Sat. Feb 22nd, 2020

Beefing up your plant-based meat game

Dissecting the success of Beyond and Impossible for Southeast Asia’s flavors

Key takeaways for entrepreneurs in the plant-based meat space:

  1. The meat matters. Finding the product offering to match each market’s palate will save on production costs especially as the company expands. 
  2. Lead the herd by partnering with the right influencers. This is crucial to create brand awareness while ensuring growth isn’t cut down by heavy marketing spend. 
  3. Milk the right cows. Find the right investors and strategic partners in the business to work with. 

On September 23, 2019, Greta Thunberg delivered a speech on climate change to world leaders at the United Nations Climate Action Summit. While over the past year the demand for climate action has rippled far beyond the laboratory, taking center stage in political arenas, news cycles and corporate conventions, some companies have been tackling various aspects of climate change for quite some time, from renewable energy sources to alternative proteins. 

From lab to IPO: a case for alternative protein business

With 14.5% of all anthropogenic greenhouse gas emissions coming from livestock production globally and the world’s population predicted to reach 9.7 billion by 2050, there has been a concerted effort by scientists to find alternative sources of protein to address global food security in a sustainable, environmentally-friendly way. 

This science found its way into the market through the rise of companies like Impossible Foods and Beyond Meat. Consumer interest around alternative protein diets has since only risen, with the help of celebrity endorsements and social media. Internet search query for pea protein has been the fastest growing category with a CAGR of 30% between the 2004-2019 period.

Last year, the alternative protein market made its latest debut, four months before Thunberg’s address and a few blocks away from the UN’s global headquarters at the New York Stock Exchange. Beyond Meat raised 240Mn USD with an estimated valuation of 1.5Bn USD in an IPO that saw stock price increase of 840% in the next two months and profits in the following quarter. 

Beyond Meat’s growth, 10 years in the making

Incumbents beefing up their plant-based meat game

The alternative meat company’s IPO signifies the potential for companies in this space to grow and rally the support of investors. Global food corporations, as a result, are beefing up their product lines with new alternative protein products as they aim to capture a slice of the plant-based food demand. 

In the United States, Tyson Foods, the world’s second largest meat processor and marketer, invested in Beyond Meat and successfully exited their position at IPO. The meat conglomerate also started to develop their own meat alternative products. When the market leader moves, the entire market follows — with Hormel, Smithfield, Conagra, and Cargill also taking a jab at alternative proteins. 

In China, the race has been afoot among traditional vegan food producers, with the added pressure to address the constant threat of livestock diseases like the African Swine Fever. Shenzhen-based vegan food incumbent Whole Perfect Food is setting up government-backed research facilities on plant-based protein while partnering with WalMart to offer more of these products in the future. Shuangta Food, a Chinese traditional pea protein supplier, is working with plant-based meat firm ZhenMeat to deliver plant-based dumplings and mooncakes. 

Meat matters

Both US and China found success in products widely enjoyed in their localities. In the case of Beyond and Impossible, the burger patty rules demand, while in China, regularly consumed items such dumplings or seasonal offerings such as mooncakes are the target of local players.  The choice of meat is also important. The ratio of pork-to-beef consumption ratio is heavily skewed in China, where people eat pork 7 times more than beef. 

When it comes to Southeast Asia’s diverse populations, product-market fit testing is a must. Dumplings might work for Chinese communities in Singapore, Malaysia and Indonesia, but it’s not a local favorite in Vietnam, Philippines and the rest of Southeast Asia. As a result, product offering and manufacturing processes need to be ready to scale and adapt to the different consumption habits of each ASEAN country.

Preaching to the animal farm

Given how nascent and niche the global market for plant-based meat has been until recently (the vegan burger has been around since 1982) and otherwise entirely absent in Southeast Asia, finding product-market fit is only the prelude to the real battle: brand awareness. And when it comes to brand awareness, being selective and strategic is key to keeping marketing costs low, as the success of Beyond and Impossible have proven. 

Beyond carefully picked out famous vegan athletes as their brand ambassadors such as Kylie Irvin, Derrick Morgan, Malcolm Jenkins to battle misconceptions around vegan diets being nutrient-deficient. While any consumer brand could implement this strategy, Beyond does it with relatively minimal dollar spending. These celebrities are either Beyond’s own strategic investors or activitivist for vegan diet who asked for little to no cost for their endorsement. 

While Impossible Foods differentiates itself by focusing on the proprietary ingredient, yeast-based hemoglobin, for its “real meat” effect, the same celebrity endorsement playbook is applied of working with A-listers who believe in the value proposition and as a result will not expect high sponsorship fees. 

Partnering with the right influencers and getting their buy-in is crucial to create brand awareness while ensuring growth isn’t cut down by heavy marketing spend. In Southeast Asia where influencers are either a dime a dozen on social media or personalities well beyond reach, banking on A-listers may not be the only approach but finding the right influencer-product fit remains crucial. 

Milking the right cows

This selective approach extends to investors as well. The investor list of Beyond Meat and Impossible Foods share a few names in common: Blue Horizon (Zurich) and Collaborative Fund. Collaborative provides a strong ecosystem for consumer brands, with investments across multiple segments such as Ripple and Just, two leading dairy-free protein startups. On the other hand, Blue Horizon’s portfolio companies have been pushing boundaries of market awareness on food sustainability. 

For Beyond, food manufacturers also became strategic partners. The support from Tyson Food and General Mills brought in strategic benefits to brand development, manufacturing, and packaging processes. With Beyond Meat’s success in the public markets, more money is coming to back alternative proteins even in regions like Southeast Asia. Temasek recently participated in Perfect Day’s $140 million series C, which is driving interest from Southeast Asian investors.

However, not all cows provide the same quality of milk. One dollar from this investor is not equal to one dollar from another. It is crucial for entrepreneurs to take a step back and carefully evaluate investors before taking their “smart money”.

 

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