The Case for Impossible Foods & Plant Based "Meat"

Disclaimer: 1. Anything related to ideologies or beliefs will not be discussed herein, as those are not the focus of this article. 2. Do not treat my analysis or prediction as any form of financial or investment advice, as I'm not a FINRA licensed financial advisor nor do I solicit clientele relations online or offline.

To understand any business well, one must observe from both the high level and from the forefront of the trenchlines to get the first hand information and intuition. Unlike both the fans cheering for plant based meat simply for "ethic" reason and the folks who oppose it for the same reasons, both of which are merely emotional impulses to me, as a humble observer of the world and a business professional, I did some research about plant based meat with 2 trials of first hand experience along with industry research over the past few weeks (months). My temporary conclusion says that to a certain extent plant based meat is a great application and great business potential from an investor or business professional point of view, while the taste is beyond expectation from an eater point of view, thus as part of the core business competency for the domain as well.

In summary, here are a few takeaways why I am very impressed of the plant-based meat business and its potential:

1. Production cost is less expensive when it's at scale. Production time from end to end should be much shorter as well. Likely storage is also less complicated. So is profitability margin when the scale keeps growing.
2. Taste is almost identical to real meat (sausage & burger patty).
3. Using vegetarians and vegans as an initial market catch is fine. The potential to scale and spin to all sorts of diners for "fun" or "dollar efficiency" is also present.
4. It gives the large capitals opportunities to drive up flares and scramble the markets around by social engineering.

Here are my two trials:

• My first trial was sausages from #BeyondMeat #BYND. I must say that I was very impressed. For a bit over $2 I got 14 oz of plant based sausages with perfect texture and flavor. As one of the biggest meat lovers out there, my immediate reaction was zero criticism to the food, or the price. The fact that it was sold at that price at a discount store, much lower than retail price elsewhere or online price on Instacart, I see that not a bad thing -- meaning decent room for margins, even in such an early stage overall, even if it's from overstock. Or, perhaps it's just a growth marketing strategy to test the water in the lower pricing tier of retail grocery markets.
• My second trial was burger patties from #ImpossibleFoods. Like the first trial, the texture and taste again received a 10/10 from me. For $2.5, again from a discount store, I got 8 oz of plant based burger patties. For work ethic, I tasted both the raw plant meat and the cooked version. As someone who's not afraid of Covid or E Coli of course I wouldn't be afraid of some raw plant meat either. I must say that the raw plant meat tastes just as good as the cooked one, perhaps a snack someday? I also measured the size and thickness of the patties, the time it took to cook to become a "medium" or "medium well", and compared it with the cooking of a normal beef burger. It seems to me that it took slightly a bit longer to cook a planet patty, but that's likely due to the blood-color food coloring. Without adding any salt, the salty level was just perfect for me. Without knowing the ingredients, my first gut feel after the first few bites was that the patties likely contained a lot of mushrooms and some beans. However, after I looked up the package detail and information online, I realized that it's only soybean, which is interesting to me, perhaps lower logistics costs for Impossible Foods also. As I will test the second patty on a later date to see how the passion lasts for an "average guy" or how "addiction" could possibly develop for an average guy, I instead made another toasted bread sandwich with egg for the evening, to get a gut feel about portion, as someone who usually has a good appetite. The result came back quite well also - one "burger" seemed likely fine for most people (perhaps more filling than a regular 4 oz burger patty), with some simple sides, and for me with the second sandwich the satisfactory score was high also after the egg sandwich. It was a good dinner, and a positive second trial.

Now let's look from the big picture - the industry, market trends, production costs, scalability, profit margin, stickiness, and social factors:

• Given the "easy" monetary policy and low interest rates for the foreseeable future, venture investors and Wall St are likely out there for hunting "the next big something" and willing to invest in businesses that can return high multiples with exponential growth. While the food production industry hasn't changed much over the past few decades besides the "organic" and "GMO free" craze, I'm sure that big investors would like to dig some opportunities of lucrative returns.
• Unlike "organic" and "GMO free" which usually have a higher intrinsic food production cost, plant based meat fundamentally lowers the cost of food production, that results in about the same level of consumer satisfaction - even for one of the biggest meat lovers like me. Instead of breeding a cow, feeding the cow, owning a farm, property tax, butchering a cow, storing the cow, along with a number of regulatory licenses, plant based meat can simply leverage on low-cost abundant US soybean productions at a fraction of the cost if it's at scale big enough. Soy beans are among the cheapest agriculture products for human beings, and I believe that excess costs such as "bloody" food coloring isn't even necessary in long term. Furthermore, overtime farm lands are likely to become more expensive, also higher taxes, but plant based meat are independent from such inflationary factors other than soybean commodity cost and labor costs. If consumer satisfaction is about the same, and costs are much lower, production time is much shorter, it means the margin is better, and scalability is higher. Why not?

• As someone sensitive and innovative, of course I still noticed a few minor differences between the actual meat taste and the Impossible Burger "meat" taste, though not negative differences. Within half an hour I actually invented ways to make normal meat patties taste like a plant based meat patty, which likely results in healthier outcome anyway. As I have no plan to open a restaurant, that was a reverse experiment. I won't share in detail in this public article.
• I believe that the "ethic" or "social impact" point in this business is great marketing that resonates with a lot of people, especially the early adopters such as vegetarians, vegans and those with dietary restrictions for health reasons. That is a good basis to start with. In the long run, as hardcore vegetarians and vegans unlikely would even "want" the meaty taste, the real long term future of plant based meats are everyday consumers as an alternative food option, easier to store and feels neater. While people don't have to agree on their beliefs about meat or the planet, as always, as every other topic, it wouldn't hurt to use this kind of viral marketing to drive the growth, whether a belief is true or false, makes sense or no sense - nobody would get hurt anyway, except more competitions for the meat farms.
• I also calculated further in depth the estimated supply chain and logistics cost ranges to understand this business better, which I won't share in this public article.

Summarizing all the points above, it gave me a temporary conclusion and the belief that the plant based meat industry will grow exponentially, potentially at much higher future growth multiples than things like cryptocurrency.

One more point, unlike meats, it is much easier for plant based meats to add certain nutrition to become "utility" and "nutrition" or even "medication" diets in the future. Think of a #Redbull or #Monster #MNST but in the plant based meat sector? The room for further innovation and imagination is just so huge. I see a bright future for Impossible Food and this industry.

As innovators, business professionals and investors, we must always keep an open-mind towards new concepts, new inventions, new opportunities and a new world that might be better or worse than what we already have, instead of using prejudice and "normal thinking" to make conclusions before getting first hand experiences objectively and digging deep. It's an amazing world out there.

Stay humble. Stay hungry.