Special Notes for Entrepreneurs

Friday, May 31, 2019

Hacking the Ruminant: Innovation and the Mysteries of the Human Palate

During summers in high school I worked in a fish market, a little square box of a building set on a wharf in a beautiful beach community on Buzzards Bay.  The northerly side of the market sold fresh fish, the southerly side fried.  In the fresh fish case, we offered haddock and bluefish, lemon and grey sole, crabs and swordfish, cod and scrod. 
I direct your attention to those last two items.  While there is no agreement on the definition of scrod, we marketed it as young cod and told people it was more tender and sweet.  And expensive.
In the back cooler, at the start of each day, we made a genuine effort to separate the big cod fillets from the small because any number of our customers absolutely insisted on scrod.  Occasionally we would run out of the little guys, however, both in the case and in the cooler.
At those times, for those insistent customers, we were instructed to take a big cod fillet (behind the scenes, of course) and shape it into smaller scrod fillets.  Like seafood alchemy, cod to scrod.
Never once did a customer complain.  Not once.  As long as we called it scrod, it was the most tender, sweetest fillet that ever cleaved the Seven Seas.
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My dad had a friend who used to stop by on an occasional Saturday night to play cards.  This friend could only drink Narragansett beer.  (No kidding.)  Any other beer, he told my father, and he would get an instant headache.
One evening, over a hand of bridge, my father went to the kitchen to refill drinks and discovered he had run out of Narragansett.  It would be an understatement to say that my dad was a boy scout, but on this occasion, his trustworthy and loyal gave way to necessity.  Dad took a bottle of Bud and poured it into his friend’s Narragansett bottle.
Disaster averted.  No headache. 
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April 1985.  New Coke.
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Source: Footnote 1
Beyond Meat went public on May 1, gaining almost 250% in its first month.[1]
It’s a company that manufactures plant-based meats that enable “consumers to experience the taste, texture and other sensory attributes of popular animal-based meat products while enjoying the nutritional benefits of eating our plant-based meat products.”[2]  Among Beyond Meat’s most popular products is the Beyond Burger, a plant-based patty that looks and tastes like the real thing.  “THESE ARE CRAZY,” one diner wrote. “THE BURGERS TASTED SO MUCH LIKE MEAT THAT I HAD TO GO BACK AND DOUBLE-CHECK THE BOX TO MAKE SURE THESE WERE, IN FACT, VEGAN."[3]
The company’s IPO has trounced those of Uber and Lyft.  Beyond Meat’s product is already selling in 33,000 grocery stores, restaurants, and other eating establishments.  Ambassadors for the brand include Chris Paul, Kyrie Irving, and Charity Morgan, while early investors numbered Bill Gates, Biz Stones, and Tyson Foods.  Diners report that Beyond Meat is delicious and often indistinguishable from the “real thing.”
Which means, of course, now comes the tricky part.

Scrod.  Narragansett beer.  New Coke.  Beef.  For most people, eating is an act of intimacy.  Choices in the cup and on the plate are based on smell, taste, and texture, and away from the dining table on health, family, ethics, tradition, culture, and religion.  Sometimes—or maybe often—choices are made on delusion. 
And, in a world facing climate Armageddon, the sustainability of food production has become an important issue for many, or at least some, consumers.  As Beyond Meat looks to grow, these factors relate in ways that may make the company’s breakthrough technology—hacking the ruminant, as it were—the easiest part of its market disruption. 
Where’s the Beef?
Meat is an industry that contributes $894 billion to the U.S. economy.  Beef alone is a $95 billion industry,[4] and a powerful one.  In 2015, against the advice of its own expert panel, the United States Department of Agriculture (USDA) and US Department of Health & Human Services rejected consideration of environmental sustainability in the newest edition of Dietary Guidelines for Americans—guidelines that would have meant eating less red and processed meats.  It was a political decision in which lobbyists overwhelmed scientists. 
In 2018, the powerful National Cattlemen’s Beef Association adopted a policy to protect consumers from “fake meat” and misleading labels.  Meanwhile, the equally powerful U.S. Cattlemen’s Association petitioned the USDA for rulemaking to differentiate beef produced from cattle versus that produced in a laboratory.  Traditional government subsidies, crop insurance, and regulations shape and alter free-market demand across the entire agricultural landscape. 
Sitting in the middle of these shifting sands is the USDA, which has jurisdiction over meat, and the Food and Drug Administration, which has jurisdiction over plant-based foods.  It is a world where commercial interests overlap with politics, regulation, and consumer demand in a complex mosaic.
Perhaps more than any other food, beef has long been part of America’s identity.  The American cowboy and cattle drive are still iconic national image. Red meat has long been associated with strength and male vitality, wealth, and wellbeing.  “Where’s the beef?”, a tagline originated by Wendy’s fast food chain in the 1980s, has become a more general indictment of a product or idea without substance.
Since the 1970s, however, beef has also become a flashpoint in America’s culture wars.  For some, red meat is seen as “the new SUV—a hopelessly selfish, American indulgence; a middle finger to the planet.”  Doug Bocher of the Union of Concerned Scientists believes that the limit of 2 degrees Celsius set at the Paris climate conference will be impossible to meet without managing livestock and meat consumption differently.[5]  
In addition, many Americans have grown concerned about the perceived links between beef and heart disease.  They are appalled at the way animals are treated on factory farms.  And they are concerned about the impact of meat production on the environment.  The rise of something called “the omnivore’s dilemma” now reflects an emotional and moral danger linked to eating certain kinds of food based on the health of animals, the planet, and the diner.  
There remains thoughtful support for animal-based beef, however.  In Defending Beef: The Case for Sustainable Meat Production, Nicolette Hahn Niman, a biologist, rancher’s wife, and vegetarian shows how livestock provide food for one billion poor people around the globe, thriving where plant crops are unviable.  She delinks red meat and cardiovascular disease and points to the true culprits, processed foods and sugar.  And she demonstrates that deforestation is not about cattle, but about growing soy for pigs.  In fact, Niman says, cattle support grassland biodiversity and help sequester carbon that would otherwise be removed from the soil by the production of feed crops. 
Amanda Radke, who writes for “Beef Magazine,” likewise questions the “meatless movement” and its misconceptions around ethics and sustainability, but offers the more visceral objection to not wanting her “meat grown in a garden.”[6] 
Both sides of the debate have strongly held positions generally unrelated to flavor and texture, the primary attributes of food.  The power of marketing—traditionally defined as product, price, promotion, and distribution—to address these broader questions of health, ethics, and sustainability in the food industry is fraught, and its impact historically has been ambiguous. 
The Other White Meat and Similar Frustrations

Consider the very different narratives of red meat’s two major rivals.  In 1987, a national campaign was launched to position pork as “the other white meat.”  Believed by consumers at the time to be full of fat, dangerous unless overcooked, and reminiscent of Sunday dinner with their grandparents, pork had a lot of ground to make up.  In 1999, twelve years later, the ad campaign had achieved a remarkable 58 percent awareness—but only 42 percent of consumers believed pork had changed in the last twenty years.[7] 
In 2005, the industry tripled spending and added a “Don’t be blah” tagline to position pork as an alternative to the same old dinners.  From 45.6 pounds per person in 1987, per capita pork consumption in 2017 was 50.4 pounds—only a paltry one-third of one percent growth annually over three decades.[8] 
Compare this history to chicken, whose growth as an industry over the last fifty years was driven more by brand names (such as Purdue) than national industry campaigns, and whose acceptance by consumers was driven successfully by a number of competing factors.  Consumers responded favorably when grocers began selling chicken in parts rather than whole.  They were attracted by improved packaging, better storage, and longer shelf life.  
Health-conscious Americans came to see chicken as a high protein, low fat alternative to red meat.  And the fast food industry embraced chicken with a vengeance.  In 1985 America’s consumption of chicken surpassed pork, and in 1992 beef.  
In the process, however, these unfortunate fowl were swept up in the machinery of factory farming.  In 1970, it took 56 days to grow a broiler to a market weight of 3.62 pounds, and in 2015 48 days to reach 6.24 pounds.[9]  This growth, engineered to maximize white meat, created a heavy, misshapen bird that dwarfed its twentieth-century ancestor but made chicken the cheapest protein among meats.
In recent years, the environmental impact of meat production has been measured and better understood.  Chicken, pork, dairy, and eggs are equivalent in impact within a factor of two, while beef requires 28 times more land, six times more fertilizer, and 11 times more water in comparison.[10] 
Do Americans Really Care About Food Sustainability?
Whether this imbalance matters to most American consumers is unclear.  Bottled water provides one cautionary tale. 
For the first three-quarters of the twentieth century it was nothing more than a sleepy niche product served at fine restaurants.  In 1977, Perrier took to the television, positioning itself as an alternative to diet sodas using saccharin, an artificial sweetener that had been linked to cancer.  Perrier rode the coattails of Americans’ increasing obsession with their health, selling three million bottles in 1975 and 200 million in 1979.  In 1994, Pepsi introduced Aquafina and in 1999 Coca-Cola introduced Dasani.  With these giants placing their muscle behind the product category, bottled-water sales reached 10 billion gallons in 2013.[11] 
New flavors and enhanced products, from fizzy spring water with fruit juice to water with caffeine and vitamins, now take up entire aisles at the grocery store.  Bottled water has become America’s favorite drink.
This is a grand marketing success in a world where consumers often cannot taste the difference between bottled and tap water, and where bottled water is three thousand times more expensive than tap water and generally no safer, cleaner, or healthier.  As important, consumers clearly value convenience and personal health over the detrimental impact of the 17 million barrels of oil required to manufacture the industry’s plastic bottles, 86 percent of which in the U.S. become litter.[12] There are modest bottled water bans in some locations, but the industry continues to grow.
Another collision between food and sustainability came in 2010 when Frito-Lay discontinued its eco-friendly, plant-based, fully compostable bag for SunChips because consumers complained it was too noisy.  Sales had fallen 11 percent in the prior year.  44,000 members on Facebook belonged to a group called “Sorry I Can’t Hear You Over This SunChips Bag.”  Reporter Kate Sheppard summed up the feelings of many when she wrote, “If the sound of a crinkly eco-chip bag is too much to handle, then the human species really is screwed.”[13] 
Her disappointment is reinforced by a study of environmental attitudes and habits of people in eighteen countries conducted by National Geographic showing that Americans are among the most likely to resist paying extra for environmentally friendly products and rank last in overall environmental attitudes and habits.  “It’s depressing, researcher Eric Whan says, “that where the greatest per capita consumption happens, there seems to be the least willingness to change, adapt, and carry one’s share of the load.”[14]
What lessons might Beyond Meat take from these narratives as it grows?  Is it the power of brand that matters?  Health considerations?  Animal ethics?  Convenience?  Price?  Can sustainability really be a factor that moves American consumers in their food choices?  CEO Ethan Brown has sifted through this complexity and takes a counterintuitive approach for creating demand for his product.  “The way I think about it is to not build a business on telling people not to eat meat,” Brown says, “but to build a business around challenging what people’s perception of meat is.”[15]
This novel approach—the conceptual innovation behind the hack of the ruminant—requires consumers to separate origin from composition.  If consumers come to understand the meat from cattle and the meat from an extruding machine are, under a microscope, virtually identical, and look and taste the same on a plate, then Beyond Meat can become an attractive alternative to animal meat.  Health and sustainability will follow. 
“Fifty years from now . . . my hope is that beef and chicken will no longer have a relationship to the animal that they came from,” Brown says.  “They will be in the same packaging, but they will be based on plant-based inputs.”[16] 
I’m betting it works.  I’m betting that fifty years from now we will consider eating beef from a cow much like we today consider smoking on an airplane. 
Unless, of course, the packaging is too noisy.  Then, all bets are off.



[1] Arjun Reddy, “Beyond Meat Is Leaving Uber and Lyft in Its Dust,” Market Insider, May 29, 2019, Web May 30, 2019, https://markets.businessinsider.com/news/stocks/initial-public-offering-stock-market-performance-mixed-2019-5-1028237977.
[4] Deena Shanker, “The US Meat Industry’s Wildly Successful, 40-Year Crusade to Keep Its Hold on the American Diet,” Quartz, October 22, 2015, Web May 30, 2018, https://qz.com/523255/the-us-meat-industrys-wildly-successful-40-year-crusade-to-keep-its-hold-on-the-american-diet/.
[5] John D. Sutter, “Why Beef is the New SUV,” CNN, November 24, 2015, Web May 30, 2018, https://www.cnn.com/2015/09/29/opinions/sutter-beef-suv-cliamte-two-degrees/index.html.
[6] Amanda Radke, “What is the Media Saying About Fake Meats?”, Beef Magazine, April 27, 2018, Web May 30, 2018, http://www.beefmagazine.com/beef-quality/what-media-saying-about-fake-meats.
[7] Charlyne Varkonyi, “Pork Embroiled in Marketing Controversy,” The Baltimore Sun, August 23, 1999, Web May 30, 2018, http://articles.latimes.com/1990-08-23/food/fo-1558_1_pork-industry/2.
[8] Jane L. Levere, “The Pork Industry’s ‘Other White Meat’ Campaign Is Taken in New Directions,” The New York Times, March 4, 2005, Web May 30, 2018, https://www.nytimes.com/2005/03/04/business/media/the-pork-industrys-other-white-meat-campaign-is-taken-in-new.html.  Also, “Per Capita Consumption of Pork in the United States from 2015 to 2017 (in Pounds),” Statista, 2018, Web May 30, 2018, https://www.statista.com/statistics/183616/per-capita-consumption-of-pork-in-the-us-since-2000/.
[9] Alan Bjerga, Dorothy Gambrell, Cindy Hoffman, Cedric Sam, “If You Are What You Eat, America Tastes Like Chicken,” Bloomberg.com, September 19, 2017, Web June 2, 2018, https://www.bloomberg.com/graphics/2017-peak-food/.
[10] Rachel Nuwer, “Raising Beef Uses Ten Times More Resources Than Poultry, Dairy, Eggs or Pork,” Smithsonian Magazine, July 21, 2014, Web June 4, 2018, https://www.smithsonianmag.com/science-nature/beef-uses-ten-times-more-resources-poultry-dairy-eggs-pork-180952103/.
[11] Robert Moss, “How Bottled Water Became America’s Most Popular Beverage,” Serious Eats, July 10, 2017, Web May 30, 2018, https://www.seriouseats.com/2017/07/how-bottled-water-became-americas-most-popular-beverage.html.
[12] “Reasons to Avoid Bottled Water,” Sustainability at Harvard, Harvard University, 2018, Web May 30, 2018, https://green.harvard.edu/tools-resources/green-tip/reasons-avoid-bottled-water.
[13] Kate Sheppard, “Why We’re Doomed,” Mother Jones, October 5, 2010, Web May 30, 2018, https://www.motherjones.com/food/2010/10/snack-attack-sunchips-cans-eco-bag/.
[14] Andrea Stone, “8 Surprising, Depressing, and Hopeful Findings from Global Survey of Environmental Attitudes,” National Geographic, September 27, 2014, Web May 30, 2018, https://news.nationalgeographic.com/news/2014/09/140926-greendex-national-geographic-survey-environmental-attitudes/.
[15] “Interview with Ethan Brown,” Animal Charity Evaluators, 2018, Web May 30, 2018, https://animalcharityevaluators.org/advocacy-interventions/advocacy-advice/learn-from-professionals/interview-with-ethan-brown-ceo-beyond-meat/.
[16] “Beyond Meat CEO Ethan Brown: The Future of Protein & Meat,” FORA.tv, May 11, 2013, Web May 30, 2018, https://www.youtube.com/watch?v=uJoOAOtugS4.

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