Beyond Meat Stock Offered in IPO – Yay or Nay?
Few things are more entertaining than watching a vegan try and mime their way through ordering a meal without meat in a country like Mongolia where the waiter thinks that people who don’t eat meat have a screw loose. Still, vegans and vegetarians around the world suffer for the sake of – well, who knows – since half of them can’t give you a solid reason why they don’t eat meat. Maybe it’s because they love animals, or maybe it’s because 78% of all land used for agriculture is occupied by livestock that commands a significant amount of resources to produce. Who knows, but nowadays things have become a whole lot easier with the advent of “meatless meats” of the type we talked about in our article on 7 Startups Creating Lab-Grown Meat. While the startup we’re going to discuss today doesn’t “grow” their meat, they have managed to become successful enough to file for an IPO.
It’s Beyond Meat Man
Founded in 2009, Manhattan Beach, California startup Beyond Meat has taken in $122 million in funding to develop a new plant-based protein to disrupt the $1.4 trillion global meat industry. They have developed three core plant-based product platforms that align with the largest meat categories globally: beef, pork and poultry. They create these plant-based products using proprietary scientific processes that include plant-derived amino acids, lipids, trace minerals, and water. While other companies use technologies like synthetic biology to “grow” meat, Beyond Meat doesn’t. Their products are non-GMO, something they may not have been able to claim if they used synbio technology – a topic we discussed before.
Their flagship product is The Beyond Burger, the world’s first 100% plant-based burger merchandised in the meat cases of 10,000 retailers across the nation. They’re also in restaurants and burger chains now, and A&W sold out when they offered the Beyond Burger on their menu. “Beets provide the meaty red hue, peas provide the protein, and coconut oil and potato starch ensure mouthwatering juiciness and chew,” says the company, and people are certainly buying it.
The Beyond Meat Brand
When it comes to building their brand, Beyond Meat has a long investor list that includes names like Bill Gates, Tyson Foods, General Mills, and Leonardo DiCaprio – a man who is idolized because he makes a living pretending to be other people. (Their joint announcement with Leonardo DiCaprio about his becoming a Beyond Meat brand ambassador in October 2017 generated over 378 million earned media impressions.) With investors onboard like Tyson Foods and General Mills, Beyond Meat has access to experts who can help them grow their brand, and grow it has. Beyond Meat products are now carried by approximately 11,000 restaurant and foodservice outlets across the United States. This past summer, they launched their burger in 1,000 A&Ws across Canada – A&W is the #2 largest burger chain in Canada – and promptly sold out of them. Beyond Meat was the fastest new-product launch in the history of both A&W Canada and TGI Fridays.
It doesn’t matter what we think this burger tastes like, people are buying it – in 11,000 grocery stores across the United States. And it’s not just the vegans and vegetarians, those deprived souls who make up less than 5% of the U.S. population. It’s also meat eaters. At one of the nation’s largest conventional grocers, Kroger, 93% of Beyond Burger buyers over the 26-week period ended June 30, 2018, also purchased animal protein during the same period.
There’s a certain “save the planet” appeal to Beyond Meat as well. Compared to meat, the company claims their protein results in 90% fewer greenhouse gas emissions, 99% less water, 93% less land, and 46% less energy. If they can get the Chinese to start eating this stuff, then maybe they’ll be able to have a meaningful impact on global meat production. Incredibly, the Chinese produce and consume 50% of the world’s pork and consume more than 25% of the world’s meat – a number which only continues to grow.
Beyond Meat Financials
As with any company that’s trying to scale fast and capture as much market share as possible, Beyond Meat is bleeding lots of cash alongside revenues growth that’s nothing short of spectacular for a company that sells veggie burgers:
As you can see, they doubled revenues between 2016 and 2017. For the first nine months of 2018, they’ve already achieved revenues of more than $56 million which means they’re on track to double revenues again for 2018. In 2017, just over 78% of their revenues came from the 2,480 tons of this stuff they sold to retail customers as opposed to the 695 tons they sold in restaurants.
We all love animals, but they taste so damn good that there’s no amount of “save the planet guilt” that can dissuade us from tucking into a big, fat, juicy steak whenever we feel like it. As investors, we see a solid business in Beyond Meat that can easily find an exit with many of the large food companies out there that are always looking for fast-growing products to add to their portfolio of brands. As for retail investors, we can see the stock being popular in much the same way marijuana stocks are popular. I smoke weed, therefore I feel I should buy weed stocks. I eat meatless-meat, therefore I feel like I must buy a meatless-meat stock. Just based on search trends, we’re led to believe that there’s going to be a lot of interest from retail investors in the Beyond Meat IPO. Throw in that whole save the planet thing, and it’s a big “yay” from where we’re sitting.