Is Beyond Meat Still the Leader of a Meatless Future?
Beyond Meat may be losing steam, but it still offers a great long-term outlook
The current market for faux meat is pretty small, with Kellogg (Morningstar Farms), Beyond Meat, Tyson, and Impossible Foods being the main players. As Beyond Meat and Impossible Foods continue to move into grocery stores and partner with restaurant chains, the long-term outlook seems to favor those two companies. Hype-wise, at least.
As of October 2020, the only brand in front of Beyond Meat was Morningstar with a 30.6% market share to Beyond Meat’s 21.4%. Impossible Foods came in at about 4.3%.
Despite the massive difference in market share, Impossible Foods is planning a $10 billion initial public offering (IPO) within the next year, which would make it more valuable than Beyond Meat (currently valued at $7.6 billion).
With dietary habits expected to shift in the coming years, the faux meat market could be worth $85 billion by 2030, some predict. Currently, though, the demand isn’t there. Plant-based meat sales make up just a small percentage of overall packaged meat sales.
Of the two, Beyond Meat does seem to have a better current outlook, with products in 122,000 stores (compared to 20,000 for Impossible) as well as partnerships with McDonald’s, Pepsi Co., and Yum Brands (which owns KFC and Taco Bell). Impossible lost its chance with McDonald’s due to expected issues of scale.
On its face, a $10 billion valuation for Impossible seems ridiculous, as it is far behind Beyond Meat in production and because of that, sales (though specific numbers aren’t available for Impossible due to it being privately held).
Beyond Meat went public at $1.46 billion in 2019 and jumped to a $13 billion valuation in just a few months. The valuation has trickled back since then and some would say it's still too pricey with three-straight quarters of wider-than-expected losses. Sales numbers are growing despite pandemic-related issues, however.
Beyond Impossible, Tyson Foods does seem to represent a challenge moving forward. The U.S.’s largest producer of animal meat (by sales) is expanding its faux meat offering this year.
Due to the limited outlook for the rest of the year and struggling in some areas of the balance sheet, Beyond Meat’s stock is down 35% in the past three months and 16% in the past month. With the end of the pandemic (hopefully) nearing worldwide, any losses Beyond Meat has accrued due to restaurant closures should start to return.
Outside of its blooming restaurant business, Beyond Meat also just partnered with natural and organic food delivery company Thrive Market. Customers will be able to purchase single-serve 10 oz. Beyond meals exclusively through Thrive, including plant-based lasagna, shepherd’s pie, green and red enchiladas, and pasta bolognese. The meals will be frozen and sold as a 10-pack for $79.99.
While Morningstar may still be the current leading in plant-based meat sales, Beyond Meat is quickly spreading its brand around and may not be far behind becoming the top dog of the industry.
From an investment standpoint, there are some concerns about Beyond Meat — and the entire faux meat industry as a whole — in the short term. In the future, though, Beyond Meat has a strong case for leading the pack.