Farming: Beyond Meat – a sizzling initial public offering on Wall Street
07 May 2019
Last week in New York Beyond Meat, a plant-based imitation meat manufacturer, launched itself on the New York Stock Exchange in what is known in the trade as an Initial Public Offering or IPO.
It was one of the most spectacular opening days in recent IPO history with the listing price of $25 shooting to over $70 at the opening bell. The price settled around $68 for most of the day valuing the company overall at USD3.8 billion.
Who is Beyond Meat and what do they sell?
Well, blue sky obviously from the hype surrounding their debut on the stock exchange. There was no indication of earning a profit in the offer documents presented to the stock exchange, so people are buying the story behind what they are doing. Basically, it is an R & D story, re-investing in research and development to improve and expand their fake meat product range.
Sales of plant-based meat substitutes in the US increased 22% in the last year and total sales are around USD1.5 billion for 2018.
Beyond Meat is a ten-year old company that creates meat substitutes out of:
- Pea protein (dried peas ground into a fine powder with the starch and fiber removed)
- Coconut and canola oil
- Bamboo cellulose
- Potato starch
- Salt (heaps of it)
- Beetroot juice to imitate the blood of meat
- Water and other minor compounds
Sausages, burger patties and a mince look-alike are the offering right now.
Source: Beyond Meat
What is the story behind this food movement? There are a growing number of consumers who are concerned about the following statistics. The Beyond Meat product claims that their meat substitute:
- Uses 99% less water than real meat production
- 93% less land
- 90% less greenhouse gas emissions
- 46% less energy
- No animals die in the production process, and
- No cholesterol, so better for you than meat
What’s not to like? Well, for a start, like all meat substitutes Beyond Meat is highly processed in a factory and that goes against the consumer movement towards more natural, less processed food.
As well, Beyond Meat has more than 5 times the salt that an un-seasoned beef patty has. Enough said. Getting that meaty flavor comes at a cost to your health.
The fake meat is currently about twice the price of regular beef, but the trend is downwards as production ramps up. Cleverly, Beyond Meat is being sold in the meat department of supermarkets, not in the health food or vegetarian section. The founder, Ethan Brown, believes that their products will appeal to traditional meat eaters and break out of the niche market that vegetarian alternatives have traditionally occupied.
What does this mean for traditional meat producers?
As fake meat becomes cheaper it will lose its novelty appeal and likely provide the majority of the commodity end of the market that people currently refer to as ‘meat’. What is left is the middle and luxury end of the market and this is where the world’s best grass-fed farmers are going to have to aim for to survive.
New Zealand meat is likely to become a luxury product that only relatively wealthy people will be able to afford, a status symbol, and then mostly on special occasions. But only if we work to put it there. It won’t happen automatically.
We have a mountain to climb. Lets get started!
Keep asking great questions …
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