Donít Miss This Tasty Vegetarian IPO

Beyond Meat wants to be more than another meat substitute brand, and it looks as if it has a pretty good shot at succeeding.

 

Asit Sharma, The Motley Fool

Feb 7, 2019

 

Food is tough business, and the vegetarian "meat" market is already pretty saturated. Fortunately for Beyond Meat, it's not competing in the meatless market -- it's going for a hunk of the $1.5 trillion global meat industry, with products that are engineered to appeal to vegetarians and meat eaters alike.

 

In this week's episode of Industry Focus: Consumer Goods, host Jason Moser and Motley Fool contributor Asit Sharma dive into the company's S-1 filing and explain why this potential IPO is so exciting for investors. Hear about the company's financials, competitive advantages, biggest threats, and more. Later in the show, the hosts update listeners about Sirius XM's (NASDAQ:SIRI) acquisition of Pandora. Plus they share what they'll be watching this earnings season out of Dunkin' Brands (NASDAQ:DNKN) and TripAdvisor (NASDAQ:TRIP).

 

Jason Moser: Welcome to Industry Focus, the podcast that dives into a different sector of the stock market each day. It's Tuesday, Feb. 5, and that means we're talking consumer goods. I'm your host, Jason Moser. Joining me in the studio via Skype, it's Mr. Asit Sharma. Asit, how's everything going?

 

Asit Sharma: Awesome! Jason, how are you?

 

Moser: I'm doing great! Just to peel it back a little bit for the listeners here, we were talking a little basketball. Asit, I didn't realize, is a UNC grad. I'm a Wofford grad. We were having fun talking about the last two years, some good games those two teams have played. Listen, basketball is a fun sport to watch. It's always fun to have good teams.

 

So, listen, we have a big show today. We're going to talk about Sirius XM's big Pandora acquisition. We're going to hit on a couple of earnings reports that we personally are looking forward to watching here in the coming weeks.

 

First we're going to jump into an upcoming IPO and a tweet we got from a loyal listener, Warren Kiesel. Warren said, "Beyond Meat. This company offers great products and will disrupt the beef industry the way that alternative dairy products are taking a bite out of the dairy industry. Changing consumption habits is essential in dealing with climate change, and their burgers are pretty damn good, too." Now, Warren, I can't speak to the burgers. I don't think I've ever tried one. But you know what? I do like a lot of what you're saying there. Asit definitely does, too. We both dug into this S-1 to learn more about the company and its road ahead, the challenges, the opportunities. Asit, I'm going to let you lead this off here. What struck you in learning more about this company, Beyond Meat?

 

Sharma: First of all, I want to thank Warren for bringing this to our attention. Warren also tweeted to me that his wife is interested in this IPO. I don't mean to draw any conclusions there, if, Warren, your wife has healthier eating habits than you do, but I'm excited about this company. Personally, I'm vegetarian every Tuesday. I started that many years ago as a health thing, and it's become habit. I know my wife and I on Tuesdays sometimes are looking for inspiration. I have to confess, I haven't tried any of the Beyond Meat products, but after reading through this S-1 statement -- that's the company's preliminary prospectus document -- I'm excited to go out and try some.

 

The company was started in 2009 by a man named Ethan Brown, who's still the CEO. It sells vegetarian meat substitutes. These are primarily from protein isolates, yeasts and other ingredients. These are sold under the Beyond Chicken, Beyond Beef, and Beyond Sausage brand names. They also have the Beyond Burger, which you'll find in restaurants, and the Beast, which I believe is found at ballparks, and I hope the price tag associated with that isn't beastly. Normally, if I get something really small at a ballpark, I find it's quadruple the price I'd pay for it otherwise.

 

The company has filed for an IPO listing under the symbol BYND. It's using a placeholder sum in its prospectus for $100 million. That simply means that for now, until those numbers get filled in closer to an IPO, the company expects to raise roughly $100 million.

 

The IPO market has been a little slow this year. That's partially because of the government shutdown. We've had very few issues to price. Not sure when this will price. My guess would be in the next couple of months.

 

With the name Beyond Meat, listeners, you might think that this is a company which is trying to market itself as a leader in vegetarian offerings. That isn't so. Beyond Meat actually sees itself as a competitor in the $1.5 trillion global meat industry. They have three core plant-based product platforms. These line up with the big three meat categories in the marketplace of beef, pork, and poultry.

 

Now, how is it different from your average veggie burger that you see in the freezer section of your grocery store? I'm going to read you this explanation from the company's S-1, because it says it a lot more clearly than I could if I tried to summarize it for you. "We create our plant-based products using proprietary scientific processes that determine the architecture of the animal-based meat we're seeking to replicate. Then we assemble it using plant-derived amino acids, lipids, trace minerals and water. We are focused on continually improving our products so that they are to the human sensory system indistinguishable from their animal-based counterparts." So if you think about this sensory level of taste, plus aroma, texture, and, enzymatically, how your body reacts to the product you're eating, this company is trying to replicate the whole experience of a meat serving on both a scientific basis but also in the human way that we react to that serving. Very impressive.

 

You can find these products in 28,000 distribution points across the U.S. and other countries. Right now, international is a small segment. It's about 3% of sales, but growing. That's led by this flagship Beyond Burger product, which is designed to look, taste, and cook like a traditional burger. Products are in many retail grocery stores, including Kroger, ... Safeway, Whole Foods, and Wegmans. The company is also partnered with big food service, hospitality companies like Marriott, Hilton, Hyatt, Disney World. You can find it in BurgerFi, TGI Fridays, and Carl's Jr.

 

I'll stop there and ask, you Jason, did you see the Carl's Jr. commercial that was in the Super Bowl on Sunday?

 

Moser:

 

more, including audio [41:37 min.]†

https://www.fool.com/investing/2019/02/07/dont-miss-this-tasty-vegetarian-ipo.aspx