Who doesn’t like a barbecue with a sound and smell of sizzling beef burger on a summer day? The answer is simple… Vegetarians! Although 10% of the world has introduced vegetarian diet into their daily living (Jacimovic, 2020), the remaining 90% is still consuming huge amounts of meat every year. Ethan Brown, Founder and CEO of Beyond Meat company had a brilliant idea of creating a burger out of plants which texture, smell and taste will be as similar as possible, to the beef burger. Sounds different but … tasty! Let’s look closely at the company, its strategy and analyse them as well as the sector. Is Beyond Meat on the route to profitability?
Professor Francis Aguilar created this incredibly powerful tool that helps us to dig deeper and understand the outer layer of business environment- the micro-environment (Team, n.d.). The six factors are looking into both market and non-market factors.
Incredible opportunity for plant-based meat producers, threat for meat producers. The Government in US is planning on introducing a so called ‘’sin tax’’ on red meat to save the planet and its residents. This can hit meat producers and as a result meat factorieswill produce less (higher price=lower demand) and eventually close down. (Garmendia, 2020)
+ High Disposable Income
Disposable income in the US is relatively high comparing to other countries. The only one with higher disposable income is Luxemburg…(Rausch, 2019) but what does that mean? Higher income means people spending more money. Plant based meat is still more expensive than traditional piece of steak but consumers are willing to pay the extra money for healthier substitute. (Reinicke, 2019)
+ Rising Health Consciousness
The rising health consciousness is an amazing opportunity for all plant-based meat producers in US. Beyond Meat puts human health as one of its priorities and it’s a part of their mission to change eating habits of meat eaters in US(Beyond Meat: Taking on the Beef Industry, 2019).
+ Technological Development
Lab made meat is all about getting the molecules right, to get the vegan meat tasting just like the real thing (Beyond Meat: Taking on the Beef Industry, 2019). Technological development is a crucial factor in creating tastier and healthier products. The production machines are also getting more advanced and as a result the product gains on quality.
+Negative impact on environment
Plant-based meat is much more environmentally friendly than animal-based meat. To produce one pound of lab-grown meat we need quarter the amount of water and 100 times less land in comparison to producing one pound of meat(TWG, 2019)!
In the United States legal barriers can be a serious obstacle and create losses. In the state of Missouri, the bill was passed about prohibiting of using words such as meat, chicken or beef on plant-based meat-like products, with a view to not to mislead the consumers(Watson, 2018). Companies can face serious lawsuits for putting the wrong label with the wrong name on the packet.
There are a lot of different variables which shape the industry to the way we see it now. The three main Key Drivers are (in order from the most important):
Health consciousness of the consumers have immense impact upon the industry. Plant-based meat taste and looks like meat but it has more nutritional values than meat and it doesn’t contain cholesterol or saturated fats that are causing a lot of lifestyle diseases (obesity, diabetes). The shift in consumption patters puts plant-based meat well ahead a piece of steak because of its health benefits.
Because of consumersconsciousnessthe choices made are also better for the environment. That’s why the negative impact that meat industry has on the environment is making the consumer to reach for a plant-based meat option. Each one of us wants to contribute to making our planet better and it can be done by such a simple swap for a non-meat food option.
These three key drivers will result in decrease in meat sales and positively impact whole plant-based meat sector.
|The Threat of Entry|
|Economies of scale & Experience||
|Access to supply and distribution channels||
|Government restrictions (e.g. licensing)|
|Threat of Substitutes|
|The price/performance ratio of the substitute|
|Extra Industry Effects||
|The bargaining power of buyers|
|Buyers are concentrated||
|Buyers have low switching costs||
|Buyer Competition Threat
|Low Buyer Profits & Impact on quality
|The bargaining power of suppliers|
|The suppliers are concentrated||
|Switching costs are high (it is disruptive or expensive to change suppliers).||
|Suppliers can integrate forwards||
|Rivalry between competitors|
|Competitor Concentration &Balance||
|Industry Growth Rate||
|High fixed costs||
|Exit barriers are high
|There is a low level of differentiation
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