SINGAPORE (May 6): On May 2, the maker of what is essentially fake meat raised US$241 million ($328.36 million) in an IPO on Nasdaq. California-based Beyond Meat sold 9.63 million shares at US$25 each, the top of the pricing range. The listing gives the 10-year-old company an implied value of about US$1.46 billion, or 16.6 times its 2018 revenue of US$87.9 million. It had been making losses of around US$30 million for both 2017 and 2018.
Beyond Meat makes burger patties, sausages and minced meat from plant proteins, such as those from peas, and promises the satisfaction of the real deal. It has a line-up of athlete “ambassadors” — including professional American footballer Derrick Morgan and Houston Rockets basketballer Chris Paul.
According to Crunchbase, prior to the IPO, Beyond Meat had already raised US$122 million in seven rounds of funding, and its backers include Silicon Valley venture capital firm Kleiner Perkins, Microsoft founder Bill Gates and actor Leonardo DiCaprio. And as the market eats up Beyond Meat’s shares, these investors, as well as the company’s founder and CEO Ethan Brown, are set to become even richer.
Beyond Meat and its offerings are actually just one of numerous options that the urban middle classes have when it comes to food. San Francisco-based Impossible Foods, backed by Temasek Holdings, also offers a beef alternative. Its version uses the iron-containing molecule haem, found in the root of soybean plants. Both Beyond Meat’s and Impossible Food’s products are distributed widely in the US and, most recently, were launched here. While current offerings could be pricey — $27 for a Beyond Burger at a restaurant here, for example — there is a chance these meat alternatives could become more mainstream. Fast food chain Burger King is set to offer an Impossible Whopper in the US that would cost only US$1 more than its regular burger.
In interviews, Beyond Meat’s Brown said it was concern for the climate that drove him to develop the vegan burger. Studies have shown that the biggest impact on the climate comes from industrial livestock farming — it contributes more than 80% of greenhouse gas emissions. People have argued that the biggest effort that individuals can make towards saving the planet would simply be to cut down on the consumption of meat and dairy products. As we report in this issue of The Edge Singapore, the companies say the process of converting plants to protein, without the middle process of harvesting crops to feed animals, uses remarkably less land and water than regular livestock farming, although it does cost a lot more to produce.
The seeming success of Beyond Meat follows widespread public backlash against processed food and industrial farming. Who could forget the “pink slime” furore or exposés of “factory farming” in the US showing chickens and pigs covered in filth and the wires of cages cutting into their flesh?
But should plant-based burgers really take off, would we then be faced with unintended issues such as those arising from the mass cultivation of peas or soybean? For example, last year, a team of scientists, including researchers at the University of Cambridge, published a study suggesting that agriculture, which appears to be more eco-friendly, uses more land and actually results in greater environmental cost per unit of food. Conversely, so-called “high-yield” farming aims to maximise the food output from existing land and would therefore be less ecologically damaging: If it uses less land, it would cause less soil loss, use less water and likely produce fewer pollutants.
Importantly, the scientists cautioned in the journal Nature Sustainability that if higher yields were only used to increase profit or lower prices, it will accelerate the damage to the environment.
The progress that Beyond Meat and its peers have made and the attention and investment they have attracted for the manufacturing of vegan burgers are quite a feat. The positive effect on the environment, produced by replacing meat with plant-based alternatives, is also welcome.
Yet, along with meal kits, food delivery services and all ancillary businesses in between, they are still options only for the middle class and wealthier. Experts say for the poorer parts of the world, there are no viable substitutes for meat that can offer the same caloric value, and complete substitution would actually be detrimental to health.
The growth of meat alternatives is also unlikely to contribute to efforts to reduce poverty, inequality and hunger, and may very well worsen the situation, as valuable resources are directed away from the agricultural sector. Indeed, according to development economists and agriculture specialists, investment in improving agriculture, particularly smallholder farms, is one of the most effective methods to deal with hunger and poverty. Smallholders farm land of between one and 10ha are prevalent in developing markets in Asia and Africa. According to various sources, there are more than 570 million smallholder farms worldwide, employing about one billion people and accounting for roughly three-quarters of the food consumed by people in Asia and Africa.
For these farmers and consumers, a world away from the Californian labs and the big cities, having real meat would already be a welcome replacement for humbler fare.
This story appears in The Edge Singapore (Issue 880, week of May 6) which is on sale now. Or Subscribe here
