The endgame for meat
Edition 15. The rise of alternate proteins. Should the PPE supply chain be more like that of cocaine?
Meat has symbolized wealth and power in human history for millennia. 2.5 million years ago, our ancestors started eating meat in the savannahs of Africa. Meat and animal produce since has been the dominant source of protein intake for mankind.
The middle of the 2010s decade saw the rise of ‘alternate protein’ which took a direct aim at upending the dominance of animal protein. However, COVID-19 has accelerated this dynamic in a couple of ways. First, the dense working environment, many meat processing facilities made them the hotspot for the coronavirus. Second, concern around health has led to a steep fall in consumer demand. Demand from major meat consumption markets such as SE Asia and China has fallen, impacting large exporters such as India.
Is COVID-19 the shot in the arm that the alternate protein industry needed?
Let’s dive into this fascinating industry today. We will look at the alternatives, evolving industry dynamics and the cutting edge science which promises to not just alter our diets, but also be a weapon to combat climate change.
Meat consumption - an overview
A quick overview of the meat consumption trends.
There is a clear link between meat consumption and income of a country. But there seem to be cultural factors playing out for a few countries as well. For example, notice the unchanged trajectory of India compared to China despite the increase in income.
In terms of consumption, pigmeat is the most popular form of meat with a global per capita consumption of 16 kilograms, closely followed by poultry and beef. However, what the global figure masks are the wide variance between countries. For example, an average person in China consumes ~62 kilograms of meat, 2/3rds of which is pigmeat while in Argentina, the corresponding numbers are ~110 kgs of which 50% is beef.
Global meat supply is dominated by behemoths. According to this excellent CB insights report -
The meat industry has evolved into a complex global business that involves farms and feed lots, as well as meat middle-men, like processing and storage centres, transportation and logistics, slaughterhouses, and more.
Together, the 6 largest meat companies represent $60B in market capitalization — as of the beginning of the year — with the largest, Hormel, boasting a $23B valuation.
However, these structures might be soon altered due to challenges related to business, ethical, and environmental concerns.
The heart of the issue is the inefficiency of the industry.
The core function of food is to provide our bodies with nutrients so that it can survive, grow and reproduce. Examples of nutrients are carbohydrates, proteins, fats, vitamins etc. Meat industry serves this to us by controlling macroorganisms - cow, pig, chicken etc.
Consider the cow.
Its value chain ranges from inputs (feed) to production (breeding) to processing (culling), to packing and distribution. All this so that our bodies can get protein molecule. The cost of consumption of this molecule through this method is staggering. Just for a start, consider the fact that we use eight times as much land for feeding animals as we use for feeding humans. Why? Well, because cows just eat a lot. Check out this video for a short snappy summary
Cows have historically been disrupted.
The only value addition they still provide globally is meat and milk. It is time those are modernized as well.
Rise of alternate protein
An illuminating part from a fantastic report by ReThinkX below (emphasis mine)
Micro-organisms exist naturally within macro-organisms, breaking down nutrient inputs to build useful outputs. For example, micro-organisms in the digestive tract of a cow help produce the protein and amino acids it needs to live and grow. Humans have manipulated micro-organisms in a more direct way through early experiments in fermentation. Today, we stand on the cusp of the next great revolution in food production. New technologies allow us to manipulate micro-organisms to a far greater degree. We can now unplug micro-organisms entirely from macro-organisms and harness them directly as superior and more efficient units of nutrient production. This is the second domestication of plants and animals. The first domestication allowed us to master macro-organisms. The second will allow us to master micro-organisms.
By ‘taming’ micro-organisms, we have moved production to the molecular level. That might sound innocuous but has profound implications. For one, the number of nutrients that we can produce effectively becomes limitless - a function of human imagination rather than being bound by the plant or animal kingdoms.
Once we can design ‘custom’ molecules, we can design food from ground-up (pun intended).
This is what Impossible Foods and Beyond Meat - the two biggest names in this field have done.
In an incredible tale, an academic in his 50s decided to use his knowledge of chemistry to create a rather well-received product that has captivated thousands.
Okay, not him. Him 👇
Patrick O. Brown was a tenured professor in the department of biochemistry at Stanford University. He is also the co-founder of Public Library of Science, a library and publisher of open-access scientific journal.
Incredibly, he did all this before embarking on an industry-defining entrepreneurial journey in his late 50s to start Impossible Foods - arguably the hottest alternate protein start-up, which is leading the charge at changing the US and global meat consumption.
Impossible Foods deconstructed meat by molecule and recreated it using the ones found in plants. So successful have they been that their plant ‘beef’ burger patty even ‘bleeds’ like meat and has been called by a few as the best fast-food burger patty - meat or otherwise.
Think about this incredible achievement.
A patty made out of plants to resemble beef, in the eyes of a few, tastes better than beef itself.
Burger King has partnered with them to sell Impossible Whoppers. So strong has been the demand from Impossible’ partners that the company has had a hard time meeting demand.
Impossible Foods competes with Beyond Meat which uses pea protein to make their own meat replacement products, which too have been very well received. Beyond Meat listed on the stock market in 2019 in a blockbuster IPO and announced a strong quarter (Jan - Mar 2020) with revenues increasing ~140% year on year to ~$97M.
The companies are now moving to introduce plant-based seafood, pork and poultry, which is harder to create than beef and needed more research. With a rapidly falling price curve as these products go mainstream, they are ready to compete with ‘original meat’ in price and taste.
They are also expanding internationally. China is the next frontier.
To improve public health and reduce greenhouse gas emissions, the Chinese government outlined a plan to reduce the consumption of meat by 50% by 2030. Yet, challenges for these companies are formidable.
For one, there is strong local competition. Second, the difference in the palate with a preference for local dishes such as dumplings, mooncakes or meatballs, and a clear choice of pork rather than beef flavours imply deep localization and investment in products.
Yet this seems like the right moment for the rise of alternate proteins with surging price of meat due to the trade war with the USA and mass culling of livestock to contain the epidemic.
The next frontier
“Unlike the cow, we get better at making meat every single day” - Pat Brown – CEO Impossible Foods
As cutting edge as alternate proteins have been till date, this is just the beginning. From ReThinkX
New information technologies like machine learning with deep neural networks are allowing scientists to analyze complex biological processes with far greater speed and accuracy than ever before. For example, we now have the technology to annotate a database of 100 million proteins in less than two days using a single computer.
With the aid of artificial intelligence and robotics, this means we can now formulate millions of potential versions of new food products and ingredients and simultaneously analyze and test them through high-throughput screening to ensure the best combination of nutrition, taste, flavor, aroma, and mouthfeel.
The industry itself is not limited to plant-based protein alone. A small snapshot of the spectrum of alternate proteins and meals that are in the market.
Food, as we know it, will dramatically change in our lifetime. It is a future we should wait impatiently for.
In other news
I recommend this excellent How I Built This podcast session with him where he talks about his journey and the company.
I have mentioned Adam Tooze, the economic historian, in my previous post which looked at the surging stock market amidst the crisis. He sat down with Tyler Cowen for this excellent podcast covering a wide range of topics. He speaks about the economic recovery, countries that could be in trouble, reasons for the failure of the Weimar Republic leading to the second World War, the survival of Europe and what to eat and see in Germany.
Not all supply chains are broken by the pandemic. The cocaine industry has shown remarkable resilience in combating global lockdowns. If only other industries like life-saving PPEs and drugs could learn a thing or two from the contraband industry.
Eugène Atget is an early 20th-century father of modern photography. He shot Paris 100 years ago. The pandemic has given a chance to recreate all the images by shooting the same spots.
Have you wondered if there was a 5th-century ‘Lonely Planet’ to navigate classical Athens? What would have been its recommendations? The British Museum has answered your wishes. Here is a travel guide to 5th century Athens. Check out the other cities too.
Do you have some spare change lying around? Well, there is a village on sale in Sweden for $7 million. However, it might be best to wait and watch the impact of Sweden’s no lockdown policy before making a purchase decision.
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