Impossible Foods: Why kill a beast when you can just use yeast?
Can genetic engineering help supplant traditional meat?
Last week, I introduced the plant-based meat industry and talked about how companies in the space are attempting to address climate change by developing plant-based alternatives to traditional meat products. Over the next few weeks, I’m going to be focusing on one of these companies, Impossible Foods, the challenges it faces, and what it is doing to address them. Impossible is attempting to draw consumers away from traditional meat by mimicking it on a molecular level, a fitting approach for a company founded by a biochemistry professor. To accomplish this, Impossible ferments genetically engineered yeast to produce the iron-containing molecule, heme, that is responsible for meat’s characteristic flavor and appearance.
Despite this technological breakthrough, Impossible still faces obstacles to its future success. Based on my learning of Porter’s five forces from Darden’s Foundations of Business Strategy course, Impossible’s biggest threat is substitute products, primarily traditional meat. One would think that lab-grown meat and other plant-based products would be its biggest competitors but the sheer size of ground there is to be gained from the incumbent meat industry means that, at least in the near future, it won’t be competing with companies in these spaces as much as one would think. In fact, data collected by Impossible shows that 75% of people who purchase its products would have just bought regular meat instead of other plant-based alternatives had its products not been available.
Presently, the biggest threat that traditional meat poses to Impossible is that it is cheaper. This is for myriad reasons. One is that today’s meat industry has had a century to optimize its operations. Impossible has a lot of work ahead itself before it can achieve the same economies of scale. There is also the fact that traditional meat enjoys various subsidies, both direct and indirect, from the government that are not afforded to Impossible that one could argue result in artificially low prices far less than what they should be.
Impossible must also overcome the negative views many have of GMO products. While concerns about GMOs are generally unfounded, they still exist and have consequences. For example, Impossible’s spread to other markets such as Europe and China is currently being slowed by the very strict regulatory climate that exists around GMOs in these regions. The easiest way to lose to a substitute is to not even be on the shelf.
There is also the possible scenario of traditional meat players introducing meat that has been produced from animals whose feed has been supplemented with additives that reduce the amount of methane emissions they produce. This hypothetical “clean meat” (I’ll leave it to the marketing professionals to think of a potentially better name) could be more acceptable to consumers and steal a bit of Impossible’s thunder. It is important to point out that these emissions reductions would still be far less than those of plant-based meat but realization of this requires consumers to look beyond surface-level marketing which most consumers don’t have the time or interest to do.
Impossible is certainly faced with many challenges as they seek to carve out a larger and larger market share for themselves. However, it is not the first underdog to go up against a seemingly insurmountable incumbent and, given the pace of change in the world these days, you could say that there’s never been a better time to be an underdog. Next week I’ll be focusing more on Impossible’s capabilities and how it is poising itself to be a major player.
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Notes:
https://impossiblefoods.com/heme
https://www.yahoo.com/lifestyle/impossible-foods-ceo-beyond-meat-151310358.html
https://www.reuters.com/article/us-hongkong-impossiblefoods/impossible-foods-launches-in-asian-grocery-stores-as-it-aims-to-move-into-china-idUSKBN2750A2global-warming/