Under the Spotlight: Beyond Meat Inc. (BYND)
Be it for ethical, environmental, or health reasons, reduced meat consumption seems like an inevitable trend in the coming decades and Beyond Meat is ready to capitlise.
Cowspiracy, Game Changers, Seaspiracy. A meat-free future is an easy sell if the success of such documentaries is anything to go by. Be it for ethical, environmental, or health reasons, reduced meat consumption seems like an inevitable trend in the coming decades.
Should that be the case, Beyond Meat ($BYND) is positioned to capitalise. A well-known brand with already popular products, Beyond is determined to create a plant-based meat alternative indistinguishable from animal proteins..
The Science
Beyond Meat is as much a science lab as it is a burger patty company. The team re-engineered plant proteins to mimic the 3D structure of animal proteins; a characteristic responsible for meat’s more complex range of flavours and textures. In their beef-like products, pea meal is the primary ingredient, where beet dye is added for the colouring and coconut oil is used for the ‘melt in your mouth’ experience unique to animal meats. Other additives are used to enhance flavour. To be clear, Beyond’s products are non-GMO. While competitor Impossible Foods focuses on flavour, Beyond’s initial goal is to replicate the appearance and the texture of animal meat.
Harvard Medical School published an article concluding that the high level of processing faux meat goes through eliminates many of the health benefits but the environmental benefits remain. That being said, Stanford’s SWAP-MEAT study discovered those who completely substituted their meat intake for Beyond’s products reduced their cholesterol levels and risk of stroke.
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Meat Stock
In 2020, Beyond posted US$406m in revenues: 80% came from retail sales and the remainder from supply to restaurants (foodservice). Beyond’s biggest distribution partners include KFC, Subway, and McDonalds as well as Walmart and Publix. Lockdowns during the pandemic affected the demand for their goods in restaurants but the company was still able to increase revenue by 36% yoy thanks to strong retail growth. Nationwide meat shortages forced consumers to consider alternatives as supermarket shelves sat empty.
The meat substitute sector is expected to reach US$23b in value by 2024. Interestingly, Kellogg’s ($K) is the market leader in the retail market with a 29% market share. Beyond Meat sits in second with 22% while Impossible Foods accounts for 9% of the market.
Beyond Meat is currently a US$7b company but it has tested giddier valuations in its past. In the 3 months following its IPO in May 2019, the BYND share price rocketed up 250% to give the company a US$15b valuation. The company currently trades 50% below that high at US$110 a share.
To Infinity
Beyond recognises three pillars to cross from a “niche to mainstream” brand.
Firstly, the team’s scientists are focused on a better-tasting product, to the point “products are indistinguishable from animal protein”. Secondly, create healthier products. And finally, more affordable products. Currently, Beyond’s burger patties retail for ~US$2.50 each. A real beef or pork equivalent costs around US$1.50.
If they can reach these goals, CEO Ethan Brown doesn’t just see Beyond competing in the multi-billion dollar alternative meat market but sit aside the biggest animal meat players in a US$1.4t industry.
This does not constitute financial advice nor a recommendation to invest in the securities listed. The information presented is intended to be of a factual nature only. Past performance is not a reliable indicator of future performance. As always, do your own research and consider seeking financial, legal and taxation advice before investing.
