The traditional meat industry in the US would be considered an oligopoly as "In the US, just 4 producers — Tyson Foods, JBS, Cargill, and National Beef — control more than two-thirds of all US beef processing." (https://www.cbinsights.com/research/future-of-meat-industrial-farming/).
With the advent of the plant-based/meat alternative industry, I would classify Beyond Meats and other competitors to be competing in a monopolistically competitive industry - their products are not homogeneous in respects to product attributes, i.e., the product differentiation is in the underlying ingredient makeup and whether they are trying to replicate the mouthfeel/taste of meat (e.g., Impossible Foods or Beyond Meats) or not (e.g., Amy's Kitchen), and there are a large number of firms - there are over 100 food startups today working to replicate animal products with plants or lab-grown meat products.
To walk through Porter's Five Forces for Beyond Meats:
The Threat of Entry - High
& Barriers to Entry - Low to High (Segment Specific)
There is also a low-cost entry to join the market - after all, anyone can create a bean burger in a commercial kitchen. As an example, Miyoko Shinner of Miyoko's Creamery actually started as a chef with a blog and book that has some of her recipes in them). The commercial kitchen comment reflects an example of a barrier with government regulation of entry - it is food and all.
Even though some of the more popularized food startups focused being more focused on technologies and R&D efforts such as Beyond Meats to drive product differentiation, proprietary technologies, and the know-how/deterrence, the barrier is a bit higher for a particular segment.
The Threat of Rivalry - Moderate
Specifically in the segment that Beyond competes in, there is a large number of competing startups working to replicate meat, instead of supplementing it. Industry growth is relatively high at this time and matching or beating the price of actual meat is at the forefront of every firm.
The Threat of Substitutes - High
As, at the broadest level, this is the food industry - there are a plethora of substitutes, both within the specific plant-based market and outside of it - any number of options exists such as:
- Other alternative meat providers
- Traditional alternatives (e.g., tempeh, tofu, and seitan)
- Regular meats (e.g., pork, chicken, seafood)
- Or even simply just not eating meat or any substitutes
Although this actually impacted Beyond not too long ago - with the pandemic and one of their supplier's factories catching on fire, there are many suppliers out there for pea-based proteins and other base ingredients.
The Threat of Powerful Buyers - High
This is mainly driven in three manners: taste, price, and distribution channels.
- The taste of the products is completely subjective to consumers
- Price, as also mentioned above in rivalry, is a huge concern. As a consumer, why would I try an alternative when the real thing is cheaper? Obviously, animal welfare concerns are important here for a segment of the market, but those meat-eaters that may try it on a Meatless Monday may not purchase in this instance.
- Beyond has actually failed in this respect several times through their distribution channels to try to reach more people through prepared food methods - although I think that their plans are smartly laid out (do I really care if my hyper-processed "chicken" nuggets are chicken or a known plant protein, for me - not really if it tastes good - give me my Buffalo Wild Wings as either - I'm here for the sauce!), the execution thus far leaves a lot on the table.
- Their latest entry to the market with Beyond Chicken is not performing as well as expected. Their collaboration with KFC has both been hailed as a big win for getting the alternative into such a traditional venue as well as condemned as, although the taste and textures are there, KFC does not cook the product in separate oil - negating its ability to be vegan (depending on one's beliefs and values)
- Their collaboration with Dunkin on a Beyond Breakfast sandwich was brought down to only 10 states after failing to sell (unfortunate to me - I'm a big fan of the Starbucks Beyond Breakfast Sandwiches)
- And lastly, Taco Bell recently dropped their Beyond Carne Asada test product (which is my greatest disappointment of all of the news I've been reading for this blog) - this last example is also mentioned as increasing the threat of buyers in our text as well where it notes on p. 64 "Firms that sell to large retail chains have also found it difficult to maintain high levels of profitability."