US Plant-based Meats – Competitive Landscape &
Channel Strategy – 14 July 2021
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Specialist:
Title:
Moderator: Nyree Hinton (NH), Third Bridge Sector Analyst
Eyal Briller (EB)
Former Director, Product at Impossible Foods Inc
Agenda:
1. Channel strategies to increase foodservice penetration
2. Product launches and partnership activity
3. Consumer demand dynamics
4. Competitive outlook
Contents
Q: Could you give an overview of the US plant-based meat industry and how it has evolved? What are the
main categories and players?
Q: Which categories are gaining traction? Which could do so over the next few years?
Q: How would you say demand has evolved? How mature is the industry and demand for its products?
Q: What technologies are used to produce plant-based meats? How are competitors innovating their
alternative protein sourcing?
Q: How are players differentiating themselves if there’s not much innovation around the extrusion process
and product formulation? Is it just marketing to grab new consumers? How could new entrants fare with
creating a product that consumers are willing to take a chance on vs traditional brands that are better at
dominating the market?
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4
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5
Q: How sustainable is the pricing environment for alternative meats given how capital-intensive production
is? You mentioned that supermarkets are building private label offerings.
5
Q: What factors are driving costs in the production process and holding back scalability? A few players
haven’t met partnership agreements due to an inability to scale efficiently.
6
Q: What are the trends in the proteins used to formulate products, including pea and soy? Are larger players
moving towards one or the other, perhaps due to cheapness?
6
Q: Do you think private label entering alternative meats is a significant threat? I’ve noticed that private label
has struggled to build a presence in nutritional snacking or health and wellness, so could this be the case in
alternative meats? Could larger players such as Kroger have the resources to build products that resonates
with consumers?
6
Q: Could you elaborate on the marketing tactics that work best with alternative meats? How do creating a
health halo and emphasising GMO-freedom play for new entrants vs marketing the product as similar to
traditional meat?
Q: How has alternative meat thrived or transformed through retail grocery and foodservice? What are the
trends in these channels?
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Q: What is the market share split between grocery and foodservice and how could this evolve? Could the big
brands make a push into foodservice? Do you think there’s still plenty of opportunity in grocery?
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Q: How has coronavirus impacted the alternative channel distribution? There’s obviously been significant
demand across grocery categories.
Q: Have key players done anything differently to grab market share rather than just benefit from overall
category growth? Have you noticed little differentiation amid the alternative meat demand explosion?
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Q: How long do you expect the largest players to maintain their dominance given their CAPEX sustainability
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vs actual profitability?
Q: Could there be risks around weaker consumer adoption?
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US Plant-based Meats – Competitive Landscape &
Channel Strategy
Transcription begins at 00:00:10 of the recorded material
NH: Welcome to Third Bridge Forum’s Interview entitled US Plant-based Meats – Competitive Landscape &
Channel Strategy. I am Nyree Hinton and I’ll be facilitating today’s interview with Mr Eyal Briller, former
Director, Product at Impossible Foods Inc.
Eyal, 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.
EB: Yes, I agree.
NH: Thank you, Eyal. Could you introduce us to your background?
EB: My name is Eyal Briller, my background is in biotechnology and food engineering. I started my career in
doing some academic research in proteins, later on joined Unilever and worked as a food developer in multiple
categories. Later, moved to the US and got my MBA out of Stanford and joined Impossible Foods as an intern
in 2014, that’s seven years ago, and was in touch with the company every since. I joined full time after
graduation. I had multiple roles at Impossible, from strategy and business development, different operations
roles and project management and in the last couple of years product management, overseeing the roadmap of
the same company, synthesizing the different generations into the roadmap and then specifying each product
on the roadmap. I recently left the company, towards a newer role in a different company.
[00:02:14]
Q: Could you give an overview of the US plant-based meat industry and how it has evolved? What are the
main categories and players?
EB: Just a couple of years ago, something like five years ago, there wasn’t even this term, plant-based. It’s
something that was coined by GFI, the Good Food Institute, which started to describe a new category that was
emerging and was led by Beyond Meat and Impossible Foods. Before that it was the traditional veggie burgers
and other types of vegan products that were not trying to mimic meat, just provide protein from plants. Then,
roughly around 2016, both Beyond launched their product, their Beyond Burger, Impossible launched their
Impossible Burger. In the beginning, Beyond went to retail first and Impossible to restaurants and then along
the years they started entering the other channel. There was a lot of traction in the market, a lot of PR and
buzz around the new category, a lot of demand was generated and then more players got into this category.
Today there are many, many brands that are trying to establish presence in this growing market, from the big
food companies, the big CPGs, big meat companies in the US and also grocery chains that are launching their
private label brand in plant-based. The categories, they all start with ground meat for burgers, either as patties
or mince, like a brick, and in recent years we see more sausage products, meatballs and chicken. Main players
today are Beyond Meat and Impossible Foods, both in retail and food service, followed by all the big CPGs,
Lightlife, which is a Canadian company and Nestlé, I would say, are the biggest ones after those. Then a lot of
other smaller brands that are not necessarily national, Meatless Farm, Nora’s Kitchen and many more.
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[00:05:20]
Q: Which categories are gaining traction? Which could do so over the next few years?
EB: Yes, I think the biggest ones that are really getting a lot of high growth in the last year are chicken
products. I haven’t seen yet anything that is whole cut, but meat or somewhat crumble chicken products,
either chicken patties or chunks, chicken nugget products, this is something that started with beef, moved to
sausage and now chicken is the latest. What I, in my opinion, expect next is a little bit of seafood and fish
product.
[00:06:30]
Q: How would you say demand has evolved? How mature is the industry and demand for its products?
EB: I don’t know the latest numbers but I think the overall plant-based meat market is around 1% or maybe
slightly higher percent compared to other animal ground meat, even just ground beef, so it’s still very, very
small. I would say we’ve seen very high growth numbers in the last two or three years, especially after COVID.
COVID, we saw crazy growth numbers compared to the year before. Naturally now, and people coming out of
COVID and starting to go out more, there’s an expected decline in the growth, still growing but more back to
normal growth, I would say. The big question is whether this is going to continue or not. In my opinion, this is
just going to grow. A big reference that you can look at is the dairy market that sell multiple protein bases, soy,
peas, almonds, oats and others, and now capturing 10% or even 15% and on the other side you see dairy milk
going down by consumption. The alternative dairy beverage market is roughly 10, maybe 15 years old, so the
way that I see it, this is a model market for us to look at and be aware it can grow at least.
I think from environmental reasons, even if the growth is going to slow down, it’s still going to continue to
grow, because the reality is that there is not enough land on Earth to grow all the meat that you need to feed
the world in 30 years. This is just a fact, so either it’s going to happen very fast or medium fast or slow, but it’s
going to happen and it’s a matter of how fast vs whether, but at least, even if you don’t think globally and in
high level, the alternative dairy market is, I think, a very good benchmark to what this alternative meat market
can grow into and we’re still very early in that adoption curve.
[00:09:54]
Q: What technologies are used to produce plant-based meats? How are competitors innovating their
alternative protein sourcing?
EB: I’ll exclude Impossible Foods for this discussion, for obvious reasons. I’m going to talk about the market
as a whole. In general, I would say there’s not a ton of innovation in regards to how to mimic meat most.
Essentially, meat is a combination of protein, fat, connective tissue and blood, flesh, colour and appearance
and there’s a lot of trial and error in trying to find new proteins. Origin of protein as well as the structure of the
protein, whether it’s (audio distorts 11.21) or other types of (? 11.24), to mimic meat better, masking the off
flavours that are not desired that is coming from the plant protein and just mix it together. The rest is you put
seasoning and toppings and all that. If you look at the innovation level, a lot of it is around trial and error.
Impossible Foods was, I think, the only company that I know of that has used and brought something very
new to the table, which was using heme, leghemoglobin. The molecules that actually generate the flavour
organically, inside, during the cooking. It’s a (audio distorts 12.25) catalyser that is present, creates all the
meaty flavours that are created when you cook meat, so that’s a huge innovation, but besides that, I haven’t
seen much else, at this point.
The other category that is emerging, but it’s still early and I’m not sure it’s in the market yet, is using 3D
printers and other ways of structuring and layering the different parts of the meat to mimic animal meat the
most. I think it’s coming out, there are companies out out Spain and out of Israel and out of the US that I know
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of, trying to make that happen. Beyond that, there are still a lot of things in the pipeline. What I said, it was
mostly around existing players and existing products that are in the market today.
[00:13:35]
Q: How are players differentiating themselves if there’s not much innovation around the extrusion process
and product formulation? Is it just marketing to grab new consumers? How could new entrants fare with
creating a product that consumers are willing to take a chance on vs traditional brands that are better at
dominating the market?
EB: That’s a great question and it’s something that’s hard to do. When you walk into the aisle today in retail,
you see a lot of different brands and it’s hard to know what’s going to be (audio distorts 14.40). A couple of the
trends are, one is trying to be as close to meat as possible. Impossible is talking about that, Beyond just
launched a new formulation that is claimed to be much closer to meat, so the quality, the similarity to meat is
one lever that companies use. The other one is more around less process, so the perceived quality issue of
being processed food and less healthy for you, being genetically modified, not organic, all that. This is another
way where these two brands are talking this way, and Lightlife, for example, used that, tried to create a PR
stunt with a big New York Times ad, calling Beyond and Impossible to stop using processed food and so on, so
that was a clear way to try to differentiate their brand and position it as a better alternative. I think the other
bucket is around their ability and (inaudible 15.55) a race to the bottom in regards to pricing between the
different brands. You see the big grocery chains, like, Kroger, Safeway, I think Whole Foods and Target, all
launching their own plant-based portfolio of products with their brand and capturing a big shelf space and
trying to convince that way. Big, attractive branding and get people to try it out. I think those are more or less
the buckets I would see for tactics to differentiate your brands.
[00:16:54]
Q: How sustainable is the pricing environment for alternative meats given how capital-intensive production
is? You mentioned that supermarkets are building private label offerings.
EB: I think, even in the short run, it’s not very profitable, especially in food. Volume drives cost down, so
every brand hopes that their volume will grow and then (audio distorts 18.14) fixed costs to set up lines and all
that development cost would be spread on larger volume and drive the COGS down. I think what we see now is
trying to gain market share, so we’re definitely not in the early days of introducing a new category, it’s phase
two now, where brands are fighting to get their market share and grow as much as possible and lowering the
price is definitely a good tactic. I think all the brands are still more expensive than what they’re trying to
replace. Ground beef price is between USD 2 and USD 5, in the more expensive places, per pound where I
think the average for plant-based is roughly, I would say, between 50% to 3x. 50% higher to 3x the price. It
still has a way to go to get closer to what it’s trying to replace and I do believe that once the threshold is passed
and price equalled to ground beef from cows, that’s going to be a huge driver in adopting this new category by
meat eaters. Right now, we definitely see the price is a barrier for many, many people. For trial and for
adoption (audio distorts 20.01). Just one more thing, the cost of producing plant-based should be much
cheaper than producing cow beef because, for obvious reasons, you don’t have to grow the cow and the
efficiency is much, much higher per pound of protein that you get. It is skewed because of subsidies from the
government to farmers and things that distort that, but in the long run it should definitely be a cheaper
product to produce.
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[00:20:48]
Q: What factors are driving costs in the production process and holding back scalability? A few players haven’t
met partnership agreements due to an inability to scale efficiently.
EB: What drives the COGS? Like any product in the food industry, the components are the ingredients, the
packaging, the processing costs including labour, and shipping and supply chain cost. Ingredient cost varies
between brand, depends on what you get. The price of the protein, this commodity, goes up and down, but the
good thing is that unlike five or four years ago, there’s a whole ecosystem that is developing alongside the
brands to drive the demand, meaning there’s a lot more supply of pea protein and soy protein in different
formats and in different (audio distorts 22.23) characteristics. Beyond that, it’s the price of the commodity,
which, there are a lot of drivers there. Beyond that, I really don’t see major hurdles or cost elements that are
very different from other food products. I think when we talk about high COGS, it’s mostly because of
relatively low volume and low efficiency because it’s a new line, the lines are not fully utilised. Sometimes you
need to build new lines and set up new quality measures to separate animal meat production line from plant-
based meat, but I can’t point in any specific, major factor that says, “This is very different from any other food
product,” that is special to this category or unique to this category.
[00:23:41]
Q: What are the trends in the proteins used to formulate products, including pea and soy? Are larger players
moving towards one or the other, perhaps due to cheapness?
EB: In general, there are many proteins that go into these products, but the bulk protein is coming usually
either from soy, pea protein, sometimes wheat, that’s what I’ve seen so far. There are a couple of other
proteins that are coming out, more like speciality proteins like chickpea and mung bean, canola, I think those
are the main ones and if we talk about soy and pea, each one has their own pros and cons. Soy is by far, not by
far, but it’s much cheaper or the cheapest protein, most abundant on Earth and most abundant in market, but
it comes with off flavours that you need to take out or mask and it has a relatively bad reputation, at least in
the western world or cultures. Unjust, by the way, but it doesn’t matter, that’s the perceived reputation, so
that’s soy. Pea protein is a new protein that started being used five years ago or so. It’s a little less common to
find, it’s coming mostly from the northern hemisphere, Canada and so on. It comes with it’s own off flavours
and the texture is a little bit harder to get it softer, relatively, so, therefore, mimicking meat a little bit less
efficiently, so you need to find ways to compensate for that. Of course, for both peas and soy, we have different
companies doing different types of extrusion and copying the fibrous structure and each one has their level of
off-taste that they carry or are able to remove. That’s more or less how I see those two proteins.
[00:27:07]
Q: Do you think private label entering alternative meats is a significant threat? I’ve noticed that private label
has struggled to build a presence in nutritional snacking or health and wellness, so could this be the case in
alternative meats? Could larger players such as Kroger have the resources to build products that resonates
with consumers?
EB: I think brands do matter. I think both Beyond and Impossible are so successful probably because of their
brand and people believe it’s good, they’ve heard it’s good. It’s hard to generate that kind of brand awareness
for private labels, but there’s a big but here. I think because it’s so saturated there are a lot of players, and I
think Impossible Food is the best but it’s also more innovative, but if I look at all the other players, there’s still
a gap in quality to convince and convert meat eaters to take that over regular ground beef. In regards to private
label, I think if there is a private label that will bring a product that is super good, super tasty, very much like
meat and maybe, I don’t know, a clean label. I think the clean label is not actually driving sales but maybe a
little bit. My point is that, regardless if it’s a private label or not, if the product is good, I think that will convert
people and make this private label a success. Unlike other categories, which are really about price and
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availability on the shelf, I think for plant-based meats we are not there yet and the product quality still matters
a lot. It hasn’t been commoditised yet or averaged out, so if there’s a private label that is able to present a very
good product, they can win.
[00:30:05]
Q: Could you elaborate on the marketing tactics that work best with alternative meats? How do creating a
health halo and emphasising GMO-freedom play for new entrants vs marketing the product as similar to
traditional meat?
EB: I’ll share my opinion, but it’s a little bit unclear, so here there’s no strong data suggesting one way or the
other. There are a lot of surveys that are done and the main drivers that bring people or convince people to try
it out and actually adopt it are, I think, three buckets. One is health, second is animal welfare and third is the
environment. Of course, quality, it has to be there, no one eats anything that is not tasty for them and the
second is cost, because even if it’s super good, you’re not going to adopt it on a regular basis. Of course, there
is convenience and it being available around you and so on, but I see those two as a must-have to check the
box but it doesn’t actually drive why you’re buying it. The why is health, again, health, animal welfare and
environment. In that order, by the way. Coming out of that, I do think that health claims are still the biggest
driver to try to convert people. Again, assuming that on condition that the consumer believes that the taste is
there and it’s at a reasonable cost and available to purchase. I’m not sure if it hit your question, but health is
definitely a big driver or the biggest driver, I think, in getting people to try and to adopt.
[00:33:07]
Q: How has alternative meat thrived or transformed through retail grocery and foodservice? What are the
trends in these channels?
EB: I think those two channels are slightly different from a consumer behaviour standpoint. When people go
to a restaurant, they often are looking to get excited about what they’re eating, trying something new but not
too new, because it’s still expensive and they want to enjoy themselves. Obviously there is value proposition
for vegetarians and vegans, but the value proposition for flexitarian, people who want to reduce their meat
consumption, is around trying something new, something that they heard about and also get excited about the
overall serving, so it’s not only the ground beef, it’s the whole burger, for example. How it’s charred, how it’s
cooked, what’s the bun like, the salsas, the topping all that. What they want is good value for their price and
enjoy the meal without thinking about what it took to make it happen. That drives a lot of the value, not the
value, the brand and the messaging, the claims that you want to have around your product and, in a way, it’s
much harder to actually communicate with your consumers because you’re at least one layer removed from
them. I can say that you’re even three or four layers removed because you’re selling to a redistributor, that
sells to distributors, to the chain and then to the consumer. The branding has to be much more viral, I would
say, and you want to create much more of a pull demand, have the consumers ask for it and convince the
restaurants to take your brand and even put it on the menu and talk about it. That’s on foodservice, I don’t
know if you have questions more on that.
On retail, it’s not easy to make it in retail as a new brand, as every player recognises, and you need to have
meaningful volumes, you’re paying a lot of fees along the supply chain until you get to the consumer, so you
need to make sure and try to control your price all the way down. You’re not really in control of the price. On
the other hand, you do get direct ways to communicate with your consumer. They see your brand, they see you
compared to the competition, you don’t only have one or two options like in a restaurant, but you have 10, so
the brand needs to be much more around communicating its value proposition on the product, (audio distorts
37.39) on the packaging and all the way along the consumer journey and I think that’s where we are. There’s a
lot more emphasis on value because you immediately compare this brand vs the others that are right next to it
and it’s very easy to reach out to the other one, so much more price sensitive. Like with any category, good
relationship and partnership and collaboration with the chain itself is very important. Thinking about the
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promotions that you’re going to do, the placement in the store, different banners and other in-store marketing,
they all play a big part in the discovery, in terms of the consumer journey in the store. You don’t have all that
in foodservice.
[00:38:31]
Q: What is the market share split between grocery and foodservice and how could this evolve? Could the big
brands make a push into foodservice? Do you think there’s still plenty of opportunity in grocery?
EB: I think every brand would want presence in both channels. Unlike Beyond and Impossible, I think many
of the new brands that are trying to establish themselves in retail would see foodservice as a volume driver vs a
brand driver. I’m thinking about the big CPGs, about the big meat companies, about other smaller players. You
don’t see co-branding in the restaurant or at the operator. There’s also a very big share of foodservice in non-
commercial. The operators that are serving food, not part of their core business, like universities, colleges,
stadiums, prisons and all these sources. They just want a solution for flexitarians and vegetarians and vegans,
but it’s not in their interest or in their core business to start co-branding and doing all that. As we said before,
volume drives a lot of the COGS down, so if you can drive volume up and share the fixed cost by going to non-
branded foodservice play, that’s a win for your brand. I don’t see why existing brands will not go at it, or the
new brands will not go and try to capture that today. It depends on the emphasis on pricing and low prices.
There’s a strong pressure in foodservice as well, because of that point, because companies don’t necessarily
care to present their brand, so it all becomes almost like a commodity, so the pressure to sell in a lower price is
strong in foodservice. That’s another consideration that might slow down the brand from going to foodservice.
[00:41:39]
Q: How has coronavirus impacted the alternative channel distribution? There’s obviously been significant
demand across grocery categories.
EB: Restaurants in the US, essentially, dropped 90% or 80% when COVID started and has very slowly grown
since then, so naturally the emphasis and weighting from all the plant-based players has shifted heavily into
retail and for good reason. 2020 saw crazy growth numbers for plant-based and people cooked much more at
home and so on. I think now we’re coming out of COVID and people have started going out again, after trying
out plant-based, I think plant-based demand for foodservice will continue to grow to even higher levels to
what it was before COVID, but again, it depends on how fast things go back to normal. It’s going up and down
everywhere, but in general the trend is going up.
[00:43:14]
Q: Have key players done anything differently to grab market share rather than just benefit from overall
category growth? Have you noticed little differentiation amid the alternative meat demand explosion?
EB: One thing we have to mention is going direct to consumer. It’s not only for plant-based but there are a
couple of new brands that are big growth in D2C, and when you include D2C, these are refrigerated or frozen
products, so it’s very costly to send, so you need to send large weights, otherwise it’s not very financially viable.
One company that has emerged during this time, it’s called Daring, out of LA. The other one is Nuggs, out of
Seattle, I think. These two specifically started with, I think, chicken products, chicken slices and chicken
nuggets, and really, I think, eye-grabbing brands and thinking about the overall experience end-to-end, from
the moment you enter their website and until you finish your meal. There’s an overall experience, a brand
experience with these companies, so I think this is quite different from the regular retail players. Again, I’m
excluding Impossible Foods’ D2C business, for obvious reasons.
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[00:46:10]
Q: How long do you expect the largest players to maintain their dominance given their CAPEX sustainability
vs actual profitability?
EB: Personally, I think for quite a long time. I think what we see here is maybe a kind of Coca-Cola/Pepsi
dynamics, where it’s the two major brands emerging, growing their portfolio, (audio distorts 47.08) their
brands and leading the market both from sales as well as innovation, but I think it’s not final yet. I do see one
or two other players emerge, only if they can offer really exciting innovation, things that could be much more
like the animal version and convince people with their mouths. That’s what, personally, I expect. Beyond and
Impossible have proven that this is working for them and they are building themselves this way, but if another
brand or two will emerge and develop something really good, they can take a meaningful market share and
that can become a three- or four-brand play. Having said that, I do think the overall size will grow a lot in the
coming 5-10 years. I’m not the only one saying it, there are a lot of reports about how big this market will be in
coming years. I think that’s what will happen, but it doesn’t meant the medium and small players will not have
a good business in general, because the overall pie will grow as well. One thing to add here is that even if the
demand is very high, it still takes time to bring a spike for everyone, because you need to adjust your
production lines and have the ingredients and just to respond to the market takes time. That can be another
advantage that one brand can have over its competition, of how fast you get to market, how much meat you
can produce in a short time.
[00:49:39]
Q: Could there be risks around weaker consumer adoption?
EB: Yes, there are risks. I would say the risks are around disappointment from the average quality on the
market, so if a big or meaningful portion of the market is tasting a product today, after all the hype and after a
long time they want to try it, or agree to try it after a long time and they try it and its not great. That’s it, they’re
not going to try again and that’s a risk for the overall market, so that’s a concern that I have, that all the new
products will be just disappointing. The other risks are around negative PR and reputation, and media
coverage around food safety issues and scandals of all sorts, and I think that can damage brand presence. That
will drive people to say, “This is another margarine vs butter play.” Margarine started as very healthy and then
very unhealthy and now it’s healthy again, so just decreasing trust in the overall category, so that’s also a risk I
see. There’s also the meat industry response and fight back through legit and not legit, illegit measures. Yes, I
think that’s more or less it.
[00:52:15]
NH: Thanks, Eyal, we’ll end the Interview there. Let me close by saying thank you again for your input, we
unpacked a lot. Clients, if you would like to speak to Eyal in a private call or meeting, please let your
relationship manager know. Thank you, clients, for joining Third Bridge Forum’s Interview today. Have a good
one.
EB: Okay, thank you, everyone. Have a good day.
Transcription ends at 00:52:34 of the recorded material
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