Beyond Meat, the world’s No. 1 plant-based burger maker, is up big since its initial public offering in May. Early investors like Leonardo DiCaprio, Bill Gates, Jack Welch and Justin Timberlake have made out like bandits. Even Don Thompson, former CEO of McDonald’s, is in on the action. Which begs the question. When, exactly, is the Beyond Big Mac due on store shelves?
All speculation aside, Beyond Meat is far from profitable. The company lost $6.6 million in its first public quarter. Which is OK for a growth company. Beyond Meat, like the plant-based food sector at large, is still in its infancy.
In 2018, the global meat industry was worth $1.4 trillion. At $670 million, the U.S. plant-based meat market represents a mere 0.25% of total market demand. In 2018 Nielson, a market research company, estimated that alternative cheese products grew at 45% while alternative meat products grew at 40%. This is in comparison to 2% growth for animal-based equivalents.
The growing market explains why Maple Leaf Foods is building a $310 million plant-based protein processing facility in Shelbyville, Ind. Roquette, a French food giant, is building a $400 million facility in Portage la Prairie, Man.. And James Cameron-backed Verdient recently commissioned a dry pea fractionation facility in Vanscoy, Sask.
Across North America and around the world, big names are investing big dollars in plant-based protein processing. This is the infrastructure required to transform peas, canola, and hemp into ingredients and finished products. As capital flows into the sector, individual companies will benefit from economies of scale across the value chain, reduced per unit pricing, and broader market acceptance. Enhanced research and development budgets will improve flavour profiles, discover new efficiencies, and add additional market share for pea-based burgers, hemp-based milk and soy-based bacon.
The business case for plant-based protein is made even stronger by the environmental case. Plant-based proteins produce upward of 90% fewer negative externalities than meat-based proteins. For this reason alone, the marketing push for animal replacement products will reach a fevered pitch.
People a lot smarter than me have already placed their bets. Plant-based protein is a long-run opportunity and Medicine Hat could benefit.
Consider that Medicine Hat is located in the heart of Alberta’s hemp and pulse crop production area, connected to world markets by rail and road, offering access to available, skilled labour. The City of Medicine Hat charges no equipment tax and can supply much needed industrial inputs via stable, municipally operated utilities. Plus, Alberta is home to Canada’s lowest corporate tax rate and Canada’s best business environment.
Given the strength of our business case, it is incumbent upon this office to proactively engage with the industry and sell them on the Medicine Hat advantage. However, there is more that can be done. Farm and business leaders can, for example, submit a proposal to the Protein Industries Canada supercluster initiative in order to draw some federal dollars this way. (PIC begins accepting expressions of interest on Sept. 1.)
It is up to all of us, as community and business leaders, to seize the opportunity that has presented itself. We must do what we can to get in front of this one. For opportunities, real opportunities, are much rarer than you think.
Jon Sookocheff is interim CEO of Invest Medicine Hat. He can be reached at http://www.InvestMedicineHat.ca.
