One food-industry consultant said investors are taking a lot on faith with money-losing Beyond Meat.
The company's valuation in its IPO is"entirely reasonable if it's got internationalisable potential and a great product,and has capacity to make money in its core profit structure,"said Robert Lawson,chief executive officer of London-based Food Strategy Associates."But it's not clear that Beyond Meat is that."
The company will need to expand its product range to succeed outside the US,where burgers aren't as popular,Lawson added.
Meat alternatives
Consumers are looking for more plant-based meat alternatives because of concerns about health,animal welfare and the environment. Startups like Beyond Meat are tapping into that demand by offering beef-like versions of the veggie burger and other meat products.
Supermarket sales of meat alternatives surged 19.2 per cent to $US878 million for the year ended January 5,according to data from Nielsen. The field is crowded,with Silicon Valley-based Impossible Foods also placing its meatless burgers in thousands of restaurants,including all Burger King locations. Nestle SA makes a plant-based Incredible Burger,which is available in McDonald's Corp.'s German locations.
Beyond Meat is sold in grocery stores nationwide and is also increasingly being featured on restaurant menus,including TGI Fridays and Carl's Jr. and now under a new deal with Del Taco Restaurants Inc. Its burger patties,with no cholesterol and 5 grams of saturated fat,are made of pea protein and beet juice,which makes them"bleed"when cooked. That compares with 80 milligrams of cholesterol and 9 grams of saturated fat for a 4-ounce patty of 80 per cent lean beef.
And despite the company's mission,Brown said the company will choose the customer over the planet when necessary.
"Our packaging is not great,"he said,referring to the plastic wrap."That runs counter to what I believe in in terms of ability to recycle things and the overall footprint of that packaging,but we care about the quality of the product. So we will make trade-offs that make sense for the product and market instead of the most environmental path."
Beyond Meat shrank its 2018 loss,while its revenue more than doubled for the second year in a row,according to its filings. Last year,it lost $US29.9 million on revenue of $US87.9 million compared with a 2017 loss of $US30.4 million on revenue of $US32.6 million.
The company had significant shortages in 2017 and 2018 and has since made significant investments to keep up with demand,Brown said.
"Now it's about sequencing customers,'he said. Quick-service restaurants have thousands of locations,so supplying them requires a huge jump in output. To keep up,Brown said,the company has been staggering rollouts.
Brown said he wants to eventually lower the price of the company's products,which currently can cost twice as much as standard ground beef. Under-pricing animal protein is a five-year goal,he said.
McDonald's ex-chief
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Beyond Meats investors include former McDonald's Chief Executive Officer Don Thompson and venture capital firm Kleiner Perkins Caufield&Byers,which owns 16 per cent of the company,and Twitter co-founder Ev Williams's Obvious Ventures with 9 per cent,according to its filings.
Its backers had included Tyson Foods,the largest US meat producer. Tyson sold its 6.5 per cent stake in Beyond Meat,according to a statement in April. Tyson's shares were sold both to insiders and new shareholders,Brown said.
The offering was led by Goldman Sachs,JPMorgan Chase&Co. and Credit Suisse. Beyond Meat trades on the Nasdaq Global Market under the symbol BYND.
Bloomberg