Climate change and effects on the food industry:
A large proportion of global emissions and practices heavily contributing to climate change arise from feeding the global population. As summarized here, the effects of this industry on the environment are alarming and present a compelling case for drastic change.
Agricultural practices: Agriculture is responsible for roughly 80% of deforestation worldwide and is the largest contributor of non-CO2 emissions, particularly through the use of fertilizers and synthetic pesticides commonly made from fossil fuels.
The food supply chain: The average distance from producers of food to consumers is 1,200km. Longer distances necessitate processing and refrigeration in order to minimize spoilage. Additionally, a third of total food produced is wasted or lost in the supply chain – typically upstream in low-income countries, and further downstream in the chain in high-income countries.
Meat consumption: Raising animals for consumption requires land, energy and water, the exploitation of which is having a large impact on climate change. Livestock production accounts for ~15% of the global greenhouse gas emissions, accounts for ~70% of all agricultural land use and occupies ~30% of the global land surface area. Furthermore, there is an adverse climate impact from the resources (water and energy) required in the production, processing and transportation supporting this industry.
This link between climate change and food production, however, is a vicious cycle. Shifts in agricultural zones, increased temperatures, and extreme precipitation patterns are posing a serious threat to food security (access, availability and stability).
Today, there are several companies deploying innovative business models tackle these issues. One such example is Beyond Meat, which has been dubbed the most successful IPO of 2019 so far.
Business model overview:
Beyond Meat is a company aiming to create ‘The Future of Protein’ – plant-based burgers, sausage, crumbles, and more made directly from simple plant-based ingredients. The company’s mission is to tackle four growing societal and environmental issues related to livestock production, namely; human health, climate change, constraints on natural resources and animal welfare.
Their products are available internationally at more than 35,000 restaurants, grocery stores, universities, hotels and stadiums. Beyond Meat products are marketed simply as a meat alternative which are as close to meat as possible. The company’s basic thesis is that meat’s core parts – amino acids, lipids, trace minerals, vitamins, and water – don’t have exclusive residence in the animal kingdom and could just as well come from plants. Through years of R&D, they have managed to develop plant-based meat, which looks, feels and tastes very similar to regular meat (e.g. they use beets to give it a red meaty colour). Crucially, the company has been able to leverage the social impact of its goals to obtain certain advantages. For example, Beyond Meat burgers, despite not containing any meat, is found in the meat section of a grocery store. This confers huge advantages on this product and massively increases the chances traditional meat lovers will give it a try.
The business model of the company is to firstly educate the public on their social impact e.g. their website and packaging claims ‘99% less water, 93% less land, 90% fewer GHGs and 46% less energy usage’ vs. traditional livestock rearing. Secondly, they are not marketing it as ‘guilt-trip’ for meat eaters, but simply as something that is as close as possible to meat.
Effects of climate change:
Beyond Meat involves farming and cultivating the vegetables which go into its meat products, so first-order effects of climate change may be relevant, such as negative effects on quality of the land, flash floods, draughts etc. However, because this product has been developed specifically to tackle some of the issues around climate change and resource constraints, the second order (positive) effects of climate change will be most significant. That is, the worse climate change gets (as is predicted by most experts), the more willing the market becomes to buy products which are actively preventing it, and the better Beyond Meat will fare.
Beyond Meat is taking steps to capitalize on the effects of climate change
Beyond Meat anticipates a growing societal backlash against the climate change impacts of the animal meat industry. The company’s website prominently features statistics such as “51% of global greenhouse gas emissions driven by livestock rearing and processing.” By capturing a growing target segment of environmentally conscious consumers, Beyond Meat stands to benefit from worsening effects of climate change.
However, Beyond Meat also acknowledges that most mainstream consumers are unwilling to make major the personal sacrifices or lifestyle changes required to effectively combat climate change. The company made a strategic choice to place the product in the meat section of the grocery store, rather than vegetarian, to attract a target segment more likely to make a switch. By partnering with major retailers, such as Whole Foods, Beyond Meat has positioned itself as legitimate alternative to meat.
Additional steps for Beyond Meat to consider implementing
One way to ensure Beyond Meat become a fixture in its customers diets is by entering diets of its consumers at an earlier stage of their lives. By expounding on its value proposition of being healthier options for humans as well as its benefits for the climate, Beyond Meat could consider working with schools to serve Beyond Meat products to school children. This will ensure that consumers will become accustomed to the taste of Beyond Meat when they are young which will indubitably increase the customer lifetime value for Beyond Meat.
Beyond Meat has also embraced a predominantly traditional retail / grocer model (with the exception of limited restaurants such as Carl’s Jr) whereas its closest competitor the Impossible Burger is only available (currently) in select restaurants. Since Beyond Meat is a relatively new product and customers might not be familiar with the products, if Beyond Meat is offered/promoted by reputable restaurants, this might reduce the customer acquisition costs for its products.
May 16, 2019
Sheng Goh, Michael Madoff, Grace Mbazima, Sam Szamocki
great article! i like the idea of introducing the flavour of impossible meat & normalise it for school children. this will ensure that the future generation can continue to consume “responsible meat”. given that the company is just now undergoing IPO, I am keen to see how much they will funnel into R&D as well as marketing / educational program to commercialise the product further.
Good job guys! our blog also covers Beyond Meat. It is definitively a trending topic!
Wow! I first heard about plant based meat here at INSEAD, in Singapore, and it’s incredible that the meat is already available in 35.000 places. I hope they get soon to Latin America, If they are not there yet.
And I agree with the company that the majority of the population nowadays is not yet willing to change behaviors and lifestyle, so the idea of positioning the product in the grocery section rather than the vegetarian was very clever.
Interesting reading. Following beyond meat’s recent IPO (2 May) I am curious to see how they are going to use this momentum to expand their business. Investors’ confidence (stock price soared 250% in just two weeks) depicts that the future might be meatless.
I really like your suggestion about targeting the younger generation. Diets are largely habitual, and given the right conditions and incentives they can change. For me, I’ve been able to rationalize decreasing my beef consumption because of climate impact but I know for others tastes is tough. If kids grow up familiar, and preferring, the taste of alternatives then it would be a new generation of consumers. Kudos!
This makes me rethink eating meat and returning to a pescatarian diet. Factory farming is cruel for animals, but I hadn’t realized the huge impact it also has on the environment. Having these products available in the meat aisle is a great way to expose this to previous non-consumers. Perhaps having photos of the production facility on meat packaging would also trigger a response like that of having images of lung cancer on cigarette packs. Thanks for this article, it was an interesting read and provides a lot of food for thought (no pun intended)!
Great idea and potential to minimize the impact on environment caused by the need of feed humans.
Another complimentary campaign that the brand could potentially undertake in order to help on increase consumers awareness and position the brand as a leading on environmental sustainability is to educate consumers on the amount of protein (and other nutrition elements) actually needed everyday, regardless of being animal or plant based to avoid over-consumption.