{"id":4885,"date":"2019-06-26T18:23:57","date_gmt":"2019-06-26T18:23:57","guid":{"rendered":"https:\/\/investingcounterpoint.com\/?p=4885"},"modified":"2019-09-05T12:58:47","modified_gmt":"2019-09-05T17:58:47","slug":"technology-so-good-you-can-taste-it","status":"publish","type":"post","link":"https:\/\/rixtrema.com\/blog\/technology-so-good-you-can-taste-it\/","title":{"rendered":"Technology so good you can taste it."},"content":{"rendered":"\r\n\r\n\"\"<\/a>\r\n\r\nBeyond Meat has had a wild first month of\r\npublic trading, rising over 500% from the IPO price before a few analysts urged\r\ncaution to those expecting incredible financial results. But as soon as the\r\nanalysts stopped downgrading the stock (to hold), the meteoric rise continued\r\nand the stock briefly eclipsed $200. While the IPO ranks as just a fraction of\r\nthe size of the other notable IPOs of 2019, the performance since IPO has been\r\nthe best by far.\r\n\r\n\r\n\r\n\r\n

Top IPOs of 2019 So Far<\/h2>\r\n\r\n\r\n\r\n
\"\"<\/figure>\r\n\r\n\r\n\r\n\r\nOf course, seeing shares sold at an IPO\r\nprice of $25 increase 5-fold within weeks of trading may indicate a mispricing\r\non the part of the IPO team, but that is another topic.\r\n\r\n\r\n\r\n\r\n\r\nI confess that I originally thought the\r\nImpossible Burger was a product made by Beyond Meat. I didn\u2019t realize they were\r\nseparate companies, both aggressively pursuing meatless meat technology. The\r\nprimary difference between the two burger products is that Beyond Meat uses pea\r\nprotein and Impossible uses soy protein with their heme molecule. I doubt I\r\ncare either way, I only care about the taste, not if I was eating peas or soy\r\nwith heme. But for someone with severe allergies, this could be an important\r\ndistinction, and yes, I know someone with a severe pea allergy.\r\n\r\n\r\n\r\n\r\n\r\nBut the two products represent a\r\ntechnological evolution in vegan cuisine. These are not companies that are\r\ntrying to make great tasting vegetarian cuisine. These companies are trying to\r\nmake you believe that you are eating meat without sacrifice. They conduct\r\nextensive research on exactly what makes meat, well, meat. In fact, Impossible\r\nFoods founder Dr. Pat Brown, a Stanford Biochemist, refers to animals as \u2018food\r\nproduction technology\u2019. In other words, he views meat as a product. The\r\ntechnology that produces that product from vegan diets, is the cow. All he has\r\nto do is replace the cow as the technology that produces the meat.\u00a0 Both Beyond Meat and Impossible hire teams of\r\nscientists whose mission is to break down every element of meat and try to\r\nfigure out how to put it back together without using a cow \u2013 and ideally make\r\nthe cow-tech more efficient.\r\n\r\n\r\n\r\n\r\n\r\nIt is well documented that one of the\r\npoorest uses of land is to raise cattle. There have been many studies done on\r\nthe benefits of Americans adopting \u201cmeatless Monday\u2019s\u201d (examples 1<\/a>,\r\n2<\/a>,\r\n3<\/a>),\r\nor other ways of consuming less meat, yet most American\u2019s do not. The allure of\r\nthis high-tech meat is that it may make it possible to stop eating meat while\r\nhaving a burger. And eventually a steak, fish, chicken, pork or anything else I\r\ndon\u2019t really want to kill myself to get to eat. In fact, Beyond Meat already\r\nproduces sausage and chicken and a company called Finless Foods is trying to\r\ntackle the fish angle.\r\n\r\n\r\n\r\n\r\n\r\nAfter all, most Americans will happily\r\nadopt something that is good for them (or the planet) as long as there are only\r\nminor inconveniences they have to suffer. Take electric cars as an example.\r\nWhile electric vehicle sales in the US represented just 2.08% of the total sold\r\nin 2018 at 361k vehicles, this is an 81% increase from 2017. And a huge\r\nincrease from the 17k that were sold in 2011. The reason for the increase is\r\nthat the inconveniences associated with owning an electric vehicle have been\r\ndramatically reduced for the needs of many drivers. The low maintenance costs\r\nand ease of refueling at home make the inconveniences suffered worthwhile for\r\nthese buyers. Add to this the impressive performance<\/a>\r\nof electric vehicles and the value proposition becomes much greater. Plus, they\r\ndon\u2019t look like this anymore:\r\n\r\n\r\n\r\n\r\n

1990\u2019s General Motors EV1<\/h2>\r\n\r\n\r\n\r\n
\"\"<\/figure>\r\n\r\n\r\n\r\n\r\nThe point is that even though EVs represent\r\nonly 2% of total sales, and incentives have driven some (much) of that growth,\r\nAmericans aren\u2019t exactly holding their noses to drive these cars. And they\r\naren\u2019t suffering to drive them solely out of a sense of moral obligation to\r\nbetter the planet. They are driving them because they actually like driving\r\nthem and the incentives and conveniences that go with it are more than enough\r\nto make the purchase worthwhile. Being able to say they are doing something\r\npositive for the environment is an extremely valuable added benefit that shouldn\u2019t\r\nbe overlooked. But very few will take advantage of that added benefit if they\r\nhave to give up too much in return. And the GM EV1 would never sell 361k cars per\r\nyear looking and performing like it did. The technology and aesthetics had to\r\nbe developed to make it reasonable value proposition.\r\n\r\n\r\n\r\n\r\n\r\nThe same is true with meat replacement. I\r\nremember being at a Thanksgiving dinner in the mid 1980\u2019s with family and\r\nfriends. People as vegetarians was a completely foreign idea to me \u2013 why would\r\nanyone want to do that? When one of our friends decided she was vegetarian at\r\nage 12 I was perplexed. That she would only eat \u2018tofurkey\u2019 or tofu turkey for\r\ndinner was just odd, but I tried some of her \u2018meat\u2019, and as you may imagine, it\r\nwas horrible. The 1980\u2019s technology was nowhere near turkey replacement. I spit\r\nout the chewy, gummy substance with a funky aftertaste and told her that\r\ntofurkey was completely unsuitable for human consumption. My friend, undaunted,\r\ndisagreed and exclaimed it tasted exactly like turkey (it didn\u2019t). Plus, meat\r\nwas murder and all that so she had the moral high ground (perceived or real\r\ndepending on views). Tofurkey or not, it was a great album.\r\n\r\n\r\n\r\n\r\n

Album Voted Most Popular with Vegans in 1985<\/h2>\r\n\r\n\r\n\r\n
\"\"<\/figure>\r\n\r\n\r\n\r\n\r\nThe CEO of BYND, Ethan Brown, knows this.\r\nOne of his quotes in a 2017 NPR podcast about the origins of his company made\r\nme realize that my experience with the teenage vegan was not unique. Said Brown\r\n\u201cit\u2019s not about feeding the pesky 13-year-old girl or boy at the dinner table\r\nwho said \u2018mom, I am not going to eat meat anymore\u2019. It\u2019s about creating a new\r\nform of meat for the center of the plate that people will love and they don\u2019t\r\nhave to sacrifice to have it.\u201d\r\n\r\n\r\n\r\n\r\n\r\nExactly. This is the heart of the reason\r\nthat the percentage of Americans vegetarians has held steady at less than 1%\r\nsince the 1990s (interesting\r\nside note<\/a>, between 2%-6% self identify as vegetarian, but still\r\nreport eating meat products \u2013 self identification is up significantly from 1978\r\nwhen only .55% identified as strict vegetarian. I would guess that people are\r\nbecoming aspirational vegetarians, meaning that they aspire to consume no\r\nanimal product, but can\u2019t quite do it): Americans like to eat meat and rubbery\r\nmeat substitutes don\u2019t cut it.\r\n\r\n\r\n\r\n\r\n\r\nBut that may be changing. The promise of cowless\r\nmeat technology is so tangible that in 2018 the U.S. Cattleman\u2019s Association (USCA)\r\nfiled a petition<\/a>\r\nto only allow the terms \u2018beef\u2019 and \u2018meat\u2019 to be used in conjunction with actual\r\nanimal based products. My favorite line from the USCA petition:\r\n\r\n\r\n\r\n\r\n\r\nThe broader definition of \u201cmeat\u201d should also be limited to the\r\ntissue or flesh of animals that have been harvested in the traditional manner.\r\nThis would similarly prohibit product from alternative sources such as a\r\nsynthetic product from plant, insects, or other non-animal components and any\r\nproduct grown in labs from animal cells from being labeled as \u201cmeat.\u201d\r\n\r\n\r\n\r\n\r\n\r\nBy limiting what products can use the term\r\n\u2018beef\u2019 they hope to keep products like the Impossible Burger categorized as\r\nsomething other than beef. Especially if it is made from insects (I might agree\r\nwith that). Their argument is that it will prevent confusion in the\r\nmarketplace. I doubt anyone is confused. But calling meat \u2018pea-meat\u2019 will\r\ncertainly contaminate our opinions of that product before we ever try it, which\r\nis the whole point. The idea that these products might taste as good as the\r\nreal thing, if not now, soon, is really what the USCA is protecting itself\r\nfrom.\r\n\r\n\r\n\r\n\r\n\r\nAnd this is the allure of the Impossible Burger and Beyond Meat. They have created technology that allows us to eat meat, without eating meat. Or at least without eating meat that uses the nearly obsolete cow technology to produce it. We may soon be able to become vegetarian without giving up anything at all. Said differently, this technology may make the inconveniences associated with being vegetarian inconsequential versus the benefits. Just like the electric car. And that is when Americans will adopt the cow-less technology and become vegetarian. If that happens, I would surmise that BYND will continue it\u2019s meteoric rise, even if it analysts believe it is overvalued at current levels. And Impossible Foods will have an amazing IPO if it chooses to do so.\r\n\r\n\r\n\r\n","protected":false},"excerpt":{"rendered":"

Beyond Meat has had a wild first month of public trading, rising over 500% from the IPO price before a few analysts urged caution to those expecting incredible financial results. But as soon as the analysts stopped downgrading the stock (to hold), the meteoric rise continued and the stock briefly eclipsed $200. While the IPO… <\/p>\n

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