ResTech

The Dollars And Sense Of Disrupting The $5B Ground-Beef Industry

Vegetarians and vegans, who forego meat and animal byproducts on principle, may be willing to settle for a burger that doesn’t really look, smell, taste, or feel like a burger due to a moral conviction. However, that product can never fulfill their hopes for a true replacement of animal meat, even for meat-lovers, thereby reducing the costs, resources, and cruelty involved in traditional food production.

To achieve that, a burger substitute must satisfy not only vegetarians, but carnivores: a much taller order. A burger can’t really bill itself as a meat “replacement” unless it can truly replace meat for everyone, including meat-eaters.

Carnivores may say it can’t be done. Impossible Foods aims to make it possible, and over the last year and a half, it has secured $114 million in financing to do so – that’s on top of its last equity round of $108 million in 2015. The most recent support came from Temasek, a global-investment powerhouse backed by the Singaporean government, and Sailing Capital, a state-owned Chinese investment fund.

Reshaping The Meat Industry

COO and CFO David Lee says the goal of Impossible Foods is not only to satisfy consumers but also to overturn the 5 billion-pound, $5 billion ground-beef industry with an alternative that he says can eliminate many of the most-expensive phases of meat production – effectively, delivering even more benefits to mankind than to the cows whose lives it’s saving.

Ground-beef production requires growing, transporting, and slaughtering animals, which uses a lot of resources: Food, water and land for raising animals, transportation and fuel, and the costs of slaughter and processing to ensure the end-product meets all health and safety requirements.

Producing an Impossible Food burger, Lee said, requires a lab to engineer and ferment yeast to produce soy leghemoglobin, or heme, a protein that is naturally found in plants – and the iron-rich molecule that carries oxygen in the blood, giving natural meat its color and flavor.

Translation?

Technology is making it possible to create a meat substitute that really tastes like meat, using a fraction of the resources, including 95 percent less land and 75 percent less water, as well as eliminating 87 percent of meat-production-associated greenhouse-gas generation. The main ingredients are wheat, potato and the manufactured heme protein.

Scale Begets Scale

Streamlining the production process, while delivering a comparable product, will result in affordable and accessible meat alternatives, Lee said.

For now, however, Impossible Foods is still working its way down from an impossible price point. Fast-casual partners – such as Umami Burger, FatBurger, Hopdoddy and B Spot – are charging $13 per burger, meaning the market so far consists of middle- to upper-class customers only. The product isn’t available in supermarkets yet, as the company felt it could gain better exposure by working with celebrity chefs, like Dave Chang, and marquee brands, such as Umami Burger.

According to TechCrunch, this trickle-down approach to scale was the plan from the beginning – and it worked for Tesla, so why not for burgers? The strategy is to pursue higher-end customers, get them behind the product, and leverage spending to subsidize further growth and bring goods to consumers at a lower-price point.

So far, 2.5 million pounds of Impossible Foods meat-substitute have been produced and consumed via 1,200 locations – so the strategy must be worth something. Yet that’s hardly a scratch on the surface of the 5 billion-pound ground-beef industry. Making a dent in that will take time, said Lee.

“We believe that massive progress can be made by betting on the consumer,” Lee said. “We make an impossible burger that meets the meat-eater on its own terms.  We believe the meat-eater will pick the best product, and we are committed to delivering a craveable, better burger.”

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