4 ms·

Yeah, I'm sure it's partially an economies of scale issue. But plant based beef should really be half or less the cost of actual beef in the long run. Otherwis

Yeah, I'm sure it's partially an economies of scale issue. But plant based beef should really be half or less the cost of actual beef in the long run. Otherwise the whole premise is totally pointless, other than for taste for vegetarians. I would switch all my beef consumption to impossible if the cost were significantly lower. From an investment perspective it seems kind of poor, given that there are already two players and likely more down the road. Will not be able to bear high margins on these kind of items. Cool that some are willing to fund the R&D even though returns are likely to be poor, though! Competition will bring price down in longer run either way.

onlyrealcuzzo 5y ago
> I would switch all my beef consumption to impossible if the cost were significantly lower. Is the cost significantly lower in non-subsidized markets like Netherlands, Hong Kong, South Korea, and Norway? Or do Impossible and Beyond charge more in those markets?
- dagw 5y ago
  In Sweden at least the Beyond Burger cost a good 50% more than cheap ground beef when I last bought it at the super market.
sdenton4 5y ago
Isn't the actual problem here federal subsidies for beef production?
- adam_arthur 5y ago
  In theory, in a competitive market, margins will decline over time and goods will be sold close to at cost. This is especially applicable to grocery/food where margins are razor thin. If we assume the inputs to impossible are significantly cheaper than beef, then cost of impossible should be significantly cheaper too. But you're right, subsidies distort the equation. If somebody can chime in with what the level of beef subsidy is, but I'm doubtful it's enough to offset using vegetables over cattle. Should be an order of magnitude cheaper in a free market, once production is scaled up appropriately.
  - sdenton4 5y ago
    It seems (maybe unsurprisingly) complex to put an exact number on the cost of a non-subsidized hamburger. However[1], the US gives $38 billion per year in beef subsidies, and less than 1% of that amount for vegetable production. I found a couple links [2, eg] which claim $30-50 per pound of beef, if subsidies are removed. There are also some discussions to be found [3] of the cost of additional externalities. [edit : one can also try a simple-but-probably-wrong end-to-end estimate... Divide $38B by 325M to get $116 per person. Then divide by 57 pounds of beef consumption per person per year [4] to get ~$2 per pound. A quick search finds ~$4 per pound for ground beef, so one may naively guess the subsidies add up to at least a 33% discount.) [1] - https://jia.sipa.columbia.edu/removing-meat-subsidy-our-cognitive-dissonance-around-animal-agriculture https://jia.sipa.columbia.edu/removing-meat-subsidy-our-cogn... [2] - https://www.quora.com/How-much-is-the-average-pound-of-beef-subsidized-in-America-If-it-werent-for-that-subsidy-how-much-higher-would-the-market-prices-be https://www.quora.com/How-much-is-the-average-pound-of-beef-... [3] - https://www.nytimes.com/2014/07/16/opinion/the-true-cost-of-a-burger.html https://www.nytimes.com/2014/07/16/opinion/the-true-cost-of-... [4] - https://www.statista.com/statistics/183539/per-capita-consumption-of-beef-in-the-us/ https://www.statista.com/statistics/183539/per-capita-consum...
petra 5y ago
Nestle has an operating profit margin of 17.5%. That's pretty good. Maybe it's possible for Beyond/Impossible. Also, if capital costs of building a plant are low relative to yearly revenue, say 10%, even at profit margins of 5%, over 10 years you got 5x of returns, and that's without counting other ways of raising capital. A lot depends on scale, and meat has scale.
- adam_arthur 5y ago
  Yeah, I haven't broken down the numbers mathematically. I'm sure it will be a profitable business, and they have a great head start. Just a question of valuation and ROI on a longer timescale. BYND stock seems wildly overvalued if you consider the very long run, for example. You can't have a tech like multiple on a food/grocery product and expect a good long term return.
sjtindell 5y ago
The premise would still be “less large scale pollution and animal suffering”.
- adam_arthur 5y ago
  That goal won't be achieved if they position it as a premium product. Vast majority of people will not buy meat alternatives if they are more expensive than meat. On the other hand, if you can bring cost well below meat, many will choose it for economic reasons alone.

onlyrealcuzzo 5y ago

> I would switch all my beef consumption to impossible if the cost were significantly lower. Is the cost significantly lower in non-subsidized markets like Netherlands, Hong Kong, South Korea, and Norway? Or do Impossible and Beyond charge more in those markets?

dagw 5y ago
In Sweden at least the Beyond Burger cost a good 50% more than cheap ground beef when I last bought it at the super market.

sdenton4 5y ago

Isn't the actual problem here federal subsidies for beef production?

adam_arthur 5y ago
In theory, in a competitive market, margins will decline over time and goods will be sold close to at cost. This is especially applicable to grocery/food where margins are razor thin. If we assume the inputs to impossible are significantly cheaper than beef, then cost of impossible should be significantly cheaper too. But you're right, subsidies distort the equation. If somebody can chime in with what the level of beef subsidy is, but I'm doubtful it's enough to offset using vegetables over cattle. Should be an order of magnitude cheaper in a free market, once production is scaled up appropriately.
- sdenton4 5y ago
  It seems (maybe unsurprisingly) complex to put an exact number on the cost of a non-subsidized hamburger. However[1], the US gives $38 billion per year in beef subsidies, and less than 1% of that amount for vegetable production. I found a couple links [2, eg] which claim $30-50 per pound of beef, if subsidies are removed. There are also some discussions to be found [3] of the cost of additional externalities. [edit : one can also try a simple-but-probably-wrong end-to-end estimate... Divide $38B by 325M to get $116 per person. Then divide by 57 pounds of beef consumption per person per year [4] to get ~$2 per pound. A quick search finds ~$4 per pound for ground beef, so one may naively guess the subsidies add up to at least a 33% discount.) [1] - https://jia.sipa.columbia.edu/removing-meat-subsidy-our-cognitive-dissonance-around-animal-agriculture https://jia.sipa.columbia.edu/removing-meat-subsidy-our-cogn... [2] - https://www.quora.com/How-much-is-the-average-pound-of-beef-subsidized-in-America-If-it-werent-for-that-subsidy-how-much-higher-would-the-market-prices-be https://www.quora.com/How-much-is-the-average-pound-of-beef-... [3] - https://www.nytimes.com/2014/07/16/opinion/the-true-cost-of-a-burger.html https://www.nytimes.com/2014/07/16/opinion/the-true-cost-of-... [4] - https://www.statista.com/statistics/183539/per-capita-consumption-of-beef-in-the-us/ https://www.statista.com/statistics/183539/per-capita-consum...

petra 5y ago

Nestle has an operating profit margin of 17.5%. That's pretty good. Maybe it's possible for Beyond/Impossible. Also, if capital costs of building a plant are low relative to yearly revenue, say 10%, even at profit margins of 5%, over 10 years you got 5x of returns, and that's without counting other ways of raising capital. A lot depends on scale, and meat has scale.

adam_arthur 5y ago
Yeah, I haven't broken down the numbers mathematically. I'm sure it will be a profitable business, and they have a great head start. Just a question of valuation and ROI on a longer timescale. BYND stock seems wildly overvalued if you consider the very long run, for example. You can't have a tech like multiple on a food/grocery product and expect a good long term return.

sjtindell 5y ago

The premise would still be “less large scale pollution and animal suffering”.

adam_arthur 5y ago
That goal won't be achieved if they position it as a premium product. Vast majority of people will not buy meat alternatives if they are more expensive than meat. On the other hand, if you can bring cost well below meat, many will choose it for economic reasons alone.