Beyond Meat is learning a big lesson in Germany

BERLIN - “Vegan hype from the USA,” shouted a May press release from a prominent German discount supermarket. “The Beyond Meat burger is now exclusively at Lidl.”

The fake meat burger sold out mere hours after its debut in Lidl’s 3,200 German stores in late May, sending customers into a frenzy — and sending Beyond Meat’s stock (BYND) up almost 7%.

It seems as if it would be against all odds, but fake plant-based meat made an enormous splash in Germany, winning over a country famous for pork knuckle, schnitzel, blood sausage, bratwurst, liverwurst and about 1,500 other types of wurst. Meat is extremely cheap in Germany, so much so that French and Swiss carnivores who live close to the German border often do their shopping there.

Even though meat is an integral part of Germany’s culture, around 11% of the German population is vegetarian or vegan and many more are at least trying to eat less animal products. According to a recent YouGov poll, 63% of Germans are trying to reduce their meat consumption, making the country one of the most vegetarian places in the world. (Even a meat tax has been proposed recently.)

After Lidl’s brief supply was sold out in minutes in May, the community section of the company’s Facebook page was filled with hangry vegans posting in a mix of anger and desperation. Wholesaler Metro had a sizable stock in Costco-like quantities and subtweeted Lidl. A few weeks later, Netto, another discount grocery chain, began proudly offering the Beyond Meat “hype-burger” as a special. Of course, it sold out there, too.

The so-called “hype-burger” (so nicknamed in the German media) continued its tour around German grocery stores, essentially as limited-time promotions, given the supply issues. Lidl got the burger back in June and, once again, it sold out within minutes, reigniting public ire. A Lidl representative ended up apologizing to the public, saying they were trying hard but there were simply no more burgers left from the manufacturer on the market. According to one German website, some stores only received five packs in the promotion — not nearly enough to meet the demand.

As one website described the outrage: Lidl’s bringing the burger to Germany had become “einem Mega-Shitstorm.”

By the end of the summer, Lidl, Netto, and other German grocery stores learned two lessons: there was immense demand for fake meat, and that they’d better start making their own — just in case. Somehow, only a few months after Beyond Meat made an enormous impact in Germany, its fake meat is on the way to becoming a commodity.

Where’s the ‘meat’?

Today the viral fake meat (“Fleischersatz”) can be found in German grocery stores, but even a few months later it’s remained somewhat scarce, much to the chagrin of German vegetarians, vegans, and flexitarians.

“I'm curious about the Beyond Meat burger,” one Twitter user wrote. "So far I have not had the pleasure."

“I wanted to eat a Beyond Meat burger yesterday,” said another. “There was no more Beyond Meat. This made me sad.”

Beyond Meat told Yahoo Finance that it’s “excited that the demand for plant-based proteins has grown in Europe and continues to increase in popularity.”

“We're happy to be able to provide and meet the growing demand. We have plans to expand our European distribution and are opening a production facility in Holland in the near future,” the company said.

But it’s clearly not enough — or at least it wasn’t enough to convince the retailers. If you go into a Lidl today, you’ll see the “Next Level Burger,” which looks like a Beyond Meat burger with similar branding – potentially similar enough that you’d be surprised there hasn’t been a lawsuit.

“It would be a gross understatement to claim that the discounter has been ‘inspired’ by its American counterpart,” wrote Bavaria’s biggest newspaper, Süddeutsche Zeitung. “Lidl has almost completely copied the ‘Next Level Burger’ from Beyond Meat.”

Lidl’s “Next Level Burger” arrived in August, and it would have undercut Beyond Meat — if the hype-burger was there to compete. In addition to lower prices than Beyond Meat and “guaranteed sufficient product availability,” Lidl noted that producing the patties in Germany means less of a carbon footprint.

Lidl isn’t the only grocery store in Germany that’s been frustrated by supply chain difficulties and came out with its own generic version of Beyond Meat burger. Aldi has done the exact same thing, with its “Wonderburger” (taste tests seem to give Lidl the edge). Though these burgers haven’t gotten as much attention as Beyond Meat’s, the lower price point and wider availability has translated into excitement for the products, and more are popping up.

Generic Beyond Meat

Beyond Meat has thrown the country’s fake-meat appetite into high gear. Germany’s national love for meat and a surge in environmental consciousness has made conditions ripe for a fake meat craze as soon as a quality product arrived.

Even though vegetarians and vegans have been eating tofu, seitan, and other substitutes for years, the new developments from companies like Beyond Meat and Impossible Burger have changed everything, according to Eilleen Valy of Proveg Germany. The quality has crossed a threshold where the “meat” close enough lures omnivores over.

"The new products we see now entering the market have made huge progress,” said Valy. “Crucially, the majority of people consuming these products are not necessarily vegans and vegetarians.”

But while Beyond Meat may have taken the trend to a new level, its success has ramped up competition in its own market. According to Valy, Germany alone accounted for over 10% of all new vegan products globally, with just 1% of the world’s population.

“Seems like Beyond Meat and co. have sparked a wave of food innovation in the industry,” wrote Mark Leinemann, a marketing professional, tweeting a picture of a Green Mountain Burger, a company in Switzerland that is also fresh on the scene. “Juicy. Bloody. Zero meat,” its website copy reads.

Months after May’s burger sellouts, the demand for Beyond’s meat substitutes has remained high. But in some places, like Basel and Bern in Switzerland, Beyond Meat’s products seem to sometimes be available at a 50% discount. That could mean that the Beyond Meat’s supply delays could have been long enough to allow competition to get a strong foothold against the Hype-Burger. Swiss economist and meat alternative "ambassador" Nicole Hasler said Beyond Meat is typically very pricey and Swiss supermarkets already have a wide range of fancy vegan products, so perhaps people have discounted them as an option.

On the one hand, recent coverage of Beyond Meat’s business by Wall Street analysts is very positive. Barclays has forecast Beyond Meat might capture 4.5% of the alternative meat industry, which itself could become 10% of the global meat industry. But the fake meat space is changing rapidly, and predicting how a price- and taste-sensitive public will react is a shot in the dark.

Beyond Meat is ramping things up

It’s no secret to Beyond Meat that meeting demand is a huge issue. The company has a red-hot product and the industry is in a critical tipping point in which consumer expectations and habits are being developed and brands are being learned and chosen.

Tons of chains in the U.S. and Canada have added Beyond Meat products to menus, usually in the form of a pilot project. Subway is “testing” Beyond Meatball Marinara subs at 685 locations in Canada and KFC is also “testing” at a location in Atlanta. Dunkin’ tested a breakfast sandwich with Beyond Meat in Manhattan. TGI Friday’s features a Beyond Burger as well. And at the end of September, McDonald’s (MCD) made its move to go Beyond. (In mid-September, Tim Hortons announced that it was pulling Beyond Meat’s offerings from its stores, citing a “limited time offer,” even though the product sold extremely well.)

Though it’s natural for a company to test before doing a nationwide rollout, the frequent use of “testing” and “limited” has made people nervous that meeting demand may be an issue. Earlier this summer, however, Beyond Meat said on an earnings call that the company could handle the supply chain challenges of any fast food chains, and stressed it’s increasing capacity to meet the demand.

“We've tripled our manufacturing capacity from last summer,” Beyond Meat CEO Ethan Brown said, later adding that the company has also begun “to respond to significant demand for our products across Europe” with a new marketing, distributing, and manufacturing partner, Zandbergen World's Finest Meat, a company Brown said was “a leader in international protein supply chain.”

Beyond Meat knows that it needs to keep the fake meat coming to succeed, and is acting accordingly. But if there are any lessons in the German situation to be learned, it’s that the biggest competitor to Beyond Meat’s dominance might be the commodification of its product. If a pair of discount grocery stores can knock off the company’s burgers that easily, customers might not need a Beyond Burger to be satisfied.

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Ethan Wolff-Mann is a writer at Yahoo Finance focusing on consumer issues, personal finance, retail, airlines, and more. He is reporting from Berlin on the Arthur F. Burns fellowship from the International Center for Journalists. Follow him on Twitter @ewolffmann.

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