The burger wars that 59% of you know nothing about

For people of a certain age, (as in this writer), the phrase "burger wars" means McDonalds (MCD) versus Burger King (QSR). Over the years, that rivalry was diffused with the addition of Wendy’s (WEN), Jack in the Box, Sonic, Carl’s Jr., etc. and then updated and upgraded more recently with Shake Shack (SHAK) versus In-N-Out Burger, (for the record I like ‘em both).

Now though burger wars are traveling through another dimension (as Rod Serling used to say). We have entered the post-burger wars, Beyond (BYND) versus Impossible, which of course serve burgers made not from meat but from plants.

Sure, there are other non-meat companies, but Beyond and Impossible have taken the lead in terms of mindshare, (along with a big cut of market share), passing both other new entrants and those bleh health food store soy burgers that have been around for decades.

Beyond Meat and Impossible Foods, to use the companies’ official names, are both wildly similar and wildly different. Both companies were founded a decade or so ago by guys named Brown, Ethan for Beyond and Pat for Impossible, both committed green, alt-food types (Ethan and Pat are both vegan) who remain CEOs — though their bios diverge after that, (more below). Neither company has QSR (quick serve restaurant, i.e. McDonalds and Burger King) ambitions, but both have deals with such companies to offer their burgers and more.

The two companies also claim to not pay much attention to each other, which is true as far as it goes, except tell that to their employees who’re trying to get space in the meat cooler sections of supermarkets and doing partnerships. (Not surprisingly, each company has an old school burger partner, Beyond with McDonald’s (it also has alliances with Yum! Brands, Whole Foods, Starbucks and some KFC, Pizza Hut, and Taco Bell stores in China), and Impossible with Burger King (also with Trader Joe’s, Qdoba, White Castle, Red Robin, Kroger, and Starbucks.)

If this story feels very 2019 to you — who can forget Beyond’s red-hot IPO that May (the stock topped $230 that July) — consider that while, yes, BYND has come back down to earth (now $100), Beyond and Impossible have been heads down working to improve and expand their offerings. The onus is on Messiers Browns to prove these are sustainable endeavors and not flashes-in-the-pan. The passion is there for both, as I discovered when reading up on Ethan Brown and interviewing Pat Brown at the Web Summit in Lisbon this week (see below).

The good news for both companies is that consumption and sales of plant-based burgers keeps on climbing, according to Gallup: “Forty-one percent of Americans report having personally tried a plant-based meat... about half of adults younger than 50, versus 26% of those 65 and older, have eaten a plant-based meat.”

Beyond’s trailing 12-months sales are now $453 million, up 14-fold from four years ago. The potential upside is still, can I say, bananas.

“In U.S. retail, [plant-based meat] has only $1.2 billion in retail sales,” says Robert Moskow, an analyst at Credit Suisse who covers Beyond Meat. “It is very small. The total meat value — if I had to compare it apples to apples — is about $135 billion. If you took the entire butcher case, that’s probably what you would get."

“The leadership in the category is really four players now. In order, it’s actually the MorningStar brand from Kellogg’s [not that Morningstar!] 29%, Beyond Meat is number two 20%, number three is Impossible 7% and Conagra 6%, number four.” Note that those numbers include all plant-based protein foods (chicken, turkey, even fish and corn dogs — which the two legacy brands have). As far as the real, cutting-edge food, it’s all Beyond and Impossible.

Moskow says Beyond is “now losing market share to Impossible. I think it’s posing a bigger threat on a market share basis than they expected. In addition, the food service market for [Beyond] has been slow to recover. A lot of restaurants are hesitant to put a new item on their menu that will add more complexity to their operations during COVID. This year, retail will be a significant percentage. It’s going to be 72% of sales this year. Pre-pandemic, management expected food service to eventually be a bigger part of the mix than retail.”

Is there room for both Impossible and Beyond (and others, as well)? No doubt. Rivals like this are kind of the American way, right? Coke/Pepsi, Ford/GM, Hellmann’s/Miracle Whip and on and on.

There are skeptics of course. “I’m cautious — I wouldn’t say pessimistic,” says Ricardo San Martin, the research director of the alternative meats program at the University of California, Berkeley. “I try to understand what’s true in the narrative we’re listening to. Are they going to wipe away the meat industry? I don’t see it. In countries with abundance, like the U.S., it’ll be another offering in the supermarket.”

“If you look at the stats, meat consumption hasn’t dropped,” San Martin says. “The only category where plant-based products have really become important is milk, or milk analogues. The reason is mainly that it’s easier to do a liquid product than a meat-like product. Plants lend more to that. Also, you don’t drink those things on their own. You don’t drink a glass of oat milk like you eat a hamburger.”

Remember though the meat industry is more or less standing still, while the plant-based protein industry is constantly iterating. It kind of reminds me of movie theaters versus watching video at home. Everything about the latter experience has improved dramatically over the past three decades, especially compared to the former.

'The biggest environmental threats in the world'

Talking to Pat Brown about all this in Lisbon was a trip. He really is a man on a mission who, Upton Sinclair-like, wants to take down the meat business. Though Pat works in Silicon Valley, he’s about as far from a Johnny-come-lately, serial entrepreneur as you can imagine. A world class scientist, Pat is a University of Chicago educated Ph.D., (his doctorate involved the study of DNA topoisomerases) and MD who practiced in pediatrics. He was a Howard Hughes Medical Institute investigator and a Stanford University biologist and DNA researcher. (Here’s a backgrounder on Ethan Brown, btw.)

This is what Pat Brown told me on stage in Lisbon about why he started Impossible:

“Well, I was a professor at Stanford and had no desire to leave my dream job,” Brown says. “I certainly didn't have any desire to start a food company. But when I started looking into what the biggest environmental threats in the world were, I realized by far number one on the list, and the most destructive technology in human history was the use of animals as a food technology. I realized the magnitude of the impact and the fact that no one was seriously trying to develop a technology to replace them. And I believed it was doable, and incredibly urgent, because it was the only way we're going to avert total collapse of biodiversity and catastrophic climate change. So I left my job and found Impossible Foods to solve the problem.”

Brown told me that after our interview he would be traveling to COP26 in Glasgow and so I asked him to expound upon this notion of the impact of the traditional meat industry on climate change.

“Animal agriculture is responsible for about 16% to 17% of ongoing greenhouse gas emissions,” Brown says. “That's a big deal. That's as big as the transportation industry. What they never talk about is the much bigger deal, which is that it's possible to reverse the climate impact of animal agriculture. You can't do that for fossil fuels. For fossil fuels, once you emit that carbon dioxide, you're not going to turn it back into coal. For animal agriculture. It's completely reversible. It's an amazing thing. Methane decays spontaneously with a half life of nine years.”

Don’t think that just because Brown is a scientist, he isn’t goal oriented: “We have to on average, double and scale every year for the next 15 years. We have to make a product that is preferred by consumers in every way that matters. And that means less expensive, healthier, more sustainable, doesn't matter that much when people are buying meat. And more delicious is the most important.”

Impossible is now making or soon will be making ground beef, sausage, ground pork in Hong Kong, chicken nuggets, and even fish. Brown says that consumers prefer Impossible ground pork and the company’s chicken nuggets to the real thing in taste tests. “That's really important because we have to be not just as good, but better,” he says. “A chicken is not trying to be delicious and it's not capable. If you said, ‘Hey, chicken, you need to taste more like a chicken,’ it ain't gonna happen. But if our consumers say, ‘Hey, your nuggets need to taste more like a chicken,’ we can do that. And that's, that's how we're gonna win.”

And steaks too? Really steaks?

“Stay tuned,” he says. “We're working on it. We started about a year and a half ago. We already figured out a lot of the flavor chemistry, but getting the steak texture is a new thing. It's completely doable. Don't have to take my word for it, you'll find out not too far down the road.”

What about the people who say that Impossible (and Beyond for that matter) aren’t really that healthy actually?

“It's completely ridiculous,” he says.“Some people will say, ‘Well, your food is processed, it has too many ingredients, and therefore it's not healthy.’ Well, why don't you look at how many ingredients are in the foods that are being served when you go to a restaurant? The whole history of food for humans involves using a combination of nature and science to make something that's more than the sum of the parts, picking particular ingredients from plants or animals or whatever, processing them by, you know, fermenting them or cooking them or grinding them, combining them. A chef combines them to make something that's more than the sum of the parts. That's all we do.” (Some will also point out that the Impossible Burger has a GMO ingredient, see below.)

Bloomberg recently reported that Impossible is looking to raise $500 million, giving it a valuation of $7 billion. And Brown says an IPO is coming, “At some point we will have an IPO to be a public company,” he says. “There's a bunch of reasons for wanting to do that. We're not in a hurry, because we have great long-term investors. But we want to make our stock available to the millions of people who support our mission, [who] want to have a share in our success. And that's really important to me.”

When I ask Pat Brown of Impossible about competing against Ethan Brown of Beyond, he has a deflective perspective.

“I don't want to compete against them,” Pat Brown says. “I wish them nothing but success. And anyone else who is trying to compete against the animal-based food industry with plant-based products. I wish them all the best of luck. We're competing against one competitor, and that is the animal-based food industry.”

So let’s get to the bottom line of any burger war: Which is better, the Beyond or Impossible? First, there are all kinds of taste-test articles out there (like this one, for instance), but you have to try for yourself.

Personally, I like ‘em both, but honestly I prefer the Impossible. (See below for what’s in these dang things anyway.*)

Funny thing is once you start eating plant-based burgers — either one — (make mine with a slice of cheddar, onion, lettuce, tomato, pickle, and ketchup), it becomes harder to go back to beef. Truth be told, plant-based burgers go down better and feel better in your body. I’m not ready to give up burgers completely, and for sure not roast beef, veal parmigiana, shish kebab, etc. ... not yet anyway, but meatless burgers have made serious inroads in my diet.

So let the post-burger wars rage on. Seems like all of us will be better for it.

*What’s in ‘em

The ingredients in a Beyond Meat burger: Water, pea protein, expeller-pressed canola oil, refined coconut oil, rice protein, natural flavors, dried yeast, cocoa butter, methylcellulose, and less than 1% of potato starch, salt, potassium chloride, beet juice color, apple extract, pomegranate concentrate, sunflower lecithin, vinegar, lemon juice concentrate, vitamins and minerals (zinc sulfate, niacinamide [vitamin B3], pyridoxine hydrochloride [vitamin B6], cyanocobalamin [vitamin B12], calcium pantothenate).

The ingredients in an Impossible Burger: Water, Soy Protein Concentrate, Coconut Oil, Sunflower Oil, Natural Flavors, 2% Or Less Of: Potato Protein, methylcellulose, Yeast Extract, Cultured Dextrose, Food Starch Modified, Soy Leghemoglobin, Salt, Mixed Tocopherols (Antioxidant), Soy Protein Isolate, Vitamins and Minerals (Zinc Gluconate, Thiamine Hydrochloride (Vitamin B1), Niacin, Pyridoxine Hydrochloride (Vitamin B6), Riboflavin (Vitamin B2), Vitamin B12).

A key ingredient in the Impossible Burger is "heme," which the company describes as “the molecule that makes meat taste, well, meaty." Further, Impossible says, “our plant-based heme is made via fermentation of genetically engineered yeast.” This GMO ingredient has required closer scrutiny to gain government approval, which so far the company has received in every country Impossible has brought it up for review. (More here.)

Correction: A prior version of this article incorrectly described Ethan Brown as vegetarian. He is vegan.

This article was featured in a Saturday edition of the Morning Brief on November 6, 2021. Get the Morning Brief sent directly to your inbox every Monday to Friday by 6:30 a.m. ET. Subscribe

Andy Serwer is editor-in-chief of Yahoo Finance. Follow him on Twitter: @serwer

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