The Beginning of the End of the Beef Industry?
I have personal beef – sorry – with the beef industry.
I’m interested in this for a number of reasons, not least because I owned a ranch in Texas. I know and understand what it takes to raise cattle. I also like beef. I mean you can’t live in Texas and not like steak.
Or can you?
There is a growing trend for “alt meat.” Yes, you read that right, meat that is, well, not really meat.
Alt meat isn’t going to stay alt for long though.
In 2014 Beyond Meat, one of the first Silicon Valley startups to manufacture meat-like burgers released its Beast Burger. It was treated as curiosity or maybe just a joke. Certainly, the meat industry initial reaction was not to take seriously the meat-less meat. And, in any event, the National Cattlemen’s Beef Association needed have worried. The fact was the BB just didn’t taste that good.
But in the years that followed Beyond Meat persisted. Impossible Foods soon joined it. This was a savvier startup, with, and this was key, more venture capital.
The thing these guys understood was that what they were selling to the public was not just about taste. Because, tastes were changing in regard to the whole way in which food was being produced and how this was impacting on the environment. Part of the appeal of the non-meat burgers is that they leave a smaller environmental footprint. In terms of the environment you can’t get any worse than beef production. Approximately 36,000 calories of feed goes into producing 1,000 calories of beef. Add in 430 gallons of water and 1,500 square feet of land, and all of this it gives us nearly ten kilograms of greenhouse-gas emissions.
Take what became known as the Impossible Burger produced by our friends above. That uses 87 percent less water, 96 percent less land, and produces 89 percent fewer greenhouse-gas emissions.
And none of this was lost on the consumers of beef products across the United States.
By 2018, sales of both the Beyond Burger and the Impossible Burger were growing – dramatically. And, what’s more, these companies started to work with restaurants chains. Beyond Meat got Carl’s Jr. and A&W (as well as supermarket chains like Food Lion and Safeway), while Impossible got White Castle.
In April 2018 White Castle initially tested its non-meat burgers in just a few locations in New York, New Jersey, and Chicago. It was a hit, quickly and obviously. The company soon expanded this option across its restaurant chains.
The same month a Beyond Meat taco was launched. Within two months, it had sold two million, making it one of the most successful product launches in the company’s history – Beyond Meat burritos were soon on their way too.
But you may think this was all still niche.
Well if I mention the words: Burger King, and, then, add the words Impossible Whopper – a non-meat burger – then you may start to wonder as I did what happened next?
Burger King, the second-largest fast-food chain in the world, launched the Impossible Whopper in St. Louis in April 2018. It was such a success that Burger King decided to serve the Impossible Whopper in all its 7,200 restaurants.
When the history of food in the United States comes to be written April 2018 is going to be the moment when there occurred a major shift in food consumption in that country.
Now what was the reaction of the US beef industry to all this? Well, they were not happy, obviously. Perhaps more than anyone else they were rattled by what they were seeing. So the beef producers successfully lobbied for a labeling law in Missouri banning any products from identifying themselves as meat unless they are “derived from harvested production livestock or poultry.” Similar labeling laws have been passed or are pending in a dozen more US states, most of them with a large constituency of ranchers.
Sometimes though you just can’t stem the tide. And, anyway, even with a cursory glance at economic history, protectionism of this sort is often the refuge of an industry in retreat, and, what is more, rarely changes the outcome.
Beyond Meat’s products are in 15,000 grocery stores in the US, and its sales have more than doubled each year. Not surprisingly, its stock price has surged. They started out this year at $25 and are now around $65. The one thing about Wall Street is that it is not stupid; it tends to know which way the prevailing wind is blowing. This summer’s endless climate demonstrations and concerns over the environment have only made this trend all the more obvious. As I write Beyond Meat, that initial shaky start-up from a few years back, is now worth an estimated $10 billion. Their more savvy friends over at Impossible Foods have raised an additional $300 million dollars from private investors. That company is valued at around $2 billion. With the announcement that it too would be joining Beyond Meat in America’s grocery stores means that its price tag is only going to go one way.
Technology is on the side of these meatless guys too. Both Beyond Meat and Impossible Foods are constantly improving their “meat” with new versions being released. Products that have as much protein as meat, but less fat, and being products that are plant-based providing lots of fiber.
Look if you can get all this plus something that looks, smells and tastes like beef but you know it isn’t, and therefore not harming the planet – which one are you going to choose?
Look beef is just not good PR presently. Mention beef and the brain starts to think: antibiotics, E. coli outbreaks, animal welfare, and climate change. Corporate America knows this and is moving on – especially when it can make as much money selling something that is as good as meat but without the baggage.
Nevertheless, the traditional beef producers have the edge currently. They should do having been around since the beginning of civilization, but they only continue to have that edge in the US due to scale. Meat manufacture is a huge industry. This gives the beef producers some weight when it comes to supply – and crucially cost (for now). But as we now know there is no one too big to fail.
Remember those laughing ranchers back a few years ago? Laughing when they heard about the meat-less meat? Well, I’m not so sure they are laughing much any more. In fact, the time may soon be coming when the joke is on them.
