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As new market booms, which meat alternative will win out?

Kristen Leigh Painter, Star Tribune (Minneapolis) on

Published in Business News

Mighty Spark Foods, a Minneapolis maker of lean natural meats, links and blended patties, filled its corporate website for months with recipes and news about its executives and charitable work.

Then came the Beyond Meat IPO. The Los Angeles-area maker of faux meat based on pea protein and other ingredients went public last month, and its stock price jumped more than any other IPO this year. An article then appeared on Mighty Spark's website headlined, "The Truth About Lean Poultry Compared to 'Faux Meat.' " It said that its patties have fewer calories, fewer carbs, less fat and less saturated fat than Beyond Meat's.

"I don't think the average consumer understands that," Nick Beste, Mighty Spark's founder and chief executive, said in an interview. "I know my girlfriend doesn't and I run this company."

Beyond Meat's meteoric stock-market debut has shown there's big money in alternative meats, perhaps far more than entrepreneurs like Beste ever expected. Its shares opened at $25 on May 2, briefly touched $200 last Tuesday before falling to around $165, a level that placed the company's market value at $10 billion.

Now, investors are looking more seriously at other makers of alternative meat products. And industry giants like Hormel and Tyson said they are working on their own plant-based proteins.

Like Beyond Meat, scores of small companies are trying to do meat differently. Some are raising meat from cells in a lab while others make imitations from newly concocted plant-based ingredients. All these innovators are trying to connect with consumers, as well as investors, and are preaching their own different virtues: environmental, social or nutritional benefits.

And in the weeks since the Beyond Meat IPO, the tone coming from these entrepreneurs' firms has changed. While they previously extolled the virtues and benefits of their approaches against conventional meat products, they are now drawing sharp contrasts with each other -- with knives unsheathed.

"The competitors in the space are freaking out because there is so much attention right now," said Laurie Demeritt, chief executive of consumer-food research firm the Hartman Group.

For instance, Impossible Foods, which makes a plant-based burger patty similar to Beyond Meat's, just published an environmental-impact report that took aim at a practice called regenerative grazing, which yields meat from animals raised in a manner that reduces their carbon impact. Impossible called such meat "the 'clean coal' of beef."

That angered Will Harris, a well-known rancher and leader in the regenerative-agriculture movement. "I welcome the discussion and the new meat products that are being offered. I think it's good for consumers to have those choices," Harris said last week. "But I am resentful of the criticism that each of these proteins is offering of others."

The past year has given rise to a plethora of alternative-meat companies that fall into different segments and claim different advantages over regular meat and each other.

Beyond Meat and Impossible make fake meat from non-animal ingredients. Cultured meat is grown in a lab from the cells of animals. Blended-meat products, like Applegate's Blend Burger or Mighty Spark's Southwest Chicken Patty, aim to reduce the amount of meat in a product by mixing in vegetables, beans and nuts.

And then there is the regenerative-agriculture movement, led by firms like White Oak Pastures, Harris' Georgia-based company that supplies meat to Epic Provisions, a General Mills brand. Such producers rotate animal grazing and take other steps that some said more than offset the carbon cost of raising an animal on a farm.

The more that industry creates new, exciting options, the more consumers will experiment, Demeritt said. "People are looking for a diversity of choices because they are eating (protein) so much," she said.

Vegetarianism and veganism rates remain relatively flat, while consumer willingness to swap out some meat for some plant-based options is growing. But advances in food technology have led to a flood of new options that are moving the segment far beyond the old black-bean or garden burger.

The lab-raised meat category attracted three times more investment capital, about $50 million, in 2018 than the year before, according to the Good Food Institute, an interest group advancing cell-based and plant-based meat alternatives. Minnetonka-based Cargill Inc., one of the world's largest meat processors, has invested in two cell-based meat startups, Memphis Meats and Aleph Farms.

Meanwhile, sales of plant-based meat alternatives grew 9.1% in the year ended May 19, according to SPINS, a Chicago-based consumer data firm that specializes in specialty and natural foods.

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Proponents for both lab-raised and plant-based meat products said they provide a way to eat meat -- or a meat-like substance -- without contributing to the high greenhouse gas emissions commonly associated with traditional livestock farming.

Meanwhile, advocates of regenerative grazing said their product, when raised using the best practices, goes a step further by actually creating a carbon net-negative.

Harris points out that a recently completed life-cycle analysis by independent-research firm Quantis found that White Oak Pastures contributed a negative 3.5 kilograms of carbon for every kilogram of meat produced, while the Impossible Burger was a net emitter. But a separate life-cycle analysis by the same research firm found Impossible Burger reduced other environmental loads, including water use and methane emissions from cattle.

Still other innovators said the best way to change and improve the meat business is to simply reduce the amount of meat in a product by lacing it with vegetables. This has given rise to the so-called blended-meat products.

And beyond the nutrition debates, there are social arguments. Proponents of regenerative agriculture say their system can help restore rural America's economy. And Mighty Spark uses proceeds from its product sale to donate meals to those in need.

"Wherever you can see a benefit, there is a trade-off," said Jennifer Schmitt of the University of Minnesota's Institute on the Environment. "It matters what you care about" in determining what product you are going to choose.

But research continues to show that personal health and wellness remains the most important food attribute consumers seek. And in the weeks since the Beyond Meat IPO, a robust debate emerged about whether its products are nutritious.

"Regardless of what a professional (nutritionist) might tell you, the consumer perception is that these products are better for you than meat, and they are better for you then the first generation of meat alternatives were," Demeritt said. "I do think the jury is still out on whether that perception of health will change or not."

That's what Mighty Spark wants to educate consumers about. Its Southwest Patty is 50% chicken and 50% vegetable add-ins. Mighty Spark, with revenue just below $10 million in 2018, is quickly working to develop additional blended-meat products.

If everyone were to adopt products like this, it would be a good step toward reducing global meat consumption, said James Gerber, at the U's Institute on the Environment. "When you think about ... how we struggle and fight over car efficiency standards of 5% change per year and here is 50% stat, that's huge," Gerber said.

Demeritt said she thinks blended products are the most likely to succeed long-term. "They have some of those taste attributes and the consumer feels good about eating less meat," she said.

As for all the companies bashing one another, Harris of White Oak Pastures in Georgia, hopes producers keep their minds open and let the products do the talking. "What's true is there are many, many consumers, that have their own reasons for eating or not eating something and we as producers should be respectful of that and we should do that by respecting the truth of what we do," Harris said.

(c)2019 Star Tribune (Minneapolis)

Visit the Star Tribune (Minneapolis) at www.startribune.com

Distributed by Tribune Content Agency, LLC.


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