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It's 'impossible' to ignore the world of alternative proteins

This article is adapted from the newsletter VERGE, running Wednesdays. Subscribe here.

Call it what you wish: "plant-based"; "alternative"; "fake." Dare I say, it’s nearly impossible to ignore the growing movement — and seemingly limitless market opportunity — in the rapidly evolving world of alternative proteins.

If you’re not tracking their growth, you should be. I caught up recently with GreenBiz ally Andrew Beebe of Obvious Ventures, one of the smartest people I know when it comes to where purposeful, potentially disruptive markets are headed. "Alternative protein companies are inherently world-positive," Beebe said, invoking his firm’s go-to descriptor of breakthrough companies and technologies. "They create profits because of purpose — and that’s what makes them absolutely massive opportunities."

Whenever Beebe touts an emerging market as a significant opportunity, it’s worth paying attention.

As an enthusiastic eater of things that taste like meat but aren’t, I decided to sink my teeth into the topic this week to better understand where the market is headed, the environmental implications and some key questions consumers and companies ought to ask, but might not be asking.

Most notable and timely is this month’s landmark initial public offering of alt-protein company Beyond Meat. The first company in its market to go public, stock prices surged 163 percent in its first day — from $25 a share to around $65 — and more than tripled in just two weeks. (It closed Tuesday at $77.50.) It was the best-performing IPO by a major U.S. company in almost two decades, and its $5 billion valuation isn’t small potatoes for a startup that has yet to turn a profit.

Beyond Meat was the best-performing IPO by a major U.S. company in almost two decades, and its $5 billion valuation isn’t small potatoes for a startup that has yet to turn a profit.
Suffice to say, Beyond Meat and its leading competitor, Impossible Foods — which itself just raised a $300 million Series E round — have significant stakes in a potentially lucrative game: The alternative meat industry could be worth a whopping $40.5 billion in the next decade in the United States alone, according to Bernstein, a leading investment research and management firm. Still, that’s merely a side dish of the overall beef market, estimated to be $383 billion by 2025, according to Grand View Research.

One reason for the alt-meat frenzy is that its appeal goes well beyond the natural foods or vegan restaurant markets. Increasingly, it’s going mainstream.

For example, after Burger King’s initial test of the Impossible Whopper in St. Louis, Missouri went "exceedingly well" earlier this year, the alt-protein burger is being rolled out across the United States before making its entry into European markets. Burger King is not the first fast-food giant to test the waters (or customers’ taste buds) with meatless options. Carl’s Jr. recently beefed up its lineup with a Beyond Famous Burger; Little Caesars just announced its newest plant-based pizza option; Del Taco started serving a Beyond Taco in all 580 stores across the United States last month. Even McDonald’s is carving out its place in the market, in Germany, and flirting with the idea of bringing the product to American shores. Meanwhile, Nestlé is set to launch a Garden Gourmet Incredible Burger this fall.

Talk about a herd mentality!

From a planetary perspective, the mainstreaming of meat alternatives is as timely as ever.
From a planetary perspective, the mainstreaming of meat alternatives is as timely as ever. The environmental impacts of meat production could make your stomach churn. Consider:

  • Eating a plant-rich diet is ranked No. 4 on Project Drawdown’s list of 80 solutions to reverse global warming.

  • The most conservative estimates suggest that raising livestock accounts for about 15 percent of global greenhouse gas emissions worldwide; that’s more than all emissions from ships, planes, trucks, cars and all other transportation combined.

  • Comprehensive assessments of direct and indirect emissions skyrockets that number to more than 50 percent of global GHGs, according to Project Drawdown’s research.

  • Meat production is the largest driver of deforestation globally and the most land- and resource-intensive commodity there is — and that doesn’t account for matters of animal rights, human health and loss of biodiversity that come along with livestock production.

It makes sense that investments in alternative proteins — both from VCs and large corporates — mirrors the growing consumer consciousness about and demand for better options. Of the $16 billion invested into U.S. plant-based meat, egg and dairy companies in the past decade, $13 billion was served up in 2017 and 2018 alone, according to the Good Food Institute.

And while venture capital investors generated 43 percent of last year’s deals, large companies are seizing the opportunity, too. Tyson Foods, one of the world’s biggest meat producers, plans to add a meat substitute to its stable later this year — about which its executive vice president of alternative proteins, Justin Whitmore, spoke on our stage at GreenBiz 19. Other incumbent meat producers, such as Cargill and Maple Leaf, are jumping on the bandwagon, too.

Of course, there are plenty of questions to chew on. Is plant-based meat actually better for us? (And can you properly call it "meat"?) Does the prospect of a predominantly vegan diet at scale really represent a public health and agricultural system disaster, as two researchers claim? What about impacts on the livelihoods of smallholder and indigenous farmers if lab-grown and genetically engineered alternatives take a bite out of their meager incomes by making their herds less valuable?

The world of alternative proteins, like any rapidly growing market, isn’t without its own set of unintended consequences. This is a world we’ll be tracking and covering increasingly on, and likely serving up on both the menu and program at VERGE 19 in October.

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