Fake Meat as Cleantech Investment
The New York Times today has a fascinating feature about a new crop of businesses developing better-tasting meat substitutes. According to the Times,
Demand for meat alternatives is growing, fueled by trends as varied as increased vegetarianism and concerns over the impact of industrial-scale animal husbandry on the environment. The trend has also attracted a host of unlikely investors, including Biz Stone and Evan Williams of Twitter, Bill Gates and, most recently, Li Ka-shing, the Hong Kong magnate.
It goes on to say that the sustainability boon of veggie-based protein over animal protein has also attracted venture firm Kleiner Perkins Caufield & Byers to the category.
Since I write about cleantech start ups and food, I figure this is an interesting market niche to examine. But my first question reading the story was, would I eat this? That is not very analytical.
The companies featured in the story are Beyond Meat, which makes a veggie protein chicken that apparently is indistinguishable from the real thing in a dish like chicken salad, Gardein, which makes products including - amazingly to me - fake fish, and Hampton Creek, a start up that has developed a versatile and healthy egg substitute made from Canadian yellow peas.
Setting aside my selfish question of whether these products would appeal to me, a non-vegetarian, I'm going to try to set the stage for an analysis of the likely success of these ventures. The companies state they are hoping to attract mainstream eaters. That means they will have to score a win on the three most important qualities for mainstream grocery shoppers: 1) Taste 2) Cost 3) Convenience.
The point of the Times story is that these up and comers are aiming to beat out today's fake meat brands on taste and texture. Many fake meat products are easier to store and prepare than raw meat, so that's a plus. That leaves cost - if they can sell the products for just a bit less than the real thing that would make a huge difference and would expand the market for fake meat.
To get the costs down while they scale production, firms like Beyond Meat will first have to appeal to the early adopter/healthy eater/vegan/vegetarian/flexitarian who is willing to try something new.
But while some shoppers may be swayed by sustainability claims, these technology-based firms will have to navigate the growing tide of shoppers of all types who eschew mystery products, high-tech food processing, and food additives such as colors, flavors, preservatives and even texturizers. Shoppers know that even natural flavoring additives may be chemically similar to MSG (particularly flavors derived from yeast). This crowd is likely to be close to a third of shoppers by the time these firms hit the mainstream. Foodies who already shun "highly processed" foods may be wary of high-tech meat substitutes.
What's more, shoppers who choose fake meat for health reasons only may regress to "sustainably raised" animal products as our nutritional understanding of the effects of various types of fats grows more sophisticated.
But one fact in the article stood out - the current leader in fake meat, MorningStar Farms, has a whopping 60% of the market. This strongly suggests that there is room for a number of new entrants to take a healthy bite of that share. When it comes to food (as opposed to, say, renewable energy) people are very picky, and they like choices.
As for me, I say, bring on the "chicken" wings, the no-egg mayo, the "meat crumbles" chili. I'll try anything once.
Speaking of picky eaters who are concerned about sustainability, check out this hilarious clip from the IFT show Portlandia: