Meat Alternatives Sector – R&D Innovation & Pricing
Outlook – 15 April 2021
Disclaimer
The information, material and content contained in this transcript (“Content”) is for information purposes only and
does not constitute advice of any type or a trade recommendation and should not form the basis of any investment
decision. This transcript has been edited by Third Bridge and may differ from the audio recording of the Interview.
Third Bridge Group Limited and its affiliates (together “Third Bridge”) make no representation and accept no liability
for the Content or for any errors, omissions or inaccuracies in respect of it. The views of the specialist expressed in the
Content are those of the specialist and they are not endorsed by, nor do they represent the opinion of, Third Bridge.
Third Bridge reserves all copyright, intellectual and other property rights in the Content. Any modification,
reformatting, copying, displaying, distributing, transmitting, publishing, licensing, creating derivative works from,
transferring or selling any Content is strictly prohibited.
Specialist:
Title:
Moderator: Nyree Hinton (NH), Third Bridge Sector Analyst
Russ Egbert (RE)
Former Director, Protein Research at Archer Daniels Midland Co
Agenda:
1. Meat alternatives sector overview
2. R&D outlook and innovation
3. Demand drivers and pricing outlook
4. Partnerships and competitive landscape
Contents
Q: Could you give an overview of the alternative meat industry, highlighting the traditional meat categories it
3
has expanded into? Who are ADM’s customers? Who is demanding these types of products?
Q: Could you elaborate on how food technology for meat alternatives and plant-based products has evolved?4
Q: Could you expand on high-moisture extrusion? How does it compare to other techniques?
4
Q: How have ingredient companies adapted to the explosion of plant-based meat and this rapid change in
consumer preference? I’ve heard that scale is an issue, but I’m sure a company such as ADM would be well-
4
suited for that.
Q: Could you elaborate on the health benefits of alternative meat? Which ingredients are consumers trying to
5
remove from their diet?
Q: Which is most important to the consumer – taste, texture or ingredients? As you mentioned, people have
5
their own reasons for switching to meat alternatives.
Q: How hard is it for alternative meat producers to formulate products that match taste and texture of
5
traditional meat? What role do ingredient companies play?
Q: You suggested that the barriers to entry are still very high. What do you think attracted investment into
this market? When did players such as Beyond Meat and Conagra decide that this industry would be the future?
6
When did people realise the need to start producing alternative meat?
Q: Is this industry a fight between balance sheets and capital – essentially whoever has the most capital will
go the furthest, given the R&D profile and significant investment needed to enter the market? Is it about
6
innovation and proprietary techniques? Tyson and Kellogg can outspend Beyond, as you know.
Q: You referred to a raw materials shortage and limited soy capacity. Would you classify soy as the most
7
important commodity or product used in meat alternatives?
Q: Would you say there is opportunity to expand in pea capacity, considering it is only 5% of the market?
7
Q: Could you compare the overall timeline and resources used to formulate alternative meat products to the
7
production pipeline of traditional meat? Does it use the same amount of resources?
Q: Could you highlight the most market-changing, innovative, successful product launches? Why do you think
8
those products were successful?
Q: Why do you think Beyond is so successful at scaling large chain restaurants, while players such as
8
Impossible are struggling to meet that challenge?
Q: Can you outline the health benefits of meat alternatives, touching on additives and the broader GMO debate?
8
Q: Could you describe the process of making a non-GMO product? You said that GMO and non-GMO are
nutritionally equivalent, but mentioned the divided opinions and producers being willing to give consumers
9
the option. Are non-GMO products worth the investment and supply chain reinvention?
Q: How long do you expect companies such as Beyond Meat and Impossible to maintain their market
9
dominance?
Q: How has global demand for plant-based meat alternatives evolved? Is the rest of the world slowly catching
10
on to this trend? Is that happening in different regions due to religious preferences?
Q: What do you think is the biggest potential threat to the industry?
10
Meat Alternatives Sector – R&D Innovation & Pricing
Outlook
Transcription begins at 00:00:00 of the recorded material
NH: Welcome to Third Bridge Forum’s Interview entitled Meat Alternatives Sector – R&D Innovation &
Pricing Outlook. I am Nyree Hinton and I will be facilitating today’s Interview with Mr Russ Egbert, former
Director of Protein Research at Archer Daniels Midland.
Russ, before we get started with today’s Interview, please state I agree or I disagree to the following statement:
You understand the definition of material non-public information and agree not to disclose any such
information, or any other information which is confidential, during this Interview.
RE: I agree.
NH: Thank you very much. Could you start with an introduction to your background?
RE: I retired from ADM about 18 months ago. Prior to that, I’d been with ADM for 28 years. Initially, ADM
hired me and I provided technical support to the food industries in the Americas, Australia, New Zealand and
some in South Africa. Also provided support for several of the application areas, which included meat
alternatives. For the last 20 years, I was the Director for Protein Research, where I was responsible for the
development of new protein ingredients for the food industry to meet specific needs of our customers. Over
that time, created well over 50 new functional proteins to meet the needs in the food industry across the
board. Led the applications teams for meat alternatives, dairy alternatives, which included snacks and cereals,
nutritional bars, nutritional beverages, so really, across the board, any application where you would be using
protein in those applications. Then, also, our technical team then supported those applications directly with
our customers, providing technical support.
[00:02:31]
Q: Could you give an overview of the alternative meat industry, highlighting the traditional meat categories it
has expanded into? Who are ADM’s customers? Who is demanding these types of products?
RE: I would just say that, overall, especially in the last five or six years, we’ve really had a significant rapid
expansion in this category. You saw a similar expansion back in the late 1990s and early 2000s. Then, the
category basically went quiet and was flat for almost 20 years, and then, all of a sudden, like I say, we’ve had
this rapid expansion in the last few years. When we look at it from a category perspective, burgers and nuggets
or sausage products have always been the leaders in the category, but if you look today, you have meat
alternatives for meatballs, pizza toppings, deli slices, so slices that you’d put on sandwiches. There are some
companies that are doing high-moisture extrusion, that produce in-tact pieces that simulate a piece of a
chicken breast, or a strip of beef or pork, which is not new technology, but it’s finally being employed in this
particular industry. Just like the rest of the food industry, we see meal entrées, complete meals and meal kits,
so it’s really expanded across the entire sector of foods where you’d normally find meat.
Private and confidential 3
[00:04:51]
Q: Could you elaborate on how food technology for meat alternatives and plant-based products has evolved?
RE: The companies you see in the news, Impossible Foods and Beyond Meat, really, those particular
companies focus their research efforts on truly understanding what makes meat meat, what gives meat its
flavour, what gives meat its texture. They were funded by some individuals that had a real interest in seeing a
decrease in the overall dependency on animal-based meat products, interested in doing what they can to
improve climate conditions and saving the planet. Like I say, as they were funded, they were able to spend
significant dollars on research that allowed them to really produce some new burger products, as well as
sausage products, that do mimic meat very closely, ground-meat products very closely. Like I say, this high-
moisture extrusion is something different, and the company that really put it in the marketplace initially was a
company called Yves Veggie Cuisine, where Yves, the owner, was familiar with this technology. He then sold
his business to Hain-Celestial and then, five years later, started up a company called Gardein. Gardein, even
today, uses high-moisture extrusion to make numerous products that are on the shelves here in the US and
Canada. Gardein is now owned by Conagra Foods, under the Pinnacle brand of products, but again, they’re
doing high-moisture extrusion and producing some really unique, that have the bite and the textural
characteristics of whole-muscle products.
[00:07:40]
Q: Could you expand on high-moisture extrusion? How does it compare to other techniques?
RE: If you’re making a typical textured, extruded piece that’s going to be sold dry and then rehydrated, these
things, when they’re manufactured, you’re probably using moisture contents of 25-35% moisture. You’re
extruding them out into the atmosphere and then you’d dry that product, and then it’s sold to the food
development company. They take it, they hydrate it, it’ll hold 3-4 times its weight in water, and then, at that
point in time, it has the textural characteristics of ground meat. With high-moisture extrusion, you’re
extruding at moisture contents of, say, 55-60% moisture. If you tried to extrude that out into the atmosphere,
it would blow it all over everywhere.
What you actually have to do is you melt the proteins down to the point where they unfold, so your
temperature is above 130 degrees C [sic]. You then have to go through and you have to cool that down by a
cooling die system, so you actually are cooling that down, and you cool it back down to about 80 degrees C or
lower before it comes out of the die into the atmosphere. As we’ve unfolded that protein and then aligned
those proteins, we actually create muscle-like fibres and texture. Like I say, it is unique and novel, and instead
of being a ground piece that’s put back together, it is actually like a whole-muscle piece. The technology is not
new. The technology is well over 50 years old. It was developed in Japan. In the 1970s, they were looking for
ways to extend seafood, and it can also be used in conjunction with meat. You can extrude meat in
combination with vegetable proteins to create these things, and that’s what some of the initial work was, but
today, this is just plant-based proteins, flavours, some types of fat source, that are being used to then make
these unique textured pieces.
[00:10:48]
Q: How have ingredient companies adapted to the explosion of plant-based meat and this rapid change in
consumer preference? I’ve heard that scale is an issue, but I’m sure a company such as ADM would be well-
suited for that.
RE: I would just say that these proteins that are going into these alternative meat products have been used in
the meat industry for many years. The meat industry continues to consume, and this is my guess and my
opinion, probably, 80-85% of all of the textured soy proteins that are produced in the world today. Meat
alternatives, again, are just a small portion of this, but the problem right now in the marketplace is there really
Private and confidential 4
is limited capacity. On the soy side, you’re looking at what they call soy protein concentrate. It’s been made
through an aqueous alcohol extraction process, where you take a defatted soy flake, which can be ground to
meat, be soy flour, and you use aqueous alcohol to extract the soluble sugars to raise the protein content to
about 70%.
Worldwide, there’s actually a shortage of that raw material, and in order to be able to expand that capacity, it’s
a considerable amount of CAPEX, capital expenditure, that has to be employed to be able to do that. The
question is, this rapid expansion of meat alternatives, is it a fad or is it here to stay? My guess is it’s here to
stay. Really, it just takes time and money to be able to do those expansions, but you’re also going to have to
expand the texturising portion of that business, as well, in order to be able to make those textured products.
On the pea side, it’s a little bit different. Pea, you make an 80% pea protein product, and then that pea protein
product is then taken and extruded into a textured piece. There, again, pea protein is extremely tight in the
marketplace, whether it’s being used on the dairy alternatives side, on the meat side, the meat alternatives
side, or in nutritional bars. Those are the two primary ingredients that are being used, as is wheat. Wheat
protein also finds its place as part of these meat alternatives, as well, but you just have an overall shortage of
protein raw materials at this point in time.
[00:14:29]
Q: Could you elaborate on the health benefits of alternative meat? Which ingredients are consumers trying to
remove from their diet?
RE: I would say there’s this health halo about these meat alternatives. I don’t know if it’s warranted. When
you look at one of these meat alternatives compared to meat, nutritionally, they’re clearly similar. When you’re
looking at, say, a burger, the burger, you might have a reduced fat content and reduced saturated fat, but at the
same time, in order to achieve the flavour delivery, which is the key factor in these products, flavour is an
absolute, a must, sometimes, the sodium content creeps up. Then, you may have decreased fat, but you’ve also
increased sodium content, which has a negative health implication. I would say, overall, these products are
quite similar in their characteristics or from a nutritional profile. I think, really, individuals have other reasons
for moving from meat products to these meat alternative products.
[00:16:28]
Q: Which is most important to the consumer – taste, texture or ingredients? As you mentioned, people have
their own reasons for switching to meat alternatives.
RE: Taste is an absolute. If it doesn’t taste good, you may have a very small group of consumers that are going
to buy it and consume it, but overall, the taste has to be there, and then it has to have similar textural
characteristics to what they’re normally used to eating. I would say taste and texture are critical as you do
development in these particular products.
[00:17:20]
Q: How hard is it for alternative meat producers to formulate products that match taste and texture of
traditional meat? What role do ingredient companies play?
RE: Like I say, most of the ingredient companies that support the meat alternatives industry do have
application and culinary teams that are continually working on formulations, and working directly with their
customers to improve the quality of these products. I would say, up until the last few years, with both the
Impossible Foods burger as well as the Beyond Meat products, we really have met some of the hurdles,
whether it be from a flavour perspective, or a textural perspective or the ease of use, where it actually is more
Private and confidential 5
similar to buying ground beef. If you go out and you buy the Impossible Foods product, you can use it just like
you would ground beef. You go to the store and bring it home, and it looks and feels and has the
characteristics. That took significant research dollars to do that.
The real issue that I see is that, if you’re a consumer products company and you’re doing this development
work, you can only invest a certain amount of money, a certain amount of dollars, into this, because at the end
of the day, you’ve got to make money. To be able to spend the dollars that Beyond or Impossible have spent,
they would never get a return on their investment. Like I say, I think that’s been one of the real challenges.
From an ingredient supplier perspective, they continue to work on improving the characteristics of the
proteins that are going into it, from the binder system going into them. The companies associated with those
particular ingredients, like methylcellulose or vegetable gums, they’re looking to do the same.
[00:20:18]
Q: You suggested that the barriers to entry are still very high. What do you think attracted investment into this
market? When did players such as Beyond Meat and Conagra decide that this industry would be the future?
When did people realise the need to start producing alternative meat?
RE: My view is probably a little bit different. My view is that, when it comes to protein, as we go forward and
try to feed the population, we’re going to need every bit of protein that we can produce and regardless of
whether it’s animal-based or plant-based. I would say that, when you’re talking about a Beyond or an
Impossible, there was the underlying desire to improve the planet by decreasing meat, overall meat
consumption. When you look at it, whether it be a Nestlé expanding their capacity in the area, you’ve got
Conagra moving back into the market by buying Pinnacle Foods, you have Maple Leaf Foods up in Canada
buying Lightlife Foods and a company called Field Roast, you just see this interest.
Then, not only that. Then, you have all the meat companies, so the Tyson Foods of the world. If you go to
Brazil, you’ve got Marfrig, which is one of the largest meat companies in Brazil, as well as one of the largest
food companies and meat companies, BRF Foods, Toledo in Guatemala, (Nutresa 22.45) in Columbia, Quality
and Sigma in Mexico. All of these companies have realised this is a growing segment, and they want to make
sure that they don’t lose out on the growth in that market. The growth of the meat industry as a whole, if I
remember right, it’s growing at 2% or 3% a year. Now we’re thinking about a category that’s growing at 20-
25%-plus, and that’s something you don’t want to miss out on. I would say a Tyson Foods or a Conagra Foods,
having been labelling themselves as meat companies, over the last three or four years, they’ve started calling
themselves protein companies. That would be the same case of some of the companies that I’ve worked with in
Latin America, as well. They’ve come out and said, “We are protein companies. We’re not meat companies.
We’re going to provide protein to our consumers.”
[00:24:03]
Q: Is this industry a fight between balance sheets and capital – essentially whoever has the most capital will go
the furthest, given the R&D profile and significant investment needed to enter the market? Is it about
innovation and proprietary techniques? Tyson and Kellogg can outspend Beyond, as you know.
RE: You’ve got to realise that Beyond and Impossible have been funded by some fairly large groups that are
philanthropists. Whether there’s a return on investment needed on those dollars or not, that’s my question, is
whether there ever is going to be a return on investment. When you get into the main categories, and not really
getting into the specific types of product that are being produced by Beyond and Impossible, the other ones are
good products. I’d just say that the Impossible and the Beyond are a step above at this point in time. Yes, you
have to put R&D dollars towards them. With the help of the suppliers, I think that most of these companies,
especially the companies where meat has been their core business for years, they know how to manufacture
them. They have the plants, they have the equipment, they have the distribution system. Like you said, they
can spend the R&D dollars to do it, and I think you’ll see that they will continue to put more R&D dollars
Private and confidential 6
towards this business.
[00:26:30]
Q: You referred to a raw materials shortage and limited soy capacity. Would you classify soy as the most
important commodity or product used in meat alternatives?
RE: Soy is the number one product, the number one protein that’s used. Wheat gluten or wheat protein would
be the second, and then pea would be third. If you look at plant-based protein, when you look the plant-based
protein market, soy makes up about 50% of the market, wheat makes up about 45%. All the other plant-based
proteins make up the other 5%, and pea probably makes up 2% or 3% of that. When you’re really looking at
where’s the opportunity, where’s the potential for volume growth, it’s going to be in the soy area. Typically, the
amount of wheat is at lower levels, but it’s there to provide some of the stretch and elasticity, like it does in
bread, in a meat alternative. What it really comes down to, when you look at soy as a commodity, soybeans as
a commodity, only about 5% of the total soybeans that are grown worldwide actually go directly into food, or a
food ingredient application, on the protein side. 95% of all the protein is in soybean meal, which is then fed to
an animal. That animal then produces protein, and then we take that animal and we deliver the protein, we
deliver that protein via that animal. It’s not that there’s a shortage of soybeans, it’s a shortage of
manufacturing capacity to produce the ingredients.
Same thing on the pea side. Peas, there are plenty of peas being grown. Many of the yellow peas that are being
grown worldwide are actually going into animal production, as well. From what I would consider a commodity
perspective, there’s not a major issue. If you’re looking at needing non-GMO soybeans, that’s just providing
the incentive to the farmers, and contracting with the farmers to grow the required amount of non-GMO
soybeans that you need to meet the needs of your customers. There are requirements for them. They have to
keep records of everything they do, including cleaning, segregation, and then they have to keep those
separated until they come and go into the manufacturing facility. Like I say, the commodity side is not a real
issue. It’s more of the ingredient manufacturing capacity at this point in time.
[00:30:42]
Q: Would you say there is opportunity to expand in pea capacity, considering it is only 5% of the market?
RE: There is, and there are some major expansions going on right now in North America. Roquette Foods
actually has one of the largest plants, a new plant going up in Canada. I don’t know exactly when it’s going to
start up, whether it’s going to be late this year or early next year. That’s going to increase the capacity, and like
I say, other interested parties expanding their capacities, as well. You basically have Roquette, ADM, Cargill
that are in that business, and as they see the need, they’re going to put in the capital to make that expansion,
as long as they’re going to get the return on that money.
[00:32:03]
Q: Could you compare the overall timeline and resources used to formulate alternative meat products to the
production pipeline of traditional meat? Does it use the same amount of resources?
RE: When you look at the resources, so if we just look at the protein and we take soybeans, whether it be
soybeans or peas, we bring them in, we process them and we create the ingredients. There are some yield
losses in that process, but for the most part, you’re capturing a good portion of that protein and delivering that
protein into the marketplace. The issue is when you feed an animal, and we know that different animals have
different conversion ratios. The ruminant animals tend to have lower conversion ratios than things like
chickens and fish, and then pork is somewhere in-between, so that’s where you lose the efficiency, because it’s
Private and confidential 7
going to actually require more protein, per se, to grow a pound of protein than if you were to be able to convert
it right into an ingredient. The real advantage on ruminants is ruminants can eat grass and produce high-
quality protein. There are places in the world where you cannot grow soybeans or you cannot grow peas, but
you can grow grass, and they can feed on that grass and then produce high-quality protein. If you want to talk
about the conversion ratios, like I say, we always have to remember there’s a place for ruminants in the world.
[00:34:44]
Q: Could you highlight the most market-changing, innovative, successful product launches? Why do you think
those products were successful?
RE: Like I say, the ones that really stand out in my mind are the ones that have been in the news, especially
here in North America, the Impossible Foods and Beyond. Again, it’s really the fact that these are, I would say,
the next generation of products, especially for what’s referred to as the flexitarian, someone that’s really a
meat eater that wants to replace the meat in their diets, but they want it to look and feel and be the same. If
they go to the store and get ground beef, they want to be able to go to the store and get the meat alternative
that looks and feels the same. Over in Europe, another one that I think of is Vivera. They came up with a
meatless steak that I’ve been able to consume, and here, again, you’ve got an experience where it’s like eating
the steak. If you want a medium-rare, it can have that same colour and feel and look. I think those are the ones
that, recently, I would consider to be real successes. You look here in the US and Canada, some of the launches
at some of the fast-food chains, I saw a piece from the CEO of White Castle, which is a fast-food restaurant
here in the US, and she was talking about how beneficial the Impossible Slider had been to their business, and
how their customers saw that as true innovation, because before that, they had grilled onions and a piece of
cheese. That was their vegetarian or their non-meat option, and now that Impossible Slider is doing extremely
well for them.
NH: I did not know White Castle had that product, but I remember the slider and some cheese.
RE: Yes. I was just quite amazed with her. It was a recent interview with her that I’m sure individuals could
find out on the web. It was just really interesting, how she viewed the impact of that product on their business.
[00:38:37]
Q: Why do you think Beyond is so successful at scaling large chain restaurants, while players such as
Impossible are struggling to meet that challenge?
RE: I would say they’re both having those challenges. It also may be the approach, as well, where Impossible
maybe focus more of their efforts on retail right now than food service. To me, again, this is totally my opinion,
I think the food service, and getting into the food service and getting visible, is just being used as a driver to
drive the retail business. Here in the US, 50% of all of the ground beef that is consumed is purchased at retail,
so being able to penetrate that is also very, very important.
[00:40:23]
Q: Can you outline the health benefits of meat alternatives, touching on additives and the broader GMO
debate?
RE: Especially if we use healthful or healthy when it comes to GMOs, really, I think that’s a poor choice of
words for GMO. If you look at a soybean that’s grown using GMO technology vs a non-GMO one, they’re
nutritionally equivalent. There is no difference. This becomes more of emotions, and that’s no different than a
consumer that would choose a non-GMO product being similar to a consumer that decides that they are only
Private and confidential 8
going to eat organic. It’s more emotional. They get tied to that decision, and I think it’s just important for the
industry as a whole to understand that, and that, as an industry as a whole, not necessarily every particular
manufacturer but the industry as a whole, provides the consumers the choice. If you look at a company called
Amy’s Kitchen. I’m pretty sure that it’s in North America and, from what I’ve read, it’s also over in Europe, as
well. Amy’s Kitchen is all about delivering organic. There is a group of consumers in the population that that’s
what they’re interested in, but we also have consumers that are interested in sustainability or traceability, or
clean-label or gluten-free. Then, there are others that are interested in a great eating experience. I think it all
comes down to the manufacturers providing choice for all of these different consumers, so that they can make
the choice. They can decide what they see or feel is important to them, and let them make the choice. Make the
best products you can, given the constraints that are put on it, but then let the consumer make the choice.
[00:43:31]
Q: Could you describe the process of making a non-GMO product? You said that GMO and non-GMO are
nutritionally equivalent, but mentioned the divided opinions and producers being willing to give consumers
the option. Are non-GMO products worth the investment and supply chain reinvention?
RE: If you look, whether it be Solae, which is a large producer of soy proteins, Conagra or ADM, and Solae is
now owned by DuPont, they’ve been owned by DuPont for quite a while, ADM and Solae are the largest two
manufacturers of textured soy protein concentrate, which is the major ingredient that goes into all of these
coarse ground products, like the patties and the nuggets and the meatballs and the sausages and everything.
Those companies know that they have consumers, that their customers have consumers that want non-GMO.
I’ll speak from ADM’s perspective. ADM would tell you that they have been doing identity preservation for
soybeans for 50 years or more, because they contracted with the farmers to grow beans that were specific for
the tofu or the soy milk market. They kept them segregated and were able to deliver those to customers,
whether they were here in the United States, whether they were over in Asia, wherever they might be.
To now do what we refer to as non-GMO, which is really just using these seed varieties that were used before
GM seed varieties came into the marketplace, it’s really just taking those seed varieties, contracting, having
farmers buy specific seed varieties, and then the farmers agreeing to the programme in order to be able to keep
that identity preservation in place, up to the point in time that a Cargill or an ADM or a Solae takes ownership
of those soybeans. I still remember, when we had the first, where it became a major issue, because the
industry, especially in North America, converted to growing GMOs, and then it became a real issue. There was
a question of, “Is this just a short-term thing, where it’s going to be over, or is this something we’re going to
have to address and manage going forward?” Basically, that’s what happened. It’s something that ADM had to
address and manage going forward, and they continue to do it today and do it extremely well.
They use the same plants. You have to go through, and when you start up a non-GMO run, you have to clean
everything the best you can, you bring in non-GMO soybeans, you run them and you flush anything that’s left
in the system out. That may take 24-48 hours, whatever it takes. You’re testing them to make sure that you can
see that everything is out, every single lot of material that’s produced is then PCR- tested for the GMO DNA,
and then the certificates are provided to the customer, and there’s documentation that they are non-GMO.
There are premiums associated with those non-GMO products and those non-GMO ingredients, because they
do cost more. The soybeans cost more. You have to pay a premium to the farmers to grow them, and then the
whole pathway requires more documentation. It requires specific holding tanks, where there are dedicated
holding tanks within the manufacturing operation to be able to bring those soybeans in and ensure their
integrity. Like I say, it is worth what it requires to be able to do that.
[00:49:52]
Q: How long do you expect companies such as Beyond Meat and Impossible to maintain their market
dominance?
Private and confidential 9
RE: Dominance in the news, right? MorningStar, which is owned by Kellogg’s, which is one of the oldest meat
alternative companies in the world, it was actually originally owned by Kellogg’s, then sold, I think back in
the ’60s, to a company called… It’s slipped my mind now, but then Kellogg’s bought that company back in the
early 2000s. MorningStar is one of those large companies that is very diverse. If you look at MorningStar
Foods and Kellogg’s, Gardein that’s owned by Conagra, the Field Roast and Lightlife Foods by Maple Leaf
Foods, the number of products they have on the shelf, they have 20-40 different products on the shelves. Even
Nestlé and Vivera, they’re large manufacturers in this space. If I go to the local supermarket here or grocery
store here, where I live or anywhere in the United States, if I go in and look for meat alternative products,
there’s one Impossible product there, maybe two. Maybe they have something that looks like ground beef, and
they might have ground-beef patties. MorningStar are going to have a full freezer case. They’re going to have
20 different products or more there to choose from. Same thing with Gardein. Even Boca, with Kraft, they
have probably 10-15 products that would be on the shelves. Amy’s Kitchen, they’re more of a food company,
but they’re going to have a huge section. To me, it’s all about press. I don’t know that it’s all about volume, but
again, that’s my personal opinion. I may be totally wrong.
NH: Kellogg’s Incogmeato launch took a long time to roll out, but I didn’t even know it had an alternative
meat offering.
RE: They did, I think it’s a joint venture with a company called Tivall Foods out of Israel many years ago, and
Tivall had been doing a lot of the development for Nestlé for the meat alternative space for many, many years.
[00:54:02]
Q: How has global demand for plant-based meat alternatives evolved? Is the rest of the world slowly catching
on to this trend? Is that happening in different regions due to religious preferences?
RE: I would say that meat alternatives are basically available anywhere in the world that you would go today,
and some countries have been ahead of other countries for many years. They’ve had products in Asia for years.
They may be different than the products that we see in Europe or if you’re in North America, but like I say,
what’s really happened is this rapid growth has woken up the meat companies. Like I say, all the meat
companies I know of, which is throughout the Americas and Australia and New Zealand, all the major meat
companies are waking up and saying, “This is a category we’ve got to be in. We are meat companies, we know
this business. We should be the leaders in the category.” It’s going to be interesting to see what the Tysons and
the BRFs and Sigmas and the Tracers of the world, what they’re going to do, Campofrio. Campofrio is actually
owned by Sigma Mexico. They are all working on this in this area. I see them continuing to put resources to it,
and they’re not going to let their business slip because they’re not in this category.
[00:56:21]
Q: What do you think is the biggest potential threat to the industry?
RE: I think the biggest threat right now is just what I would consider raw-material availability, and the fact
that it could take five years or longer to be able to address and expand the capacity to meet the needs. My
question, is there willingness to do that by the manufacturers, or one of these meat alternative companies, are
they going to step in and say, “We can’t get what we need, so we’re going to invest the capital to do it”? That’s
going to be the interesting thing, to see what happens. Is that going to happen? My guess is that it’s likely to
happen. Like I say, that’s the biggest threat right now, is just that everybody wants the raw materials that are
going into the products, and there’s just not a lot of availability at this point in time. At this point in time,
you’re in pure 101 Economics. This is truly supply and demand, so what happens when you’re short in supply?
Prices go up, and that’s the reason why, when you say they’ve dropped prices on these products, I think that’s
for market penetration, because their raw-material prices are not going down at this point in time. Maybe they
will in the future if you get some increase in capacity, but right now, that’s not the case.
Private and confidential 10
[00:59:18]
NH: I think that is a great place to conclude the Interview. Let me close by saying thank you, Russ, for your
input. It’s been a really good discussion. Thank you, clients, for joining Third Bridge Forum’s Interview. If
anyone would like to speak with Russ in a private call or meeting, please let your relationship manager know.
Thanks again, Russ.
RE: Thank you.
Transcription ends at 00:59:33 of the recorded material.
Private and confidential 11