Shares in pricey vegan burger maker pops 163pc in Nasdaq debutBusiness | 3 May 2019 11:24 am
Investors have a big appetite for fake meat.
The shares of Beyond Meat, the purveyor of plant-based burgers and sausages, more than doubled Thursday in its Nasdaq debut. It is the first pure-play maker of vegan “meat” to go public, according to Renaissance Capital, which researches and tracks IPOs.
Beyond Meat raised about US$240 million selling 9.6 million shares at US$25 each. Those shares jumped by 163 percent to close at US$65.75.
The 10-year-old company has attracted celebrity investors like Microsoft co-founder Bill Gates and actor Leonardo DiCaprio and buzz for placing its products in burger joints like Carl’s Jr. It sells to 30,000 grocery stores, restaurants and schools in the U.S., Canada, Italy, the United Kingdom and Israel.
Beyond Meat Chief Executive Ethan Brown said the IPO timing is right because the company wants to expand overseas. He also wants consumers to be able to buy shares since they have fueled the company’s growth.
“It really is a wonderful feeling to be able to welcome people in who have helped this brand,” Brown told The Associated Press.
Still, Beyond Meat has never made an annual profit, losing US$30 million last year. It’s also facing serious competition from other “new meat” companies like Impossible Foods and traditional players like Tyson Foods Inc. Tyson recently sold a stake in Beyond Meat because it plans to develop its own alternative meat.
The IPO comes amid growing consumer interest in plant-based foods for their presumed health and environmental benefits. U.S. sales of plant-based meats jumped by 42 percent between March 2016 and March 2019 to a total of US$888 million, according to Nielsen. Traditional meat sales percent 1 percent to US$85 billion in that same time frame.
The trend is a global one. U.K. sales of meat alternatives jumped by 18 percent over the last year, while sales of traditional meat and poultry slid by 2 percent.
Demand is expected to continue to grow. Euromonitor, a consulting firm, predicts worldwide sales of meat substitutes will grow by 22 percent by 2023 to US$22.9 billion.
Even Burger King has recognized the appeal. Earlier this week, the fast food chain announced that it would start testing the Impossible Whopper, made with a plant-based burger from Impossible Foods, in additional markets after its monthlong test in St. Louis proved successful. Meanwhile, Ikea says it’s working on developing a plant-based Swedish meatball, which it says it plans to test with customers early next year.
Brown says Beyond Meat’s ingredient list — it only uses natural ingredients that haven’t been genetically modified and doesn’t use soy — sets it apart from competitors. Its products are made from pea protein, canola oil, potato starch and other plant-based ingredients. Its burgers “bleed” with beet juice; its sausages are colored with fruit juice.
Unlike competitors, Beyond Meat products have also been sold in the meat section of groceries since 2016. That has broadened their appeal beyond vegetarians. Beyond Meat says a 26-week study last spring showed that 93 percent of Kroger customers who bought its burgers also bought animal meat during the same period.
In a 2016 taste test, Consumer Reports said the texture of the Beyond Burger was similar to ground beef, but it didn’t match up in flavor. The magazine’s conclusion: It might not be the best burger you’ve ever tried, but it’s pretty tasty on a bun with lots of toppings.
As for health benefits, the results are mixed. A four-ounce 92 percent lean burger from Laura’s Lean Beef has higher fat and cholesterol than a Beyond Meat burger, but Beyond Meat’s burger has higher sodium and carbohydrates and slightly less protein. The lean beef burger is 160 calories; a Beyond Meat burger is 270 calories.
Brown says Beyond Meat is working on reducing sodium, which is a natural byproduct of its manufacturing process. But he also points out that red meat and processed meat have been classified as possible carcinogens by the World Health Organization.
Beyond Meat also costs more. For US$5.99, consumers can get two 4-ounce patties of Beyond Burger or four 4-ounce patties of Laura’s Lean Beef.
Brown said Beyond Meat has a five-year goal of getting at least one product — most likely beef — to cost less than the animal version. He expects the supply chain will grow as sales expand, which will lower the cost of raw ingredients like peas.
But Beyond Meat touts environmental benefits as well. The company says a plant-based burger takes 99 percent less water and 93 percent less land to produce than a beef burger, and generates 90 percent fewer greenhouse gas emissions.