Beyond Disruption

Disruption is the fashionable word that entrepreneurs use these days when they come up with a new way of meeting a currently met market need.  Some of the industries and businesses that have been disrupted since the mid-1990’s: taxis, hotels, travel agents, mail delivery, newspapers, even owning clothing (yes, you can now get a wardrobe rental subscription) are a century or more old, and they were caught snoozing on the beach by the rising tide that swept over them and left sand in their unfashionable swimsuits. 

Successful entrepreneurs — the buying islands and NBA franchises kind of successful —  do not simply see market opportunities, they see large, lumbering, defenseless dinosaur industries that are ripe for exploitation.  (Think of a carnivorous packs of agile velociraptors swarming and feeding on a grazing apatosaurus).

The latest industry to be disrupted is the meat industry, and the disruptors are producing meat substitutes produced from protein-replacement formulas.   Beyond Meat raised $122 million in its Initial Public Offering on May 2. On Crunchbase, Beyond Meat (Ticker: BYND) describes itself as “planting The Future of Protein. Delicious, 100% plant-based products without the health and other downsides of animal protein.”

In her book “The Big Fat Surprise,” published in 2014, Nina Teicholz documented the systematic marginalization of the meat industry without any basis in research. In her introduction, Teicholz writes: “Almost nothing that we commonly believe today about fats generally and saturated fats in particular appears, upon close examination, to be accurate.”

Beyond Beef contains a long ingredient list: Water, pea protein isolate, expeller-pressed canola oil, refined coconut oil, contains 2% or less of the following: cellulose from bamboo, methylcellulose, potato starch, natural flavor, maltodextrin, yeast extract, salt, sunflower oil, vegetable glycerin, dried yeast, gum arabic, citrus extract (to protect quality), ascorbic acid, succinic acid, modified food starch, annatto (for color). 

Beef has one ingredient: beef. And, according to the web site Healthline, grass-fed beef contains a host of beneficial nutrients in greater quantities than conventional beef, including Omega-3 fatty acids, and vitamin E which helps to protect human cell membranes from oxidation.

Other downsides of meat? By downsides perhaps Beyond Meat is referring to climate change? In the 2017 book “Drawdown,” edited by Paul Hawken, which documents a plan to reverse global warming, Managed Grazing is listed as the 19th (of 100) most important strategies to fight climate change.

In January of 2018, biologist Daniel B. Hewins of Rhode Island College et al, published a study in the journal Nature of their findings from research on the impact of grazing on the soil carbon retention of Alberta, Canada grasslands. They wrote “long-term exposure to moderate grazing increased soil carbon mineral concentrations, particularly within the top 15 cm of mineral soil.”

The meat alternative companies have done a masterful job of dominating the conversation about protein for humans and have raised breath-taking amounts of capital to do it.  But are the meat substitute companies making the world any less warm? Maybe. Are they helping people to feel better about their food choices?  Most definitely.  Beyond Beef is winning the marketing message fight leaving the food industry dinosaurs in the dust.

Beyond Meat made its debut at Whole Foods Market in May of 2016, and now has a market capitalization of over $5.5 billion.   Analysts at Barclays believe that plant-based meat substitutes can reach sales of $140 billion in 10 years.  According to Nielsen data, in comparison, retail sales of labeled fresh grass-fed beef grew from $17 million in 2012 to $272 million in 2016, doubling every year. 

As a food industry professional, I am awed by the cultural relevance that Beyond Meat, Impossible Burger and the other meat-replacing disrupters have achieved in a very short period of time.   However, there is a segment of the meat industry that deserves equal attention, and that group is comprised of the many small farms, ranches, meat processors and abattoirs that are striving to produce meat sustainably and responsibly.  Keller Crafted Meats, for example, a meat processor and distributor based in northern California and Reno, Nevada, works with a carefully selected group of American meat producers that support rural communities, open pastures and compassionate treatment of their animals.  Rancho Llano Seco, based in Chico, CA, raises hogs outdoors and provides them with feed raised on the company’s land which owner Charlie Thieriot and his ancestors have been stewarding for generations.  Both of these companies and their colleagues all over the United States, are passionate about protecting the land and feeding their customers nutritious whole foods.

Defining Your Category in a Crowded Market

The natural, organic and specialty food world can feel crowded sometimes, especially when you think of densely populated categories like granola (117 in a recent search on Amazon), or trail mix (1,258).  The reason that these categories get crowded is because the barriers to entry are relatively low.  Making granola, while very satisfying for a home cook, takes ingredients, a few sheet trays and mixing bowls and an oven.  Trail mix requires even fewer inputs.  Making these products commercially does not require a high degree of culinary skill.

Both of these categories have some very high quality products and they are deserving of the sales that they earn.  Creating a food product that can fight off the competition is a daunting challenge.

Have a barbeque sauce that all of your friends rave about?  Do you make the best chocolate chip cookies in the county? That’s awesome!  Before you start developing a food product that you wand to have sold at retail, it’s critical to carefully ask yourself (and answer) a few big questions:

1. Who’s going to buy my product?  Your customers, or your target market, are you most important constituency.  Pleasing the customers by fulfilling a need of theirs is critical to your success.

2. What’s my competition?  Where are your desired customers currently getting what you plan to sell.  Unless you are lucky enough to have discovered a new super-fruit from the South American rainforest, or invented the greatest thing since sliced gluten-free bread, chances are you are trying to sell something that someone else already has on the market.  How is yours better and different?

3. Why would someone buy my product instead of what’s already out there?  Point of differentiation, value proposition, x-factor, silver bullet, are all terms used by marketers to describe the attribute that one product has to separate it from all the others.  As a food manufacturer, your product must have something about it that sets it apart from the hundreds of other products in your category that are entering the market each year.

4. How will I make money?  Obvious, yes, but not easy.  Ingredients, labor, packaging, rent, utilities, insurance, transportation are all costs that you need to invest before you can make your first sale.

Do you have an amazing product that you want to take to retail?  Nice!  I’d love to help.  I have 15 years of experience in the retail food business and I can work with your company to get your products launched, growing or relaunched quickly.  Contact to start the conversation.