Beyond Meat vs Impossible Burger | Interview | 5

0:07I'm David Brown and this is Business Wars.

0:35In the 2010s, fake meat that tasted real was all the rage. The company's Beyond Meat and Impossible Foods revolutionized what a plant-based burger could taste like. It's actually really good. Can you believe this chicken salad? Does it taste like chicken salad? Taste it. It actually does, Ethan. Yeah. And I have a long relationship with meat, so I was very worried. Very good. That's a video from 2014 when Beyond Meat founder Ethan Brown introduced his product to the team at CBS this morning. Over the course of a decade, these companies started winning over the hearts and stomachs of vegans and omnivores alike.

1:10Whether you were concerned about climate change or animal welfare or just wanted to eat less meat, Beyond Meat and Impossible Burgers filled a void. They even made their way onto fast food menus. Introducing the new McPlant, made with the first plant-based patty worthy of being called a McDonald's burger. Introducing the Impossible Whopper, with a patty made from plants, no beef. No beef. I've never had plants taste like beef before. But these days, it seems like the plant-based patty sizzle is more of a fizzle. The publicly traded Beyond Meat continues to suffer losses year over year. Meanwhile, the privately held Impossible Foods has struggled to turn a profit.

1:52This has many wondering, was the plant-based meat market just another food fad? And what can these companies do to get back in the game? Helping us sink our teeth into the two biggest plant-based meat brands out there are Jason Cartalion and Michael Keller. The two host the Vegan Hacks podcast, where they share vegan recipes, news, and analysis. With more than a quarter of a million followers on TikTok and another 170 ,000 on Instagram, The duo has a major platform in the plant-based world, and they're joining us today to share their take on the future of the meatless meat market. All that's coming up.

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4:43Jason Cartalion and Mike Keller, welcome to Business Wars. Thanks for having us. It's a pleasure to be here. And it's a pleasure to have you. How long have you guys been vegan for? Jason, start out for us. I'm a longtime vegan. I've been vegan for 15 years. And why did you decide to go vegan? It was a long odyssey. I spent a lot of my life being vegetarian. There was a spell in my life that I was a pescatarian. And I think the last thing I did was give up cheese. It's a hard one to give up. That was the thing I gave up. And I never looked back. First, I was vegan for my health. And then I learned about animal agriculture and the unsustainability.

5:28and I became really focused in on the environment and doing the things that I could do to try to help the environment. And so it was just an odyssey that kind of moved in that direction. Mike, what about you? How long have you been vegan and what was it that got you on that? Well, I was vegetarian since I was like 12 or so out of just sort of a general feeling of guilt from eating a hamburger or something. And then I went fully vegan when I saw this PETA video. This was like a couple decades ago. It's called Meet Your Meat. And it's like this 10 or 12 minute video that just shows what happened to animals in factory farms and slaughterhouses.

6:11And I just washed my hands of any animal products from then on. You know, anytime I would think to pick up meat or milk or anything like that, I thought of what I saw in the video and I was just done. Wow. Well, it worked, it sounds like. So how many vegans are out there right now? Any estimates? And what about the lifestyle? Is it on the rise or where are we with veganism? Well, the vegan community is anywhere between 2 % and 4 % of the population. Wow, I had no idea. And the concept of veganism kind of ebbs and flows with popular culture. You know, right now there's actually a lot of noise about veganism waning in popularity.

6:55But the vegan lifestyle is, you know, constantly being adopted. And it seems as though even if people aren't all strictly vegan, from what I hear, a lot of my non-vegan friends and family are just kind of trying to reduce meat, if only for health reasons. Yeah, I've been picking up on that in among my own friends as well. I know your podcast, Vegan Hacks, is extremely popular online, specifically TikTok. I saw that, Jason, you even scored an invite to TikTok's creator event in Los Angeles. That's a pretty big deal. Let's let's play a clip from one of your most viral videos here. As a vegan, I don't need chicken eggs to make deviled eggs.

7:34I don't need turkey to make turkey legs. And I don't need fish to make tuna sushi. This has six million views. What's the story behind the video? And how do you make a turkey leg without turkey? Actually, that's made with wrapped up tofu skin. Yeah. So basically, I work to inspire people to cook, to learn about cooking, to learn about vegans. You know, a lot of people don't know how vegans are. They think we're like aliens or something. And I think that I like, like Mike and I are city dwellers. We don't go to yoga class. We don't live in a commune, you know, and we have to, you know, live in our society.

8:19And so I basically created this platform, especially in social media, to inspire people to be more mindful about what they're eating and where their food comes from. And it's not a judgmental platform. And I'm kind of a little clownish and I have fun. And that particular video shows, you know, vegan sushi made out of tomatoes. It also shows a really fun hard-boiled deviled egg made out of a potato. And then also the iconic giant vegan turkey leg made from tofu skin. Now, Mike, recently you guys put out an episode on Beyond Meat and Impossible Burger. And we want to get into both businesses in just a bit.

9:08But I'm curious, what are your thoughts on the products themselves, Beyond Meat and Impossible Burger? Do either of you have a favorite? I think most people we know kind of prefer the taste of Impossible Burgers. Right? Interesting. Jason, wouldn't you say that? Okay. With me, there's no question. I feel that when we tried it for the first time, I don't know, I've talked to Mike about it too. When you bite into it - It was scary. And you haven't eaten meat in 15 years or whatever, 20 years, there's an uncanny valley that goes down. It was unsettling. Right. But again, I feel that Impossible rolled out their product when the product was ready.

9:48Beyond didn't. They had this kind of Silicon Valley aesthetic where they pushed out this product and it wasn't ready. And in some ways, the customers and consumers became beta testers. And so, especially the first iteration, I think they're on their fourth iteration of Beyond. The first iteration of Beyond emanated an unpleasant smell. And so they adjust their recipes. So they went to Beyond 2.0 and Beyond 3.0, which I felt was the best one that took the smell out and was their best recipe. And now they have introduced Beyond 4.0. If you took your favorite, the 3.0 and the Impossible Burger, what would be the biggest difference between the two patties from a taste perspective?

10:40The Impossible meat, well, first of all, it has this kind of bloody heme protein that gives it a kind of a meaty vibe. Also, I mean, you're familiar with Dippin' Dot technology? Sure, I absolutely am. It's the future of ice cream. That's what I hear. As of the 80s. So dip and dots are these little like, you know, ice cream chunks. They're using that technology and they put it in the meat as little fat bubbles. And those fat bubbles kind of expand and then become liquid when you're cooking it to get a meatier burger. And both of those burgers used the dip and dot technology. But impossible is a more refined cooking experience.

11:26It cooks like meat. It cooks like ground beef. And I've cooked ground beef. I have an omnivore family. And Impossible is a much more realistic meat analog than Beyond. And also, when you bite into Beyond, it still has a certain taste that on my palate does not appeal to me. But in my opinion, Beyond is an inferior product to Impossible. and we're just talking about the ground beef, which is their, I guess, their flagships. Yeah. Would you agree with all that, Mike? Yeah. For the most part, yes. I don't have quite the refined palate that Jason has, but I do prefer the taste of Impossible Foods.

12:09And most of my omnivore friends who do eat meat have told me that it is much more analogous to real meat. I've never heard anybody rave about a Beyond Burger. Let's talk about the rest of the Beyond and Impossible products. I've seen chicken nuggets at the store, beef jerky, there's sausages, there are the hot dogs. Any major differences among each company's other fake meat products? Basically, the Impossible Chicken Nuggets are top tier. And a lot of people cannot tell the difference between the Impossible Chicken Nuggets and Animal Chicken Nuggets. But also that sphere of business. There's a lot of people making chicken nuggets.

12:50Beyond has a chicken that I think is okay. Every Beyond product, from my perspective, had a little bit of a problem, like it wasn't 100 % there. And I understand that some of those problems had to do with scaling from the laboratory to mass consumption. And there were issues with that. You've just mentioned a magic word here, and that's laboratory. And I guess I think a lot of folks wonder if these burgers and other products can be truly considered plant-based if they're coming from a lab. What would y 'all say to that? I don't think they're ordering chemicals. If they're processing plants in a lab, it's just sort of the R &D of the product, but I'm more concerned with what's in it.

13:43And even though the ingredients are very processed, I don't think that's a bad word. Okay. So we have to make a delineation between the two things. Okay. Even a product of, I don't know, when Frito-Lay is making their chips, they're making their chips in a lab. They're creating some kind of flavors and flavor profiles, et cetera. There are two separate things. There is plant-made meat, which is beyond and impossible. And then there's lab-grown meat. And lab-grown meat is made in a bioreactor. And that's a totally separate thing. And isn't really commercialized at the moment. Well, the FDA did approve the sale of lab-grown meat.

14:33There's two companies right now that are selling lab-grown meat. They're priming their products for market, and it's upside foods and eat just. However, they're having issues scaling those products to market. And allegedly, they may be having financial problems. Also, there is legislation in states that have a lot of cattle that are trying to ban lab-grown meat. But again, those are two separate things. There's meat made from plants, and then there's lab-grown meat, and they're completely separate. This is something I've always been curious about. I've always thought that if I were a vegan, and since I'm an omnivore, it's hard to imagine, but I do really like the Impossible Burger.

15:20And I've wondered, you know, when I've had these other style burgers that are more like, for instance, they've got beans in them primarily. That's their main protein. I would almost sometimes rather have that than the impossible because it's so close to meat, if you know what I mean. If you think about, say, a black bean or a chickpea burger, something like that, are there people you know, too, that would rather have that sort of patty? Absolutely, yeah. Yeah. I mean, before this so-called revolution with Beyond and Impossible, that's what a veggie burger was. You know, there's the veggie burger brand.

15:53I mean, and a lot of people do find, like, they don't really want – my dad, for example, does not like the taste of meat. So if I were to give him an Impossible Burger, he wouldn't want to eat it. But he wouldn't mind an old-school veggie burger, the kind from decades past. And that definitely has a place. I think to a great extent, this new generation of like sort of tech company burgers, I feel like their intent was to displace meat, whereas the intent with previous veggie burgers was something for vegans and vegetarians to eat. it's time for a quick break my guests are jason cartalion and mike keller co-hosts of the vegan hacks podcast and when we come back we're going to dig into how tastes have changed when it comes to beyond meat and impossible foods and what that means for sales stick around

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18:56Hey, welcome back to Business Wars. Our guests are Jason Cartalion and Mike Keller of the Vegan Hacks podcast. The duo's spirited debates on the latest vegan news and plant-based recipe tutorials have garnered them more than a quarter of a million followers online. So Beyond Meat and Impossible Foods essentially make the same products, but in slightly different ways. How do they differentiate themselves when it comes to marketing? For example, is one emphasizing health benefits while the other emphasizes the environment, that sort of thing? Mike, I know you follow the industry rather closely. Yeah, I think recently Beyond has rebooted their grocery products to be more of like a health-based food.

19:36This grilling season serves more than burger. Serve the ingredients for a healthier, more vibrant life. And Impossible Meat has launched this really fun campaign with this sort of like Ron Swanson-esque figure with a mustache saying like, this is meat. Meat has problems and it's going to take us meat eaters to solve them. So when the world says too much meat is bad and we should eat less of it, we say no world. We should eat more. So it's less of a health food thing and more of a... trying to capture the masculinity of eating beef. Well, which strategy seems to be resonating more with consumers?

20:14Well, I mean, they're basically focused on two different consumers. Beyond has been almost a shapeshifter when it comes to marketing. Like they've been marketing, let's say, let's try celebrities. Let's hire Kim Kardashian to talk about the Beyond chicken. Let's try to find, you know, I don't know, sports people and show that they're healthy and athletic. I do feel that overall, Beyond has always leaned towards the environmental message. And now - Look at their logo. Yeah. They have a cow with a cape, meaning it's like, it's a superhero. You're doing the right thing for the environment or for cows or for whatever, you know?

20:52They even said, I remember I was at an event and they were like, every time you bite into this burger, you're helping save the planet. But the key difference between Beyond and Impossible is that Impossible made the break. They separated from their founder, Patrick Brown, and they have a new CEO who's not vegan, who's not really into the environment. He's just a food guy. And he's doing the best he can to make it into a real food company. Meanwhile, Beyond is still, in my opinion, floundering. Let's do this. Let's do that. Let's move in this direction. Let's move in that direction. And there's definitely a lack of focus of management, in my opinion.

21:43You know, it's interesting, too, because unlike Impossible, Beyond Meat is a publicly traded company. What was the market like for this product at the time when it IPO'd? And I'm curious what your reaction was when it did. I definitely tried to get in on the IPO and it totally got away with me. Jason and I both have some beyond stock. And I remember waking up on the IPO day and the official price was supposed to be$25. It already opened at$50. And I couldn't even get it at$50. It ran off. You know, so there was a lot of hype baked into it and a lot of hope and expectation that this was going to be like, you know, disruptive technology, a new category.

22:24And so like the valuation was completely like divorced from reality and sales in the way that like a tech company is because you think, you know, when you invest in tech, you think like if this thing is a world changing product, it doesn't matter what the sales are today. Right. One day it catches up to the valuation. So far, that hasn't happened, but we still have our stock. We're hoping. Yeah, presently, Beyond, I guess, is valued at$460 million. However, they're$1.2 billion in debt. That's rough. That is rough. Impossible also went through a boom and bust. Because if you look at the secondary market, Impossible shares were up to like$40-something dollars.

23:07I'm looking at it now. So they also lost it. Because at the same time when there was all this hype for Beyond, there was all this hype for Impossible 2. Yeah, yeah. Well, Beyond had a lot of success during the pandemic experiencing something like a peak in sales and revenue. But today, obviously, that's not quite the case. In fact, they've been plummeting. In 2023, they dropped something like 25 % since 2021 if you compared those two years. And things really haven't seemed to be getting better. What changed, do you think? I think during the pandemic, people had a lot more disposable cash and more time on their hands.

23:44They could take a chance on a double priced food item. And also they could take a chance on a bad valuation on a stock beyond when they IPO, which was a little before the pandemic. It was during that time when they had so much money. So when you have all this cash, you have to do something with it. And so they tried all sorts of different marketing angles. And if something didn't work, they could just spend money on something else. And it was a very different time than it is now. I also think that there is a certain amount of consumer fatigue. Like, I guess vegans were a captive audience. We're going to keep consuming these products.

24:21But the real key is what they call the flexitarians. You have to capture them and keep them. And I just feel the novelty of these, oh, it's just like meat, only it's not. And it costs twice as much. Yeah, and it costs twice, maybe three times as much. So again, the price is a barrier. The novelty definitely lost its luster. But yeah, I do think that price is a big concern, especially when people are struggling to pay their bills and they see a pound of ground beef that's subsidized by the government, basically sell for three bucks, or they can get the impossible, you know, an eight ounce or a 10 ounce.

25:07package for, you know,$10,$12. You know, the math doesn't work. It's not math. And it's particularly disappointing for us because we know you only get like one chance to make a first impression. So it's so frustrating for us if these companies are shoving out half-baked products because we know that like a flexitarian or an omnivore, whatever you call them, a meat eater. They're only going to try it once, especially if they're paying double, they're only going to try it once or twice. So if it gives a bad impression, the product isn't really ready for prime time, you kind of lost that customer.

25:46Or if not, you lost that customer for a long time. What's Impossible's strategy here, looking on the sidelines in a sense and watching Beyond Meat's fumbled? I do feel that Impossible went ahead and they were very calculating how they released their initial product. They didn't put it immediately into stores. They started in like very select restaurants and it was kind of a foodie thing. And there was a lot of word of mouth. They didn't rely a lot on advertising too. They relied on word of mouth. And then they also had some really interesting solid partnerships. The beyond partnerships were a lot more shaky, obviously, because they'd come and go.

26:25But impossible sort of was this kind of wall of like, you couldn't read them. Beyond was, look what we're doing. Like everything was a great press release, the news hits going on CNN business, you know, all these different situations where they could juice up their stock and get people excited about the product while Impossible just kind of was under the radar, but really, really concerned about the products they were putting out into the marketplace. Yeah. Now have either of you seen any chatter about an acquisition in the future? I read somewhere that Tyson was an early investor in Beyond Meat before the company IPO'd.

27:02And I wonder, could you see Impossible or Beyond getting gobbled up by, say, a Tyson or another one of those? Peter McGinnis said they are looking for some kind of liquidity event, whether it's an IPO or a private equity. He says they're not pigeonhole. But from a strategy perspective, I wonder if Impossible regrets not IPO-ing or doing their liquidity event in that more free-flowing time because now their valuation is so much lower. This gamble that Beyond took could have turned out a lot better. From a strategic perspective, Beyond could have taken all this cash and they could have swallowed up all the market share.

27:45And so I think they were going for that gold rush at the time of capturing as much as you could, thinking this is going to be like a winner-take-all situation, and impossible held back. And that seems to have been good for the taste of the product and the sustainability of the company. But now they're also in a bit of a tricky situation because if you look at the secondary market, their shares are not trading at a very high price. So they're not going to get the same astronomical valuation. Unfortunately, it just seems as though Beyond had that opportunity, this influx of cash and kind of fumbled it.