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Jennifer Wells: Beyond Meat’s dazzling IPO proves the meatless meat revolution is quickly going mainstream

Jennifer Wells: Beyond Meat’s dazzling IPO proves the meatless meat revolution is quickly going mainstream
Business
The best news about the wildly popular public listing for Beyond Meat Inc. is that the investment world is catching up to consumer tastes.

By this I mean that Beyond Meat is not, as some observers would have it, narrowly a story about vegetarianism or veganism and the shifting size of that market, but broadly about the growing demand among meat eaters for non meat proteins that taste just like meat.

Beyond Meat investor Jessica Chastain attends the opening bell ceremony at Nasdaq MarketSite to mark the IPO of Beyond Meat in New York. Valued at around $1.5 billion, Beyond Meat makes plant-based burgers and sausages. The companys opening trade was $46 a share.  (Drew Angerer / GETTY IMAGES)

As a dedicated carnivore who once challenged a niece to a 40-ounce steak off (I lost), I will now happily devour a Beyond Burger (hold the mayo). So, there’s my bias declared.

The smartly branded and marketed Beyond Meat started trading on the Nasdaq exchange Thursday. The shares took off like a rocket. What the company had initially thought would be a $19 stock was priced at $25, started trading at $46 and closed the day at $65.75.

By “smartly branded and marketed” I mean it was genius to have actress Jessica Chastain on hand for the ringing of the opening bell. In an interview with Bloomberg, Chastain said she invested in the meatless meat company after filming in Toronto and failing, time and again, to nab a Beyond Burger at an A&W restaurant. “I tried for four months in Canada to get one and it sold out everywhere,” she told Bloomberg. The actress has done very well on her investment.

As for the business case, trying to argue against it is a lost cause. Every research study I looked at predicted a compound annual growth rate (CAGR) for alternative proteins of between 6.5 per cent and 8 per cent. In the meat substitute market specifically, Research and Markets anticipates a 7.9 per cent CAGR across the next decade. Last summer, Mintel, a global market research firm, forecast that in this calendar year U.S. consumers planned to purchase 33 per cent more plant-based food products. The trend, the research firm concluded, was no longer niche.

I’m not here to boost a stock. But I am interested in revolutions, and I think this is one.

More proof: last week Ikea announced that it would be introducing a new and improved vegan meatball targeting, yes, meat eaters. I wonder if that suggests that Ikea was not previously preoccupied with the challenge of satisfying the taste buds of vegans. (It goes without saying that Ikea meatballs, regardless of their ingredients, should be consumed with Sylt Lingon, a.k.a., lingonberry jam.)

Back to burgers. Burger King’s new meatless Impossible Whopper has proved such a hit in the U.S. that the chain’s parent, Restaurant Brands International, said it was struggling to keep up, similar to the woes experienced by A&W.

The early evidence supports the assertion of Beyond Meat founder Ethan Brown that this is not a binary choice. The U.S. grocery chain Kroger, which sells the Beyond Burger, reported that across a 26-week period, 93 per cent of BB buyers also purchased animal proteins.

This is not to discount what Brown calls the “halo” benefits of the brand. Sustainability comparisons favour plant-based meat over the real thing, be it water usage or greenhouse gas emissions or land use. Using these sustainability metrics New York data firm CBInsights reported, for example, that it takes 16 pounds of greenhouse gas emissions to produce one pound of meat compared with 3.5 pounds of GHG emissions for a pound of its plant-based competitor.

It’s not too soon to deploy the word “competitor.” It is, however, too soon to predict how this industry shift is ultimately going to shake out.

I have written previously about last month’s announcement by Maple Leaf Foods Inc. that it will build North America’s largest plant-based protein facility, in Indiana. The company has already moved into plant-based meat offerings through acquisition, with its Lightlife plant-based burger going against the Beyond Burger in grocery stores.

Two weeks ago, meat and poultry giant Tyson Foods, with $40 billion in sales last year, announced that it had sold its 6.5 per cent interest in Beyond Meat. The Tyson strategy: to launch its own nonmeat protein products, with market testing anticipated this summer.

These are big, long-lived players with broad distribution networks. But Beyond Meat has an edge with its products. At least so far. (The Beyond Burger rolled out through the Sobey’s chain last week.) But the company’s prospectus makes clear that it has not ceased fine tuning the “meat” duplication, and expanding its current product offerings. Burgers accounted for 70 per cent of sales last year; the rest is made up of sausages and “Beyond Beef Crumbles” sales (think tacos).

Sales and marketing, investing in manufacturing facilities, long-term distribution, expansion of research and development. There are enormous challenges ahead.

But it’s clear from the company’s move-to-market, and the response of mighty competitors, that “meat” is no longer just meat.

That’s not to say I’m about to reject a medium-rare rib-eye. But I’m also going to put meatless burgers on the barbecue this summer.
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