Foods

800% growth and second share issue: what happens to Beyond Meat artificial meat producer after IPO

The company is in demand for vegetable food, whose market size is estimated at $ 14 billion, and sells products in 30 thousand establishments of large restaurant chains.

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In May 2019, Beyond Meat, one of the main producers of meat substitutes, held an IPO. For two and a half months, the value of the manufacturer’s shares increased by 800% – from $ 25 to $ 200, and its capitalization exceeded the cost of the restaurant chains Shake Shack, Wendy and many other industry companies.

Beyond Meat investors include Bill Gates, Leonardo DiCaprio, Twitter co-founder Biz Stone and former McDonald’s CEO Don Thompson.

Charlie billello

Vegetable meat substitute burger cutlets, ground beef and sausages are sold in 30 thousand supermarkets, restaurants and other establishments around the world. Beyond Meat promises to produce vegetable bacon and steaks, and in the long-term plans to create the perfect copy of animal meat.

There are several reasons why Beyond Meat is successful, from successful positioning and interest in plant foods to ongoing partnerships. In addition, the company became the first producer of vegetable meat on the stock exchange.

Environmental demand

According to a study by the University of Michigan (commissioned by Beyond Meat, but reevaluated by independent scientists), burger patties require about 1,200 liters of water and 4 m² of land to produce, while a vegetable burger takes 99% less water, 93% less land and 46% less electricity. Greenhouse gas emissions from vegetable meat production are 90% lower.

Consumers support sustainability: Beyond Meat sales increased by 80% from 2017 to 2018. The Fast Company publication cites the results of a survey that over the past five years, the number of those who would try to replace real meat with vegetable meat grew by 43%.

Beyond Meat positioning – don’t bother meat lovers

Beyond Meat does not limit the target audience to vegetarians – the company believes that its products are suitable for those who eat meat. It builds on the idea of ​​the ethical consumption of food – healthy for humans and safe for the environment and animals.

At the same time, the company does not condemn meat lovers, as this will reduce the number of customers, emphasizes Beyond Meat CEO Ethan Brown. According to company statistics, 93% of buyers of Beyond Meat burgers in the first half of 2018 also bought animal products. Plant food production in the US generates about $ 13 billion annually, while meat is a $ 1.4 trillion business, Brown notes.

According to the head of Beyond Meat, the neutral position of the company also affects financial success: generation Z and young millennials are increasingly guided by moral values ​​when choosing products and buy Beyond Meat instead of less “environmentally friendly” real meat.

Partnerships

Since the end of 2017, the company has entered into partnerships with large chains of restaurants, coffee houses and shops.

Dunkin donuts

On July 24, 2019, Beyond Meat and Dunkin ‘Donuts chain of coffee shops announced the appearance of a new morning sandwich in restaurants in the Manhattan chain – with an egg, cheese and vegetable cutlet.

The new product did not attempt to attract vegetarians (as can be seen from its composition), but the network also considers a fully vegetarian menu. The vegetable cutlet was developed specifically for Dunkin ‘Donuts, and the companies are planning further cooperation on the release of other products.

For Dunkin, the new menu item is the opportunity to increase sales in the morning, CNN said . Now the fast food market in the United States is not growing , the exception is breakfast – their sales for the year increased by 1% and the leaders of fast food restaurants believe that this is the last “bastion” for the growth of companies.

Blue apron

From August 19, 2019, recipes with vegetable meat will appear in the menu of the delivery service of products with recipes . According to a representative of Blue Apron, 63% of customers from more than 5,000 respondents are interested in herbal products. After the announcement, Blue Apron shares went up – from $ 7.66 to $ 10.38.

Famous Dave’s

A network of barbecue restaurants announced the appearance of Beyond Meat products in five restaurants in the United States. After testing, Famous Dave’s plans a full launch in restaurants and chain stores. The company shares after the announcement rose from $ 4.16 to $ 4.66.

Tim hortons

On July 17, 2019, after a short testing, the chain of eateries launched a new menu of sandwiches and burgers with vegetable cutlets. Products will be sold in over 4,000 restaurants in Canada.

Del taco

On April 15, 2019, a chain of Mexican food restaurants announced a partnership with Beyond Meat and sold over 2 million Tako Beyond meat products in two months . According to a company spokesperson, Tako Beyond has become one of the most successful new product launches in the history of the network.

A&W Canada and other restaurant chains

The company became one of the first partners of Beyond Meat – in June 2018, a burger with vegetable meat appeared on the A&W main menu, and in March 2019, companies launched products for breakfast.

Also in 2018, Bareburger restaurant chain entered into partnerships with Beyond Meat , and since 2017, Beyond Meat burgers have been present at Burger Fi fast food restaurants.

Reasons for 800% Share Growth in Two Months

High demand for products

The demand for vegetable analogues of meat is growing , and there are no signs that it will slow down. According to Barclays analysts, companies like Beyond Meat and Impossible Foods can grow into a $ 140 billion industry over ten years and capture about 10% of the global meat industry.

JPMorgan has a similar forecast – company analysts believe that sales in the vegetable meat industry could exceed $ 100 billion in the next 15 years, with $ 15 billion from Beyond Meat.

Successful First Quarter

In June, Beyond Meat published its first financial report: revenue for the first quarter of 2019 increased by 215% – to $ 40.2 million – compared with the same period last year, when revenue was $ 12.8 million. The loss was lower than expected.

The results forced stock analysts to revise their valuation and raise forecasts for the next quarter, which led to a sharp increase in stocks.

By the time the second financial report was released, the value of Beyond Meat shares had grown by 800% – from $ 25 to $ 200 – compared with the initial offering. This was facilitated by the interest of the manufacturer’s partners, as well as favorable financial reports and analyst forecasts.

Second quarter results and secondary offering

The stock price began to decline sharply before the publication of the results of the second quarter: on Monday, July 29, the company announced that shortly after the IPO it would start a secondary public offering – this reduced the price by 14%.

The fall did not slow down in the next two days – from $ 235.55 to $ 196.5 at the close of trading on July 31. Beyond Meat has announced that it will sell 3.25 million shares at $ 160 at a secondary offering, which is significantly less than their value on the exchange. The company will direct the money from the sale to increase production capacity and marketing.

A sale with such a “discount” may be a sign of a revaluation of the company, CNN said. Own low valuation scared investors, and stocks continued to fall – another 10% before the market opened on August 1.

Interest in Beyond Meat and the rapid change in the value of shares are caused not only by demand and financial reports, but also by the uniqueness of the company, says Michael Antonelli , Managing Director of investment company Robert W. Baird & Co.

In his opinion, at the time of listing, Beyond Meat became the only public company in its field, and the market does not quite understand what to do with it – because of this there are sharp jumps.

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