Plant-based meat is like soccer

Welcome to Nonrival, the newsletter where readers make predictions.

How it works

On Sundays, read the newsletter and make a forecast by clicking a link at the bottom.
On ~~Wednesdays~~ (Thursday this week), see what other readers predicted and how your forecast compares.
Over time, you’ll get scores based on how accurate your forecasts are.

In this issue

A quick note: Nonrival will likely be off next week
Plant-based meat forecasts
Tech layoffs keep rolling
The power of simple rules

Thanks for forecasting. Send feedback to newsletter@nonrival.pub.

A quick note

Nonrival will very likely take this coming weekend and next week off, to spend time working on some improvements to the newsletter and its infrastructure. I want to make sure I'm making this email better, not just writing it, so that might mean skipping a couple more weeks this spring to work on behind-the-scenes stuff.

And if you want to read an article about Nonrival, the newsletter-focused website Inbox Collective wrote a nice profile. Tell your friends to sign up!

Is plant-based meat like soccer?

Reading this week's forecast rationales about Beyond Meat, a pretty clear story emerges about the plant-based meat industry:

Its near-term future depends on what happens to inflation, household incomes, and the price of meat
Long-term, it's likely to grow considerably
But that's not a guarantee that Beyond Meat, the company, will necessarily thrive

My favorite comment comes from a reader who put the chances of Beyond hitting $85M in revenue at 50%, but who wrote:

"I equate plant based meat in the US to soccer: a niche that will grow slowly over time."

How your forecast compares

You said there was a [020523_FINAL GOES HERE]% chance of Beyond Meat clearing $85M in revenue this quarter.

You predicted that the average of readers' forecasts would be [020523_CROWD GOES HERE]%. The actual average was 46%. You were closer than [020523_CROWD_RANK GOES HERE]% of readers.

What other readers said

Reader rationales

10%: I don't know many people actually changing their eating habits right now, especially coming out of the pandemic and everyone is somewhat hedonic.

15%: The sector is shrinking because it is more expensive and incomes are tighter. I don't expect incomes to expand for Q1. Beyond meat's beef product is inferior to Impossible's - so those with the income to choose will choose Impossible's. (I'm using my experience as a target consumer - a person with a meat-eating family who'd prefer to be vegetarian. My family vastly prefers Impossible's product.) Additionally, Impossible is available in fast food. Mcdonald's is stalled on a similar deal for Beyond Meat. (When buying burgers, we go to Burger King because they have the Impossible Whopper - for me.)

20%: USDA forecasts that beef prices are going to be down in the spring.

30%: The industry is still fledgling and bound to be stumbling. The “ grilling” season isn’t here yet and the general public is slowly coming around to the health benefits of eating more plant based ( less beef ) in their diets. So I can see a slow season for the impossible burger, but it will gain and maybe it will take someone with deeper pockets to weather the turbulent early years.

30%: It seems to me that when the world is going through recessions and large global impact wars that things like this almost become discretionary.

45%: Bird flu will raise prices of some real meats

50%: While macroeconomics is impacting revenue, it appears over optimism and lack of strategy is also a factor. I equate plant based meat in the US to soccer: a niche that will grow slowly over time

70%: Last quarter was the only time in 3 years that their revenue dipped below $85M. I think it's more likely than not that they will bounce back a bit. Although the company itself may be in some trouble I think plant-based meat will eventually gain widespread acceptance when (not if) it manages to get close to price parity with regular meat.

75%: Vegetarians have strong spending power and will power this category

And a good point about this question via the Substack comments:

Scott: “The headline and actual poll here are mismatched implying a causal relationship. The relative success of one company can't translate to the overall relative success of the market. In fact, this one company may be on the decline because of new entrants into the market. That is, it's possible both are true that fake meat is not a fad and Impossible will fail.”

The toughest part of writing Nonrival, by far, is finding forecasting questions that are a reasonable proxy for some wider trend. As Scott points out, it's very possible to be bullish on plant-based meats but pessimistic about Beyond!

Tech layoffs keep rolling

Earlier this month Nonrival asked if tech layoffs had peaked. Readers gave on average a 44% chance that tech layoffs cleared 30,000 in either February or March. The forecasters on Good Judgment are more pessimistic, and give an 83% chance that one or both of those months clears that bar.

Meanwhile, Dell laid off nearly 7,000 people and Zoom just laid off 1,300. The total tally for February is still under 12,000 though on Layoffs.fyi.

The power of simple rules

"Superforecaster" Robert de Neufville writes on his Substack about the "power of simple rules":

You don’t need to know everything about a subject to make relatively accurate predictions about it. Forecasting requires a basic understanding of the field you’re trying to forecast—the kind of understanding a smart person can acquire through a few hours or days of diligent research—but you don’t need a graduate degree. In fact, subject matter experts, as a group, show no particular skill at forecasting within their own area of expertise. Whatever advantage their knowledge of a subject gives them is surprisingly small. The best forecasters are not those with the deepest knowledge, but those who are the most skilled at applying probability. The truth is—as I’ve written before—it can be hard for forecasters to do much better than follow simple, reliable heuristics...

We can sometimes improve on simple predictive rules if we're aware of the limitations of our knowledge. In some cases, it may be clear that a model isn’t accounting for some obvious factor. These cases are known as “broken-leg exceptions” after the idea that we should discount a reliable model of whether a person will go out to see movie that didn’t account for the fact that they just broke their leg.

There can be times where deep subject matter knowledge pays off, of course, or where it's even required. But there's also something to the advice: Don't overthink it. Try to gather data, use simple rules and mental models, balance multiple perspectives. You don't have to be extraordinarily clever to do these things so much as you have to be self-aware and recognize the limits of your own knowledge.

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