Hi ZipLawyer! I'm Ludo Lugnani and this is ZipLaw: an independent newsletter covering unique news stories. We explain how each story impacts law firms and their clients so that you can stand out in interviews and applications and develop your Commercial Awareness!
Today's newsletter is a 6 min read:
- 🍔 Meaty Problems: Why is the meat market under stress?
- ➕ Plus: Spy balloons, UK works on digital pound, Man City fines and Google announces its new AI friend.
🤿 Deep Dive
- Fewer people are eating meat due to the rising costs of food and living. This is causing big problems for producers and leading to interesting shifts in the meat industry.
No meat, thank you.
The meat industry is having a rough time. Consumers are increasingly cutting back on beef due to concerns over the cost of living, health, animal welfare, and the environment. Some of the world's largest beef eaters, such as Argentina, and younger generations are now picking chicken over beef.
What about meat-free?
They're not doing great either. Investor interest in fake meat start-ups is declining, and sales of plant-based meat have slipped. The industry's leading companies, Beyond Meat and Impossible Foods, have suffered as well, with Beyond Meat laying off over 20% of its workforce and Impossible Foods reducing its workforce by a fifth. The main challenges faced by fake meat include price, taste, and health concerns over heavy processing.
Inflation Up, Meat Down
One of the key reasons behind this trend is the rise of food-price inflation, with people in low and middle-income countries, particularly hard hit. Recent data from the World Bank between September and December 2022 shows rates of increase above 5% in almost all economies around the globe, irrespective of their level of income.
Put simply, many people are having to cut back on food spending and that is having a direct impact on the meat industry and it's once booming meat-free alternatives.
Any other solutions?
Precision fermentation, molecular farming, and biomass fermentation are some of the new alternatives to traditional meat that are on the horizon. Plant-based meat start-ups are also working on improving their products, making them less processed and tastier.
The meat industry is also looking for ways to improve animal farming practices. Climate solutions for cattle, such as methane-suppressing feed additives and better manure handling, are emerging. Regenerative farming i.e. farming and grazing practices that rebuilds soil and soil biodiversity is becoming increasingly popular.
How does this Impact Law Firms and their Clients?
Note: In this section, we consider how law firms' client may be affected by the story we discussed with particular focus on their concerns and opportunities. We then discuss how law firms can help, and which particular legal departments could see an increase in work and why.
💼 What does this mean for law firm's clients?
Clients in the Meat Industry:
- Concerns: The meat industry is facing major challenges, including declining consumer demand for beef and pork, as well as financial struggles for major players. These companies may need legal help navigating financial difficulties, including staff layoffs, company restructuring and renegotiation of key contract whose obligations they are unable to meet (e.g. on payment provisions).
- Opportunities: The meat industry may also see opportunities in the development of new technologies, such as precision fermentation and molecular farming, to address the issues of animal welfare and environmental impact.
Clients in the Plant-Based Meat Industry:
- Concerns: The plant-based meat industry is facing its own set of challenges, including declining sales and decreased investment from investors. Companies like Beyond Meat and Impossible Foods may need legal support in handling staff layoffs and restructuring of unprofitable areas of their business.
- Opportunities: Despite these challenges, the plant-based meat industry may still see opportunities in continued development of plant-based alternatives, such as improved fake burgers and steaks, and in addressing health concerns over heavily processed fake meat. These companies may need legal support in navigating product development and regulation. He also sees plenty of plant protein potential in Latin America where meat consumption remains high.
Clients in the Farming Industry:
- Concerns: The farming industry is facing increasing pressure to address environmental issues and animal welfare concerns. They will also be concerned about the reduced demand for meat as this directly impacts the demand of businesses for their products and decreases their profits.
- Opportunities: The farming industry may also see opportunities in the development of new technologies and practices, such as regenerative farming and methane-suppressing feed additives. Producers that are able to pivot rapidly into these new technologies will greatly benefit and may open up their market share to new consumers (both individuals and businesses) who place increased importance on the origin and production of meat-based products.
⚖ Which legal departments would this impact?
- With the shift in consumer preferences towards alternative meat options, there may be a rise in the number of contracts related to the production and distribution of new meat-alternative products such as molecular farming, and biomass fermentation.
- As meat, and fake-meat producers struggle financially due to the downtrend in the industry, they may find themselves unable to complete supply orders, or unable to pay their own suppliers. This will require a review of penalty and liability clauses in the contracts, together with potential renegotiation of supply requirements and payment provisions.
- They would see an increase in work as they advise companies like Beyond Meat and Impossible Foods on restructuring their operations and finances, including layoffs, bankruptcy proceedings, and reducing workforce. They will liaise closely with employment and insolvency teams to avoid repercussions from lay-offs whilst evaluating the suitability of insolvency proceedings.
- They would also advise promising start-ups in meat-alternative areas on their funding, investment, and mergers or acquisitions. This will particularly relevant for start-ups involved in precision fermentation, biomass fermentation, and molecular farming. We can expect more corporate funding to flow into these areas are private equity firms and investment funds see the shift in the industry and acquire promising start-ups with a view of re-selling in coming years.
Intellectual Property Law
- They will advise start-ups on protecting their innovations and ideas related to precision fermentation, biomass fermentation, and molecular farming. These are complex technologies and processes which require extensive IP protection with patents, trade marks for brands and clear delineation of copyright ownership for the start-ups employees (to clarify IP in any work they do transfers to the start-up)
- The above is crucial as investors will want to see adequate IP protection as these processes and technologies are what they invest in. No one wants to invest in a magical new molecular farming business, and then find out ten other ones use the same method and the business owns nothing (whoops!).
Food and Agricultural
- These departments would see an increase in work as they advise companies on compliance with regulations related to the production, labelling, and distribution of alternative protein sources such as chicken, lentils, and plant-based meat. This would include specific advice on compliance with the Agriculture Act 2020 which regulates farming in the UK.
- They would also advise on regulations related to precision fermentation, biomass fermentation, and molecular farming, including issues related to food safety, labeling, and animal welfare. These new technologies would give rise to additional complexities and their expertise may be required in protecting processes with their IP colleagues, and on litigious claims as to mis-compliance with farming and agribusiness regulations.
📰 News Spotlight
🎈 Spy Balloons
- The Pentagon was caught off guard by Chinese surveillance balloons that were found in US airspace through "additional means of intelligence collection". America won't be giving back the debris from the destroyed balloon to China.
💸 Manchester City FFP Trouble
- Manchester City was accused of over 100 breaches of the Premier League's financial rules. The club failed to provide accurate information about its revenues and ignored the financial fair play rules.
💻 UK Gets Ready for the Digital Pound
- The UK Treasury and Bank of England are working on a "digital pound" that could replace banknotes by the end of the decade. With the decline of cash, a publicly backed digital currency is necessary to ensure central bank control of the UK financial system.
🤖 Hello, Bard
Google is launching its own chatbot, Bard, to rival OpenAI's popular ChatGPT. Bard will give users access to Google's most powerful language-based AI system as the company aims to catch up in the AI internet search race.