What’s Next for the Alternative Meat Industry?
According to a recent announcement by the Centers for Disease Control and Prevention (CDC), 9% of workers at meat and poultry processing facilities across 14 states have been diagnosed with COVID-19. This potential interruption in the supply chain has driven increased interest in alternative meat from companies like Beyond Burger and Impossible Foods. To get a better picture of this industry, GLG talked to Stephanie Lind, former Senior Vice President, Global Sales at Impossible Foods Inc. The interview has been shortened and edited for clarity.
There has been increasing critique about how alternative meat is processed, leading to discomfort from consumers. Could you talk for a bit about that?
Consider the combination of the crops being used: soy, wheat, and pea protein are the most typical. This invokes the debate about wheat versus soy, about GMO versus non-GMO. As the plant-based movement shifted to the mainstream, it became a product that wasn’t just for vegans and vegetarians. People started looking at fat and sodium content. People cited the environmental impact. Yes, alternative meats use less water and land, but these are still monocrops. There’s a lot of noise coming from non-GMO activists as well as the traditional protein industry pointing out what can be seen as the “weaknesses” of alternative meats. As the category grows and competition speeds up, that’s only likely to increase.
Food service demand was decimated with the lockdown orders around the world. Are there any differences within the supply chain as it relates to food service vs. food retail?
Supply chain for retail is much more simplistic. Essentially, 10 retailers do 80% of the volume. Many have their own supply chain. If they don’t, they’re using one of a handful of distributors. From this perspective, it’s a pretty easy supply chain.
The food services supply chain is complicated. You might have 4,000 distributors. Many restaurants get three, four, or five different distributors in their back doors. It’s much more difficult in food service to know what and where the inventory is. In retail, you get scanned data. You know what’s going out the front door. You don’t get that data in food service.
While the food service supply chain is more complicated, I don’t think that has any bearing on what’s happening in food service today. There are reports that about 25% of restaurants will not survive the shutdowns. It’s hard enough for restaurants to make money in normal times. COVID-19 is forcing weak and over-leveraged restaurant concepts out of business, or at least to rethink where they fit.
Could you talk about Beyond Meat’s competitors? Who are you seeing as real threats as we move forward into 2020 and beyond?
At the outset of 2020, I believed it was going to be the year of the invasion from Europe. This is still somewhat true. You’ve got Meatless Farms coming in from the UK. I’m really impressed with how they’ve launched in the market. They’re doing all the right things in terms of building the brand. That’s one I’m watching. There’s also Nestlé, Unilever, Kellogg’s, Cargill, Tyson, Hormel, ConAgra – they all have a foot in the game and what they have is leverage, something that Beyond and Impossible and even a Meatless Farm don’t have.
As grocery stores and food service come back, they need to figure out how to make up for all the lost revenue. There’s likely to be a free-for-all in traditional ad spend, consumer spend, coupons – all those things you can do in retail to get the consumer to try their products.
Companies will need to use or leverage their broader portfolio. Cargill’s agreement with PURIS for the pea protein will be interesting to watch to see how much it can leverage ownership of that. Archer Daniels Midland just signed an agreement with Marfrig to produce plant-based burgers in Brazil. Things like this will put increasing pressure on the smaller guys as they try to access the ingredients they need, particularly if they’re really reliant on pea and soy to make their products.
Do you see the fight for shelf space influencing differentiation requirements? Do you think this will continue to require significant R&D investment?
Pre-COVID-19, I would have said absolutely, but just based on all my conversations with manufacturers, distributors, retailers, and operators, there’s been this massive push to SKU rationalization. I’ve heard that one of the largest CPG companies in the world has reduced from manufacturing around 400 SKUs to doing 30 to 50 because they wanted to focus on understanding throughput. I think there will be a major category management initiative for the alternative meat space that could be challenging for the small guys.
Post-COVID-19, there will be a lot of push for cash, helping retailers drive traffic. Shopper marketing is big in the retail space in particular, so the people who are really good at the shopper marketing and use that to maintain their position in the category rationalization process will be helpful. I don’t know if Beyond or Impossible have done the right kinds of shopper marketing in retail and B2B marketing.
When we talk about plant-based proteins, there’s this whole idea of the next generation of offerings. What’s coming up? Currently, some players out there are doing really interesting things with fermentation. That’s the most sustainable platform for creating mycoproteins. Mycoproteins have fiber and protein, so they have an added benefit. They’re generally made through fermentation, so it’s much more sustainable. Companies like Quorn out of the UK are leading this charge. The cellular meat, frankly, is playing catch-up in a way I did not anticipate.
Growth in this industry requires penetrating new doors, both in retail and food service. The next generation is either about these different forms of production – fermentation and mycoproteins – or new types of protein, like plant-based shrimp, chicken, and pork, so getting to things beyond beef. I’ve not seen that innovation. There’s a little bit happening in chicken. The question is, does Beyond Meat really run with the little five-hour test they did with KFC?
About Stephanie Lind
Stephanie Lind is the Founder of Elohi Strategic Advisors, where she consults for small and large emerging brands in the food service space in category management, sales and supply chain strategy, and targeted talent search. The company specializes in pioneering emerging organic, natural, plant-based, and sustainable brands into the channel and will assist diversity-owned companies with their certifications. Most recently, Stephanie served as Senior Vice President of Global Sales for Impossible Foods, the juggernaut plant-based meat with over $400 million in funding. She grew the revenues 10X in over one year with a national launch that used new and proven sales and marketing techniques. In the role, she managed the sales, sales operations, new product, and B2B marketing functions.
This article is adapted from the May 28, 2020, teleconference “Beyond Meat and the Alternative Meat Industry.” If you would like access to this teleconference or would like to speak with Stephanie Lind, or any of our more than 700,000 experts, contact us.
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