good Food Institute (GFI) 2020 Plant-Based State of the Industry Report.
blown away when I tasted the burger.... The Impossible Foods team has discovered how to re-engineer what
makes beef taste like beef. We’re always looking to support people who are making the best products in the best
ways possible and, to me, the Impossible burger is one more example. First and foremost, we think this makes a
delicious burger.”7 Although these two firms were among the most widely known plant-based meat alternatives
companies, traditional meat suppliers such as Tyson Foods and Smithfield had also entered the business. These
large giants had set up separate units to explore the plant-based meats market and had reported steady progress.
Would these players and their products accelerate the trend away from meat? Given the economics of protein,
would the cheaper soy protein win out against the more versatile pea protein? Would the COVID-19 pandemic
catalyze demand for plant-based products? These were a few questions on the minds of investors as 2022 dawned.
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By 2020, there were only half as many dairy farms in the U.S. as there were in 2003.9 Although some of the more
recent declines could be attributable to the rise of plant-based alternatives, a 2017 study by the USDA showed
that only 20% of the decline in dairy milk could be traced to replacement by non-dairy products, underscoring
that the decline in milk consumption was partly a secular trend.10
The second major protein stream, meat-based protein, encompassed a fairly wide range of meats and related
products, although it skewed towards beef, especially in the United States, a country that consumed twice the
global average.11 The FAO (Food and Agriculture Organization) reported that meat production had grown by 44%
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between 2000 and 2019.12 Although COVID-19 had slowed production growth, it was expected to have minimal
impact on the upward trajectory of global meat production. Despite the increasing trend in meat consumption
worldwide, consumer sentiment appeared to be reversing, especially in the economically wealthier countries.
Environmentalists had long viewed the meat industry as a major contributor to climate change, given its
large land-use footprint, outsized demand for water, and release of methane, a greenhouse gas linked to global
warming and climate change. Scientists believed that beef and dairy cows together were responsible for two-thirds
of all greenhouse gas (GHG) emissions in the world, and if cows were classified as a separate country, they would
rank above the entire EU in GHG emissions and just below the U.S. and China. The consumption of meat
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was also seen as having a very negative effect on global warming. It was estimated that consuming four pounds
meat consumption.14 Consulting powerhouses such as McKinsey and Boston Consulting Group opined that
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consumers were becoming more acutely aware of climate change issues and were therefore willing to eschew
meat products in favor of plant-based alternatives.15,16 These concerns were especially pronounced among the
younger generations, and accentuated by environmental concerns and animal welfare practices such as the stigma
associated with factory farming.17
In parallel, health advocates were raising concerns about the health consequences of eating meat, especially
beef. The medical community had raised successive alarms regarding the consumption of meat through a wide
range of studies that had traced the health consequences of such consumption. There was mounting evidence
that a diet rich in meat increased the probability of type 2 diabetes, cardiovascular disease, colorectal cancer,
and a general increase in human mortality.18 Since cattle feed typically included antibiotics, the consumption
of meat products increased antibiotic resistance in humans and was thought to be on track to contribute to ten
million deaths by 2050. Further, research had shown that fecal matter was present in 69% of pork and 92% of
poultry, and Consumer Reports magazine found that 100% of ground beef contained fecal matter.19 Collectively,
these concerns, combined with societal changes, began to move consumers, especially the younger generations,
away from meat towards healthier plant-based protein alternatives.
Plant-based food production was a technology-intensive business and required significant spending, both in
terms of R&D as well as plant-based inputs that were mostly commodities procured at scale. Exhibit 5 provides
data on the average cost structure of firms in the industry. Plant-based protein alternatives that formed the
base product for alternative meats were typically traced to two sources: soybeans and yellow peas. In addition
to these two plant-based protein sources, there were other newcomers to the mix, such as mungbean protein
and mycoprotein (a fungus extract), but pea protein seemed to be ascendant with an increasing surge of patent
filings (15% compound annual growth rate starting in 2009) compared to soy (decline of 2% in patent filings).20
Soybean protein contained all nine of the essential amino acids that are considered essential for healthy human
life. It also had the benefit of a fairly long history as a food source and therefore had a well-established farm-to-
market supply chain. It had a very favorable environmental footprint aided in large part by its nitrogen-fixing
ability. It was quite attractive in terms of costs as well, averaging $2 per kilogram in its purest form. However,
it had been losing some of its luster to other alternatives such as pea proteins that did not share some of the
allergenic and estrogenic baggage that soy protein carried.21 Like soybeans, split yellow peas produced a protein
that was considered complete because it contained the same nine essential amino acids. While it did not have
quite the same level of digestibility as soy protein, it had all the benefits of minimal environmental impact, along
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with the added advantage of its non-GMO origins. Yellow peas contained roughly 16-18% protein with the rest
composed of starch. Pea protein was more than twice as expensive as soy protein ($5 per kilogram in its purest
form), given the technical challenges involved in manufacturing protein isolate (>80% purity). China was the
world’s largest producer of pea protein, although much of its production was commercial grade (<80% purity).
Chinese manufacturers typically processed yellow peas to derive starch that was in great demand for making
noodles and other edibles. In contrast, manufacturers in North America and Europe produced purer forms
of the protein but faced significant challenges in getting rid of the starch byproduct in the local markets. For
example, starch produced by North American manufacturers was primarily used in cardboard production as a
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gluing agent and therefore attracted very low prices. Many of the plant-based food companies tended to blend
commercial grade protein with purer forms in proportions established by their own proprietary process, before the
texturization process. Texturization processes added functionality to proteins that in the raw forms were devoid
of attributes such as mouth feel and bite. This was largely performed in-house by the food manufacturers who
invested significant sums in R&D efforts to produce patentable approaches to texturization. However, some of
the protein suppliers were experimenting with their own texturization processes, and generically textured proteins
were sold to intermediaries who prepared a range of products that could be labeled as needed by buyers. This
route was favored by some of the large grocery retail chains for the production of store-labeled alternative meats.
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Exhibit 5. Cost Structure of Plant-Based Meat Producers
Rental 1 0.3
While plant-based proteins were seen as a potential substitute for meat and related products, there were
several companies that were engaged in developing cultured meat using animal cells. These companies were betting
that consumers who were considering switching to meat alternatives for environmental reasons would switch
to cultured meats instead. The cow was considered to be one of the most inefficient converters of calorific value
consumed. Specifically, the meat that a cow produced was only 1% of the calorific value of all the input feeds
that it ingested before being slaughtered. By optimizing the calorie conversion process using animal cells grown in
labs and then scaled for commercial production, these firms had chosen a different path to addressing the climate
change concerns associated with meat production. The process starts with choosing cells from a live animal or egg
(e.g., cow or chicken), and the most promising cells in terms of meat quality and nutritional content are isolated
in a bioreactor. The cells are grown in a growth medium containing the very same nutrients that characterize
the typical diet of the source animal. In about four to six weeks, the cells divide and subdivide to produce meat
ready for harvesting. The resulting meat product is then pressed into molds providing the requisite shapes that
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match the natural version. The process had the advantage of being completely GMO-free and also free from fecal
contamination.22 Given its neutral environmental footprint, cultured meat was being promoted as a means of
addressing the role of meat production in climate change. However, while some of the health-related concerns
such as infections resulting from ingesting fecal matter would be eliminated by this process, longer-term health
concerns relating to meat consumption would ostensibly stay the same since the cultured products would carry
the same health risks as their natural analogs.
A California company, Eat Just, had gone the farthest with this approach and had received approval from
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the government of Singapore to sell its chicken meat in the island nation in 2020. The company had already
established a foothold in the egg substitutes segment in the U.S. with its mungbean-based product that was
available on grocery shelves under the brand name Just Egg, which was the top liquid egg product in the market,
beating even its real egg rivals.23 Although cultured meat was much more expensive than the natural product,
scaling and technology improvements were expected to bring down the costs significantly. There were over forty
known startups that were in various stages of development and commercialization of cultured meat products.
The race to create viable plant-based foods had attracted increasingly significant amounts of capital investment
into the industry with an estimated $2.1 billion pouring into the sector in 2020 alone with 93 deals. Exhibit 6
provides a snapshot on investments and deals in the plant-based food sector.
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Exhibit 6. Annual Global Investment in Plant-Based Foods Between 2010 and 2020
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Source: Good Food Institute (GFI) 2020 Plant-Based State of the Industry Report.
The alternative meats business had grown steadily over the years, reflecting a cumulative growth of over
30% from 2010 to 375 firms in 2022. Exhibit 7 provides a chart showing trends in the number of firms in the
industry over time. By early 2022, there were some clear leaders in the business and a pecking order of firms
seemed to be evolving. Morningstar Farms, a Kellogg subsidiary, had garnered a significant share of the market.
Analysts believed that its long experience with grocery retailing gave it a leg up against all others. Its familiarity
with commodity markets agricultural products also helped it gain a good foothold in the business with a massive
33% share of the segment, $407.3 million in 2021according to Mintel, a market research and data consultancy.24
Conagra and Heinz were two other established players that had managed to make substantive forays into the
emerging plant-based food business, with Conagra brand Gardein commanding a 12% share that contributed
$147.8 million to the company. Exhibit 8 provides a snapshot of key competitors and their retail level market
shares.25 All the leading competitors were locked in intense branding battles to establish the superiority of their
own product brands. Store brands had also quickly emerged as generic versions that were trying to get a slice of
a rapidly growing market, an exercise in which they were aided by commodity companies such as Cargill that
marketed white-label burgers (i.e., a generic form of burger that was usually sold as a store brand) and related
products to their grocery-chain buyers. The key competitors in the “born plant-based meat” world included
Beyond Meat, Impossible Foods, both of which were domiciled in the U.S., and Maple Leaf Foods, a company
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headquartered in Canada. These companies were locked in a battle for market share and industry dominance
and hoped to trade their lack of a food heritage for better science-based insights into food formulations that
would appeal even to ardent meat eaters.
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Source: IBIS World.
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Source: Mintel.
Plant-based meat alternatives had started to spread across a rather wide range of consumers with over 80%
of adults having been exposed to one or more of the industry’s products, according to Mintel.26 Burgers were the
preferred format for most users trying meat alternatives for the first time, and their initial experience with the
format opened the door for further experimentation with a wider range of products such as hot dogs, meatballs,
and sausages. Adults between the ages of 25-44 appeared to be the key demographic with a slight bias towards
male consumers. Parental influence was remarkably evident with respect to consumption of meat alternatives
in households with children. They tended to be persuaded mostly by availability, product variety, as well as the
ability to access ready-to-prepare options. A considerable majority of self-classified “omnivore” consumers were
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significant users of alternative meat products. Interestingly, many consumers tended to add meat alternatives to
real meat products as a means of diversifying their overall protein intake, and also to adopt healthier lifestyles.
The same pattern was seen in the consumption of plant-based milks as well, with many households tending
to use a variety of plant-based milks in addition to dairy milk. A third of current consumers increased their
overall consumption of meat alternatives year over year despite the price premiums commanded by the products
compared to natural meat. The increase was seen as a trend driven by wider availability of the products, especially
in the refrigerated shelves of grocery stores, often adjacent to natural meat products, as well as the wider range of
product formats. Since grocery retailers were fairly new to this product category, there was intense competition
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to secure shelf space ,especially in the refrigerated sections of the stores. As had happened in the proliferation
of plant-based dairy milk alternatives, stores began allocating scarce shelf space to a variety of plant-based meat
alternatives as well.
Despite the rosy picture typically used to portray the future for plant-based meat alternatives, there was
clear evidence that U.S. consumers still loved natural meat and weren’t about to change track towards alternatives
easily. See Exhibit 9 for a comparison of demand for meat products versus plant-based substitutes. After all, meat
contained greater levels of protein on a cost/unit basis and had been a well-entrenched source of food in the
country for a very long time. The major producers—namely, JBS, Tyson Foods, Smithfield, and Cargill—had
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mastered the industry supply chains and had the large-scale production facilities to keep costs low. See Exhibit
Exhibit 9. Comparing Demand for Meat and Plant-Based Meat Alternatives 2005-2021
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Stanford professor Pat Brown was indeed a rara avis with a valuable combination of deep scientific insight,
business savvy, and a passion to save the world from the climate change abyss. Having won a lot of laurels for his
pioneering work in genetic structures and gene expression, Brown turned his attention to a challenge where he
believed he could make a meaningful impact that would help humanity address climate change. It was 2009 and
Pat Brown was on sabbatical from Stanford looking for the next big challenge when alternative meat caught his
attention. The pivotal moment came when he was attending a climate change conference in Paris and realized
that education and regulation were insufficient to address climate change and something more fundamental had
to change. It was obvious that humans would be loath to give up meat entirely; after all, even the conference
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scientists themselves enjoyed their steak dinners in the evenings. His best analysis indicated that finding a meat
substitute that meat eaters would prefer was the way forward, and he set about disintermediating the cow from
the meat business. His objective was to replace meat from the world’s food systems with plant-based alternatives
by 2035, an audacious goal indeed.
The idea was nothing new. Back in 1943, John Harvey Kellogg, brother of W. K. Kellogg of cereal fame,
launched a product called Protose developed at the Battle Creek Sanitarium in Michigan, an institution that
was run by Kellogg. Being a Seventh-Day Adventist, Kellogg believed in vegetarianism and set about creating a
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neutral food that was morally and ethically consistent with the principles of the Seventh-Day Adventist Church,
which believed that eating meat caused the degeneration of the human race. The product Protose was created in
1899, an amalgam of soy, peanuts, and wheat gluten, and subsequently marketed in 1921 by the Battle Creek
Food Company under the leadership of J. H. Kellogg.28 Several variations on the meatless theme had hit the
market since with limited appeal. Morningstar Farms was one of the more profitable ventures that launched a
burger targeted at vegetarians. The company, originally a part of Worthington Foods, introduced a line of soy-
based burgers in 1975. It was acquired by Kellogg in 1999. Its burgers were made of a combination of beans,
water chestnuts, mushrooms, onions, carrots, and other ingredients, and its veggie burger had grown to become
standard fare in vegetarian households. It had since grown its product portfolio to encompass seven different
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taste and texture profiles that catered to a broad audience. However, it was not a product engineered for meat
Pat Brown was clearly ready for the challenge. He brought his disciplined scientific thinking to the task at
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hand, assembling a group of fellow scientists to address a seemingly innocuous question: what made meat taste
like meat? After a period of intense research, the group concluded that the heme was responsible. Heme, a naturally
occurring molecule in most life forms, was responsible for transporting oxygen in the blood. It gave meat its
flavor and also its pinkish hue when cooked. The challenge was then to synthesize heme at a cost-effective scale.
Brown set about testing over 30 different sources of heme with mixed results. Soy leghemoglobin extracted from
the root nodules of soy plants performed the best, and Brown set about trying to scale the production. Despite
his best efforts, the process was not cost efficient and had to be abandoned. Instead, heme was synthesized by
genetically altering yeast with a fragment of soy DNA. Within six months, Brown and his team had created the first
viable version of a meatless burger that came quite close to mimicking the real thing. From then on, the arduous
journey entailed fine-tuning the ingredients and recipes such that consumers would never be able to easily tell
the difference. The evolved recipe contained soy protein concentrate, coconut oil, sunflower oil, natural flavors,
potato protein, methylcellulose, yeast extract, cultured dextrose, food starch-modified, soy leghemoglobin, salt,
soy protein isolate, mixed tocopherols (vitamin E), zinc gluconate, thiamine hydrochloride (vitamin B1), sodium
ascorbate (vitamin C), niacin, pyridoxine hydrochloride (vitamin B6), riboflavin (vitamin B2), and vitamin B12.29
Impossible Foods was born in 2011 and won a first round of funding led by the well-known venture capital
firm Khosla Ventures for $6.42 million in exchange for roughly 7% of the company. It was this funding that
allowed Brown to explore ways to scale the production of heme from the roots of soybean plants and assemble
the team of scientists who helped identify the centrality of heme in the production of the meat alternative. The
climb towards product equivalence with beef was just getting started. The next couple of years were marked by
more intensive efforts to hone the product, ultimately leading to a commercial launch in 2016, five years since the
company was founded. Impossible Foods subsequently attracted several rounds of funding from a veritable who’s
who of the venture capital world, including companies such as UBS, Temasek, and Horizon, and a whole host of
celebrities such as Bill Gates, Common, Peter Jackson, Jay-Z, Mindy Kaling, Trevor Noah, Alexis Ohanian, Kal
Penn, Katy Perry, Jaden Smith, Serena Williams, will.i.am, and Zedd.30 In preserving the mission of Impossible
Foods, Brown ensured that his original contract with Khosla Partners included a clause that precluded the sale
of the company to 100 firms that he identified without his express consent. Thus, when Google approached
with an offer to buy the company, he was able to refuse the offer without any further serious discussions with his
investors. The professor was no novice to business, having co-founded yet another successful company, Laurel
Foods, in 2010, a rising star in plant-based foods that was selling a range of products under the Kite Hill brand.
Exhibit 10 compares major brands of alternative meats.
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Exhibit 10. Comparing Different Brands of Alternative Meats
Manufacturer Ingredients Calorific value Price
Impossible Foods Water, soy protein concentrate, coconut oil, sunflower oil, natural flavors, 2 percent or 240 calories $8.99/12 Oz.
less of: potato protein, methylcellulose, yeast extract, cultured dextrose, food starch- 14 g fat (8 g saturated fat)
modified, soy leghemoglobin, salt, soy protein isolate, mixed tocopherols (vitamin E), 370 mg sodium
zinc gluconate, thiamine hydrochloride (vitamin B1), sodium ascorbate (vitamin C), 9 g carbs (3 g fiber, <1 g added sugar)
niacin, pyridoxine hydrochloride (vitamin B6), riboflavin (vitamin B2), vitamin B12 19 g protein
Beyond Meat Water, pea protein isolate, expeller-pressed canola oil, refined coconut oil, rice 250 calories $5.99/8 Oz.
protein, natural flavors, cocoa butter, mung bean protein, methylcellulose, potato 18 g fat (6 g saturated fat)
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starch, apple extract, salt, potassium chloride, vinegar, lemon juice concentrate, 390 mg sodium
sunflower lecithin, pomegranate fruit powder, beet juice extract (for color) 3 g carbs (2 g fiber, 0 g added sugar)
20 g protein
Morningstar Water, carrots, onions, soy flour, egg whites, mushrooms, whole grain oats, wheat 150 calories $4.31/8 Oz.
(Kellogg gluten, water chestnuts, vegetable oil (corn, canola, and/or sunflower oil), green bell 8g fat (1g saturated fat)
subsidiary) peppers, calcium caseinate (from milk), cooked brown rice (water, brown rice), red bell 400 mg Sodium
peppers. 6g carbohydrates (3g fiber, 1g added sugar)
16g protein
Conagra Water, textured pea protein, textured wheat protein [wheat gluten, wheat starch), 240 calories $4.33/8 Oz.
(Gardein brand) palm oil coconut oil, vital wheat gluten, contains 2% or less of: methylcellulose, malt 15 g fat. (10 g saturated fat).
extract, natural flavors, garlic powder, organic sunflower oil, sea salt, onion powder, 450 mg sodium.
beet juice (color added), citric acid, ascorbic acid 8 g carbs. (0 added sugar)
19 g protein.
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Maple Leaf Foods Water, pea protein, canola oil, coconut oil, natural flavors, less than 2% modified 250 calories $5.99/8 Oz.
(LightLife brand) cellulose (from plant fiber), sea salt, vinegar, beet powder (color), cane sugar, cherry 17g fat (5g saturated fat)
powder (to promote color retention 390 mg sodium
6g carbohydrates
20g protein
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The very year that Pat Brown had his epiphany about the critical need to disintermediate the cow from the
beef business, Ethan Brown (no relation to Pat Brown) founded Beyond Meat (BYND) to do just that. He had a
few paces of a head start over Pat Brown, having spent several years in the renewable energy business. He considered
himself a down-to-earth person with farming roots in Maryland, where he had been exposed to raising animals.
The experience shaped much of his thinking, and he converted to vegetarianism after he graduated from college
and later became a vegan. Armed with a graduate degree in public policy with a specialization in environmental
issues, he was passionate about making a difference and decided that addressing climate change was the most
crucial challenge facing the world. He was convinced that developing a plant-based meat alternative would be
a lynchpin in the solution to tackling the “four horsemen” of the climate change apocalypse, as he called them.
The four horsemen were: health effects of eating red meat; consequences of GHG emissions generated by cattle;
land and resource use pressures related to meat production; and animal rights issues. Like Pat Brown, Ethan
Brown also believed that shaming people into switching to plant-based meats was not the way to go. He’d have
to persuade them by offering a superior product.
In an interview for a podcast with Reid Hoffman, the co-founder of LinkedIn, Ethan Brown observed,
“People think meat is some kind of mystery, but, in fact, all the pieces you need to build a piece of meat are
already there in plants; you just got to go find ’em. I know the composition is amino acids, lipids, trace minerals,
vitamins, and water. I know those are all available in plants. Then it’s a question of, what is the process for getting
it to form into the structure of meat without using a biological living organism?”31 He then set about finding
experts who could help address this question.
His search for expertise led him to a pair of researchers at the University of Missouri who had been working
on plant proteins. Professors Fu-Hung Hsieh and Harold Huff held the patent for a plant-based meat that pulled
apart like chicken meat, a concept that captivated Brown. Lacking the resources of venture-backed funding, he
relied on university-based research to perfect the product he had in mind. In his view, the challenge was to form
the amino acids, lipids, trace minerals, vitamins, and water that meat was composed of into a muscle structure
that would resemble meat. He had funded a modest research program at the University of Maryland to help
develop that elusive structure that he wanted. The confluence of these two sources of expertise helped Brown get
his dream product within his grasp, almost. The product that his team developed mimicked the characteristics
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of chicken meat rather than beef, and included soy derivatives along with pea and mungbean proteins. There
was an obvious mismatch between the market opportunity that leaned heavily towards beef and the pull-apart
chicken meat substitute that Brown’s team had engineered. Nevertheless, a determined Brown decided to plunge
ahead and commercialize the chicken meat substitute. The company launched its Beyond Meat chicken strips in
a few Whole Foods stores in 2012 and then expanded nationally to include more outlets.
As the R&D team ramped up efforts to refine the chicken meat product and also continue its quest for
the beef alternative, Brown was securing funding to support future growth. The company entertained numerous
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proposals from some of the leading venture capital firms but settled on Kleiner Perkins, a powerhouse in Silicon
Valley, CA. Although the deal required Brown to part with a bigger chunk of equity for a lower price, Brown
reasoned that it was worth signing on because of the access to Kleiner Perkins’ network that he knew would be
invaluable. This financing deal was soon followed by investments from other powerful venture capital firms,
as well as a host of celebrities such as Leonardo DiCaprio, Jessica Chastain, Snoop Dogg, and NBA star Chris
Paul, among others. In 2016, BYND brought its plant-based beef burger to the market to loud acclaim, and the
trajectory of forward growth seemed exponential. It was billed as the world’s first plant-based burger merchandised
in the meat section of grocery chains. The company claimed that 93% of its customers who bought its burger
product also bought the regular meat burgers, a testament to the fact that the plant-based alternative was being
Taught by Jose Luís Marín, from 28-Jan-2024 to 1-May-2024. Order ref F499946.
perceived in the same light as the meat-based original.
products. BYND chose to forgo the business when chains appeared to be unyielding. “The future is one where the
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meat case is going to be called the protein case and consumers will be able to buy plant-based and animal-based
protein side by side,” Ethan Brown once remarked.32 Brown had committed BYND to producing a burger that
would achieve price parity with natural meat burgers by 2024, a goal that he felt was within reach.
The BYND burger contained a variety of ingredients ranging from pea protein, coconut oil, rice protein,
mungbean protein, potato starch, lemon juice, and beet juice, to name a few. Notably, it had fewer ingredients
compared to the Impossible Burger, and also used fewer chemical additives.33 The advent of the burger rang the
death knell for the chicken strips product that was created using technology licensed from the researchers at the
University of Missouri. Although the product had launched BYND and put it on the map as an up-and-coming
alternative meat company, the product itself appeared to be a far cry from what the meat-loving customer wanted.
It was panned in several reviews by influencers and celebrity chefs and had seen declining sales. By 2019, BYND
pulled the product from grocery stores without much fanfare. Brown was more ambitious with the burger and
crafted a multi-channel strategy. The intent was to sell the product through conventional grocery chains such
as Whole Foods, while at the same time selling it to food service channels as well. The food service channels
catered to restaurants and large service contractors who operated institutional cafeterias and kitchens, such as
the dining services of a university or hospital. The response was overwhelmingly positive, but also brought with
it some huge challenges in supply.
BYND relied on co-producers to manufacture the burger patties and did not have the manufacturing
capacity it needed to scale up production instantly. It operated production facilities in Missouri and Pennsylvania.
Outside the U.S., it had its own plants in the Netherlands and China. In addition to these facilities, it relied
on a large number of co-producer relationships to meets its demand. Initially, many of its co-producers were in
Asia, and when demand outstripped estimates, the company found itself facing a supply chain challenge. It had
expanded its collaborative ventures to encompass multiple grocery chains very rapidly, and its supply network
was cracking under the pressure. Since the co-producers were not under any specific contract with BYND, there
were limits to the influence that the company could exert on its supply chain partners. The supply problems
had the potential to stifle growth, since retail partners as well as food service companies were known to look for
alternatives to ensure that they could meet the needs of their downstream buyers. BYND had entered the food
service market almost at the very beginning. As demand started to grow, Brown found that he was unable to
meet his commitments, given the lack of manufacturing capacity. He had to walk away from food service, and
this proved to be a shaping influence in BYND’s early life.
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In May 2019, Ethan Brown took a decisive step toward becoming a global company with the potential to
rival one of the large meat companies like Tyson and JBS when he decided to seek public listing of his company
in the Nasdaq exchange. Listed at $25 a share, the price soared 163% on the first day of trading, and BYND
became the first alternative meat company to be publicly traded and only the third company in stock market
history to soar as high on its first day. Although he had taken a different route, preferring the relative secrecy
of private financing, by 2021 Pat Brown was also rumored to be contemplating a public listing of Impossible
Foods. The last round of funding that Impossible Foods had obtained was at an imputed market capitalization
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of $4 billion (2020), while it was rumored that the company was seeking a listing at $10 billion.34
While Impossible Foods and Beyond Meat were contemplating a meatless future, the established meat
industry giants such as JBS, Tyson Foods, Cargill, Smithfield, Hormel, and Nestlé were rolling out their own
meatless plant-based alternatives across a wide range of products spanning burgers to chicken nuggets. These moves
were to be expected since analysts estimated that the market for plant-based meat alternatives would account
for $85 billion by 2030.35 The objectives of many of these players were transparently commercial. Unlike Pat
Brown and Ethan Brown, who were driven by larger goals of addressing climate change and health issues, these
meat manufacturers were largely focused on the emerging commercial opportunity. Tyson is believed to have
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Purchased for use on the Strategic Management, at IES Abroad Barcelona.
spent no more than a year end-to-end before launching its own plant-based chicken nuggets, a product that had
taken Beyond Meat several years to perfect. A spokeswoman for Tyson was quite clear when she suggested that
“Right now, it’s really about the business opportunity.”36 For their part, neither Pat Brown nor Ethan Brown
saw the incursion by the meat companies as a serious threat. Pat Brown thought it was an “encouraging sign”
to see the meat manufacturers investing in plant-based alternatives. He felt secure in the belief that product
characteristics would determine the winners in the business, and he felt that Impossible Foods was very well
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positioned in that regard. Ethan Brown opined, “If Nestlé or Perdue or Tyson think it’s a good idea to buy our
product and reverse-engineer it, they’re chasing a ghost. We’ve moved on from those models into new models
and new iterations.”37 The large meat manufacturers had formidable supply chain prowess and deep pockets, two
ingredients that would be critical in scaling up plant-based alternatives. Given their close relationships with the
grocery chains and food service companies across the globe, only time would tell how far the meat makers could
go in terms of posing a serious threat to the newcomers. For example, Cargill invested $100 million in Puris, a
pea protein supplier that was one of two primary suppliers to Beyond Meat as well. Given the limited supplies of
this important ingredient, Cargill’s investment took on a larger role than the monetary value seemed to suggest.
As 2021 wound to a close, there were some clouds on the horizon for the plant-based meat industry.
Beyond Meat as well as Canadian rival Maple Leaf Foods had both reported unexpectedly sharp declines over the
last two quarters. In announcing poor results, Ethan Brown remarked that the ~13% decline in U.S. revenues
was probably attributable to “transitory dynamics.”38 Share prices had declined in response to a decline in U.S.
sales as well as a drop in gross margins (~-5%). However, international sales were quite strong and showed a
growth of ~145%. BYND had a market capitalization of $4.8 billion (compared to its peak of $15 billion) and
employed 700 people compared to rival Impossible Foods that had a projected valuation, based on the last round
of financing, of $4.2 billion and 818 employees.39 A major difference between the two rivals was their market
footprint. While Impossible Foods was available in seven countries, BYND had extended its reach to 85 countries
as of 2021. However, Impossible Foods had expanded its product portfolio to encompass Impossible Sausage,
Impossible Pork, Impossible Chicken Nuggets, and Impossible Meatballs. It had registered trademarks for several
other product offerings spanning seafood as well and was known to harbor intentions of disintermediating the
seafood business. Would customer preference for plant-based meat products follow the path of plant-based milks
that had become entrenched in grocery shelves, or would they fade off as a transitory phenomenon?
By early 2022, there were some signs that the enthusiasm for alternative meats was facing strong headwinds.
Sales in the industry had declined by 0.5% in 2021 after a scorching growth rate of 46% in 2020, mostly fueled
by the pandemic. Some experts like Will Hallyar of OC&C Strategy Consultants believed that there had been
“a bit of a hype cycle, with an awful lot of people trying things once or twice”; others, such as Hanneke Faber,
President of Unilever’s food business, believed that “going forward, this market will continue to grow in the
20% range every year.”40 The market signals were quite mixed indeed. For example, plant-based foods were
experiencing double-digit growth in Europe although there had been a deceleration. In a survey of 3,000 U.S.
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consumers, roughly 40% said they had not tried plant-based meats or would not try such products, although
39% also added that they wanted to reduce their intake of red meat. Some believed that the plant-based meat
products had not lived up to their billing and required significant developments before customers viewed them as
equivalent to real meat. Was it wise for Impossible Foods and Beyond Meat to continue to dismiss the strategies
of established meat manufacturers to offer plant-based alternatives, or should they join hands to take advantage
of the resources that these larger players possessed? These were a few questions that dominated discussion among
plant-based meat analysts.
Endnotes
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1
Ritchie, H. 2019. Half of the world’s habitable land is used for agriculture. https://ourworldindata.org/global-land-for-
agriculture.
2
McKinsey & Company. 2019. What’s ahead in the meat and protein market? Video transcript. https://www.mckinsey.
com/industries/agriculture/our-insights/alternative-proteins-and-the-future-of-meat.
3
Gaan, K. 2020. State of the Industry Report: Plant-based meat, eggs, and dairy. The Good Food Institute.
4
2018. Fitch Solutions Macro Research cited in the IPO Prospectus of Beyond Meat.
5
Schulman, G. 2021. Meat, Beef & Poultry Processing in the U.S. Industry Report 31161. IBISWorld.
6
Madigan, J. 2021. Meat Alternatives Production in the U.S. Industry Report OD6163. IBISWorld.
7
Dai, S. 2016. David Chang Adds Plant Based ‘Impossible Burger’ to Nishi Menu. Eater. New York. https://ny.eater.
Taught by Jose Luís Marín, from 28-Jan-2024 to 1-May-2024. Order ref F499946.
com/2016/7/26/12277310/david-chang-impossible-burger-nishi
11
Bashi, Z., McCullough, R., Ong, L, and Ramirez, M. 2019. Alternative proteins: The race for market share is on. McKinsey
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Quarterly, August.
12
FAO. 2021. World Food and Agriculture Yearbook 2021. FAO. Rome, Italy. https://www.fao.org/3/cb4477en/online/
cb4477en.html#chapter-2_2.
13
Ibid.
14
https://www.farmsanctuary.org/cows/.
15
Bashi, Z., McCullough, R., Ong, L, and Ramirez, M. 2019. Alternative proteins: The race for market share is on. McKinsey
Quarterly, August.
16
Boston Consulting Group. 2021. Food for thought: The protein transformation. March.
17
Kateman, B. 2019. Non-dairy milk alternatives are experiencing a ‘Holy Cow’ moment. Forbes. August 19.
18
Qian, F., Riddle, M. C., Wylie-Rosett, and Hu, F. B. 2020. Red and processed meats: How strong is the evidence? Diabetes
Care. February 43(2): 265-271.
19
Friend, T. 2019. Can a burger help solve climate change? New Yorker, September 23.
20
Most of the insights relating to proteins discussed here are drawn from Bashi, Z., McCullough, R., Ong, L, and Ramirez,
M. 2019. Alternative proteins: The race for market share is on. McKinsey Quarterly, August.
21
Bashi, Z., McCullough, R., Ong, L, and Ramirez, M. 2019. Alternative proteins: The race for market share is on. McKinsey
Quarterly, August.
22
The discussion of the cultured meat manufacturing process is drawn from https://goodmeat.co/process.
23
Schwab, K. 2019. These plant-based food companies are rebranding to target meat eaters—and it’s working. Fast Company,
July 25.
24
Mintel. 2021. Plant-Based Proteins, U.S. May 2021. Mintel Group Ltd.
25
Retail sales do not include sales through food chains that form the primary channels for some of the newly emerging
plant-based alternative meat producers.
26
A substantial part of the insights discussed here have been drawn from Mintel (2021), Plant-Based Proteins, U.S. May
2021. Mintel Group Ltd.
27
Friend, T. 2019. Can a burger help solve climate change? New Yorker, September 23.
28
The discussion on the development of protose was drawn from Buckley, N. 2021. Fake meat is baked into Battle Creek’s
history. Battle Creek Inquirer, October 4.
29
Moskin, J. 2019. How do the new plant-based burgers stack up? New York Times, October 22.
30
Impossible Foods. Press release. August 13, 2020.
31
Hoffman, R. 2021. Beyond Meat’s Ethan Brown: How to teach your customer? https://mastersofscale.com/wp-content/
uploads/2021/04/mos-episode-transcript-ethan-brown.pdf.
32
McKinnon, T. 2021. How Beyond Meat’s strategy set it apart. May 18. https://www.indigo9digital.com/blog/
beyondmeatmarketingstrategy.
33
Moskin, J. 2019. How do the new plant-based burgers stack up? New York Times, October 22.
34
Sen, A. and Franklin, J. 2021. Impossible Foods in talks to list on the stock market. Reuters, April 8.
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35
Yaffe-Bellany. 2019. The new makers of plant-based meat? Big meat companies. New York Times, October 14.
36
Ibid.
37
Ibid.
38
Watson, E. 2021. Beyond Meat CEO blames ‘largely transitory dynamics’ for -13.9% decline in U.S. revenues, offset by
triple-digit growth overseas. Food Navigator, November 11. https://www.foodnavigator-usa.com/Article/2021/11/11/Beyond-
Meat-CEO-blames-largely-transitory-dynamics-for-13.9-decline-in-US-revenues-offset-by-triple-digit-growth-overseas.
39
https://my.pitchbook.com/profile/97319-89/company/profile#comparisons.
40
Terazono, E. and Evans, J. 2022. Has the appetite for plant-based meat already peaked? Financial Times, Friday 28, January.
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Purchased for use on the Strategic Management, at IES Abroad Barcelona.
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