Lecture Notes: The Rise of Beyond Meat
Introduction
- The burger: Iconic in American culture.
- Significant environmental and ethical concerns associated with meat production.
- 32.2 million cattle processed in 2017 in the US. (Factory farming)
- A pound of beef requires 308 gallons of water and to digest cows emit a lot of gas (methane)
Beyond Meat: An Alternative
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Company Overview
- Founded by Ethan Brown, a former carnivore turned vegan.
- Products made entirely from plants.
- Available in supermarkets, restaurants, hotels, and sports stadiums.
- Significant investments from prominent figures like Bill Gates and Leonardo DiCaprio.
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Product Composition
- Mimics meat's look, taste, and cooking behavior=> in terms of its molecular composition. So the proteins, the carbohydrates, the lipids, minerals, and vitamins, all of which are available, except for cholesterol, in the plant kingdom. All of the facility's R&D lab technicians are trained meat simuliers.
- Ingredients: Peas, rice, mung bean, beets, potato starch, and coconut oil=> figure out what makes meat taste and behave like meat at the molecular level and then go out into the plant kingdom and identify materials that behave the same way.
- Nutritional Profile: Similar protein content as beef but higher sodium and fat.
what existed before
Veggie burgers are nothing new. They've been around since 1982. Previous generations of veggie burgers generally were preformed burger patties that were already cooked, that you essentially reheated.
Market Presence and Growth
- Beyond Meat sold over 25 million burgers since 2016.
- Filed for a $100 million IPO in 2018.
- Available widely across grocery stores and fast food chains.
- Expansion into other plant-based products like chicken strips and sausages.
-consumed not only by vegans and vegetarians, but also by carnivores
Competition
Challenges and Future Outlook
- Beyond Meat focuses on improving product quality and reducing cost.
- Sales of plant-based meats grew by 24% in 2018, compared to 2% for traditional meats.
- Ethan Brown is optimistic about plant-based meat overtaking animal protein in the future.
Conclusion
- The plant-based meat industry is booming, driven by environmental considerations and changing consumer preferences.
- Future prospects include developing more diverse plant-based meat products like bacon and steak.
- Conduct a five-forces analysis on Beyond Meat’s industry. The video notes that sales of plant-based meats grew by 24%. How is this growth likely to impact each force? Will the strength of each force be impacted at all? Will it increase or decrease? Use your analysis to justify your answers. How is industry growth likely to impact each force? Explain below with one or two sentences for each force
1)Here is a five forces analysis of Beyond Meat's industry, with explanations of how industry growth might impact each force:
1. Threat of New Entrants:
- Industry Growth Impact: Likely to increase the threat of new entrants. Rapid growth attracts new players seeking to capitalize on the expanding market.
2. Bargaining Power of Suppliers:
- Industry Growth Impact: Could decrease the bargaining power of suppliers. As demand for plant-based ingredients increases, suppliers may face more competition, giving Beyond Meat (and others in the industry) more leverage.
3. Bargaining Power of Buyers:
- Industry Growth Impact: Likely to decrease the bargaining power of buyers. With a growing number of plant-based meat options, buyers have more choices and less power to negotiate prices=> likely to have to accept the prevailing market price
4. Threat of Substitute Products:
- Industry Growth Impact: Likely to increase the threat of substitute products. As plant-based meat gains popularity, it attracts competition from traditional meat producers who are developing their own plant-based alternatives.
5. Rivalry Among Existing Competitors:
- Industry Growth Impact: Likely to increase rivalry among existing competitors. As the market grows, companies like Beyond Meat and Impossible Foods will aggressively compete for market share and customer loyalty.
- Based on your five-forces analysis, how could Beyond Meat increase its profit relative to the other industry participants? Outline your recommendation with a brief paragraph or a detailed bulleted list .
To increase its profit relative to other industry participants, Beyond Meat can leverage its early mover advantage and capitalize on the industry growth in the following ways:
- Strengthen Brand Identity and Differentiation: Beyond Meat should aggressively build its brand identity as the leader in plant-based meat, emphasizing its commitment to quality, taste, and sustainability. This can involve focusing on marketing campaigns that showcase its unique selling points, such as its "meat-like" experience and its environmental benefits.
- Scale Up Operations and Secure Supply Chains: As the market expands, securing a stable and reliable supply chain for plant-based ingredients becomes crucial. Beyond Meat should prioritize building strong relationships with key suppliers, ensuring access to high-quality ingredients at competitive prices.
- Expand Product Portfolio: Beyond Meat should continue to expand its product portfolio, exploring new plant-based meat options, such as bacon, steak, and other popular meat products. This will allow them to capture a wider customer base and further differentiate itself from competitors.
- Develop Strategic Partnerships: Partnering with major food retailers and fast-food chains can significantly expand distribution channels and reach a broader customer base. This can involve developing co-branded products or securing shelf space in high-traffic locations.
- Focus on Cost Optimization: As the industry matures, cost efficiency becomes critical for profitability. Beyond Meat should focus on optimizing its production processes, streamlining (optimising) supply chains, and exploring new technologies to reduce production costs.
By taking these steps, Beyond Meat can strengthen its position in the rapidly growing plant-based meat market, generate significant revenue, and increase its profitability.
3.You've been hired as a strategist for Beyond Meat. They want to know where they should be positioned to take advantage of weak forces in the industry. Is there such a position? Explain why or why not. Explain your answer below in a brief paragraph or a detailed bulleted list. Remember to use insight from your five-forces analysis.
While Beyond Meat can benefit from weak forces, there isn't a single position that fully mitigates all threats. Instead, they need a multi-pronged strategy:
- Leverage Supplier Power: The increasing demand for plant-based ingredients could give Beyond Meat more leverage with suppliers. They can negotiate favorable contracts, ensuring access to high-quality ingredients at competitive prices. This strengthens their cost advantage and allows them to offer competitive prices to consumers.
- Strengthen Brand Identity: As the threat of new entrants and substitute products rises, a strong brand identity is crucial. Beyond Meat needs to build a strong reputation for quality, taste, and sustainability, differentiating themselves from competitors. This can involve focusing on marketing campaigns that highlight their unique selling points and emphasize the benefits of plant-based meat.
- Expand Distribution and Product Portfolio: To counter the bargaining power of buyers, Beyond Meat can expand its distribution channels and product portfolio. Partnering with major food retailers and fast-food chains can broaden their reach and make their products more accessible to a wider audience. Expanding beyond burgers into new product categories, like sausages, bacon, and steak, can capture a broader customer base and appeal to a wider range of consumer preferences.
By strategically positioning themselves to take advantage of weak forces and address potential threats, Beyond Meat can solidify its position in the growing plant-based meat market, increase its market share, and drive profitability.