Beyond Meat vs. Impossible Foods: The fight for market share in meat-free foodtech
By Joshua Mayers, PitchBook
May 10, 2019
If meatless burgers aren't already on the menu at your favorite fast-food spot, they might be soon.
Highlighted by Beyond Meat's stunning public debut—which recorded a jaw-dropping 163% gain in its first day—the vegetarian alternatives category of foodtech is blowing up. And now the ravenous race for market share begins, with Beyond Meat and Impossible Foods (which has raised nearly $500 million in debt and equity) in prime position to benefit from rapid and radical changes around what we eat.
"As demand increases, we expect a flood of new entrants chasing an expanding market opportunity," said PitchBook Emerging Tech analyst Alex Frederick. In his recently published foodtech report, Frederick noted how VCs poured $7.5 billion into foodtech startups in 2018, an all-time high.
Here's a sample of fast-food chains offering meat-free products, either in collaboration with Beyond Meat/Impossible Foods or via their own proprietary offerings:
• McDonald’s recently began selling a vegan burger in Germany called the Big Vegan TS
• In April, Nestle announced the launch of its own meat-free burger branded as the Incredible Burger in Europe (with a launch in the US later this year called the Awesome Burger)
• Burger King has announced that its Impossible Whopper will be available at all US locations by year end
• White Castle has launched and later expanded the availability of its Impossible Slider
• Del Taco has been selling its Beyond Taco since March
• Carl's Jr. began selling Beyond Burgers in January
• Taco Bell is expanding its new vegetarian menu (but no vegetarian alternative products)
Big names + big moves = good news for investors banking on mass market adoption.
"While high up-front R&D costs may dissuade competitors initially, successful products could quickly become commoditized as competitors can reverse engineer manufactured foods," Frederick said.
Private investors have long been aware of the opportunity in the vegetarian alternatives category, with Kleiner Perkins, for example, emerging as a big winner in Beyond Meat's IPO with a 15.9% pre-IPO stake—having first backed the company in early 2012. Other notable investors include Obvious Ventures and DNS Capital.
Big-name industry players are also heavily invested in the space, though Tyson Foods (via its venture arm Tyson Ventures) might lament selling its Beyond Meat stake right before the IPO as it reportedly pursues its own meat-free products.
Another opportunity parallel to meatless alternatives is lab-grown or "cultured" meat, a still-emerging area where venture investors have committed more than $42 million. Lab-based fish producer Finless Foods, as an example, has plans to commercialize a bluefin tuna product in the second half of the year. While not vegetarian, these products can address the needs of consumers with food industry concerns like carbon emissions and the ethical treatment of animals.
One area to watch going forward will be government action. For instance...
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