In this file:
· Fads And Fallacies In Food - And Beyond Meat
· Beyond Meat Bringing Burgers To China
Fads And Fallacies In Food - And Beyond Meat
About: Beyond Meat, Inc. (BYND), Includes: ADM, CAG, K, MLFNF, NSRGF, NSRGY, TSN
Rogier van Vlissingen, Seeking Alpha
Dec. 2, 2019
· Beyond Meat saw its tires deflated a bit recently.
· Structurally, Beyond Meat is a transition product with lots of uncertainty.
· The entire food sector is at the door of deep structural shifts.
It's been some time since I looked at Beyond Meat (BYND) and it's time to refine the market outlook for this company in some more detail in the context of the forces of change that are at work in our food system. As of 3Q19 the company saw sales of $92 million, but was operating in the black and still evidently growing fast (EPS $0.06, 250% YOY revenue growth) and it is clear there is a lot of projection of a brilliant future implied in that stock price, currently at about one third of its absurd $234 peak, but 3x the IPO price. However, competition is only just beginning to arrive in earnest and the next few years will be quite interesting. On the face of it, there is ample reason to become more conservative and consider this stock overvalued; even if sales continue to grow by quite a bit, the rate of growth is likely to slow down. To begin with, the company exists at the confluence of (at least) three trends, and it is not easy to forecast the likely growth trajectory. You certainly cannot merely numerically project the trends based on the current, relatively quick market acceptance of the product before you analyze what is happening here.
Some people seem to think the recent pullback is the beginning of a greater adjustment, here, here and here, while others think it is a buying opportunity, such as here and here. The most nuanced recent analysis in my view is one by George Atuan, though I tend to disagree with him in the end, mainly because he views the company only in the context of the clean meat outlook, which is not enough, as I am explaining below. In my view the bottom line is that the idea of plant-based meat alternatives is at least a half a century old and we should seriously question the over-the-top market reception of Beyond Meat, especially because of the range of competition, old and new.
I want to look decidedly at the long-term outlook and the overall context of what is happening in the food industry as a whole, for there are structural issues that need to be understood in what amounts to a rapidly evolving market adjustment of historical proportions.
The Alternative Meat Scene
Beyond Meat has high visibility because it is public and stands on its own. But the optics are deceptive and the competition is far greater than most people realize, and that alone would warrant profound skepticism about the current valuation. The range of competition is truly awesome. Just consider how Tyson (NYSE:TSN), for instance, straddled the fence with its own Raised & Rooted label, as well as investments in Memphis Meats, Future Meat Technologies and MYCOTECHNOLOGY, exiting an early investment in Beyond Meat when they announced their Raised & Rooted product line.
• Impossible Foods is a significant player, at least as compared with Beyond Meat. It is still private, as well, with no IPO set - but it has a putative valuation, based on a recent raise in May 2019, in the $2 billion range. A new round is in the offing that could raise the valuation further. It is a plant-based meat alternative also. Some of the investors listed are Temasek, Jay Z and Bill Gates. If today 1% of burgers is plant-based, there's 99% left to go, but Impossible has many similarities to Beyond Meat, especially in terms of going it alone, when many other ventures are still in the entrapreneur stage or simply private. Besides, the market is not merely alternative burgers. One thing is clear: There is pent-up demand: Burger King, for instance, reports strongly increasing sales thanks to the Impossible Whopper.
• If you're in New York and you want to have a casual survey of the potential depth of this market, go to May-Wah Market just to realize how extensive the market for meat alternatives is and how many players there might potentially be in meat alternatives. There are vegan/vegetarian alternatives for almost anything you can think of and that market was lively long before anyone heard of Beyond Meat. Texturized Vegetable Protein (TVP), made from soy, has been around for ages as a meat substitute - it was invented by Archer Daniels Midland (ADM) in the 1960s. It is predicted to grow about 5% per year for the next 10 years to a $1.4 billion market. In other words, plant-based meat alternatives are an old idea. Currently, there is a new wave of enthusiasm for the idea.
• As many have pointed out, some of the food majors - such as Tyson and Nestlé (OTCPK:NSRGY) (OTCPK:NSRGF), Gardein (CAG), Morningstar Farms (K), and Maple Leaf Foods (OTCPK:MLFNF) - have an innate advantage, as they already have shelf space in supermarkets. As to the almost endless number of smaller entrants, I note that earlier this year, when checking out the plant-based food show in Manhattan, I was overwhelmed by the number of entrants in this space. Besides the industrial packaged meat alternatives, many chefs will prefer to make their own veggie burgers and garden burgers, and some of these could potentially be superior to these industrial products or simply have a following of their own.
• The other major component of the market context for Beyond Meat is the clean-meat market, or lab-grown meat. One big entrant is Memphis Meat, which is still private. But it has been in the news because of its illustrious early investors, notably including another food giant: Bill Gates, Richard Branson, Suzy and Jack Welch, Cargill, Kimbal Musk and Atomico, and HRH Prince Khaled bin Alwaleed, the latter of whom is also opening his own chain of vegan restaurants in the Arab world.
To sum it up, we have at least a tripartite market segmentation occurring, each with its own dynamic, as follows: ...
Wholesale signals - the big picture ...
What does government have to do with it? ...
A tale of two trends ...
Segmenting the vectors of change ...
Slicing and dicing the positions ...
more, including links
Beyond Meat Bringing Burgers To China
Brandon Kirkwood, Vegan News Now
December 1, 2019
Beyond Meat the scrappy start up that launched their IPO into the stratosphere earlier this year have their eyes on China. They are racing against rivals including Impossible Foods whose own burgers have set records since being debuted to great success at Burger King this past summer becoming a permanent fixture on the Burger King menu.
Beyond meat is currently selling products in Singapore, Hong Kong, and Taiwan but are eager to expand nationally in China to reach the billions of consumers in a yet untapped plant based market.
According to a Barclay’s report the alternative vegan plant based meat market is expected to hit $140 Billion dollars in revenue within the next decade or so.
To achieve the goals and success that they or even their competitors want in China will require essentially starting from scratch all over again. They will need to overcome not only a nation that’s become the largest pork consumer in the world but will need to build an entirely new supply chain including retailers and product transport in a very large country.
“We know that to get to China and to do it the right way, it’s going to take scale, it’s going to take a manufacturing presence in that area, we have committed to producing in Europe in the first quarter of next year…Asia’s not going to be that quick, but we do hope to have something up and running before the end of next year.” Beyond Meat Executive Chairman Seth Goldman said on Wednesday on the sidelines of a food conference in Chicago.
Goldman said that at the start products in China would need to be higher than the traditional flesh versions but that price would come down as they are able to scale production just like has been occurring here in the United States.
Meanwhile Beyond meat announced back in may of this year that they would open a manufacturing facility in the Netherlands...