Beyond Meat: Compelling Company, Underwhelming Investment Opportunity – Beyond Meat, Inc. (NASDAQ:BYND)
Editor’s take note: Seeking Alpha is proud to welcome Richard Durant as a fresh contributor. You can become a Seeking Alpha contributor and make money for your very best investment ideas. Active contributors also get free access to SA Essential. Improvements in food technology along with growing environmental, health insurance, and moral concerns shall drive a common change in consumer behavior regarding proteins intake.
The market for plant-based meats alternatives will grow dramatically in coming decades, led by companies like Beyond Meat (BYND). Beyond Meat is creating a market-leading position using its superior products and strong branding, making them a possibly attractive investment opportunity. I have estimated an intrinsic value for Beyond Meat of 190 USD per share and believe they may be a stylish long-term investment opportunity with an adequate margin of safety if shares can be purchased below 150 USD per share. Beyond Meat is creating a profile of plant-based meat alternatives and desires to change the definition of meats, from determined by source to determined by structure.
They currently offer products which imitate beef (patty, floor-meat), pork (sausage), and poultry (chicken strips) using plant-derived amino acids, lipids, trace minerals, and water. Their products aim to replicate not the taste just; but the texture, aroma, and appearance of meat, extending to mimicking bleeding to being prepared prior. Their initial focus has been on pork and beef alternatives as consumers appear to be more willing to abandon these products for health reasons. In the U.S., 95% of the populace consume meat and even though growing fast, the market for plant-based meat alternatives is around 2% of the size of the U.S. Between 2014 and 2017 the percentage of U.S.
Although plant-based alternatives are a growing market, it is unknown how much market talk about they can take from the meat. The plant-based milk industry is a relevant comparison and could act as helpful information for potential growth rates and market size. The non-milk dairy category in the U.S. 2 billion in 2017 (13% of the dairy products dairy category) and is growing for a price of 10% yearly.
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If plant-based meats alternatives to achieve the same amount of market penetration, the U.S. 35 billion USD each year. As the market for plant-based meat alternatives has existed for a long time, food technology is developing a paradigm shift where consumers can get the knowledge of eating meats without consuming pet products. This new influx has been led by Beyond Meat and Impossible Foods, although is becoming an increasingly competitive space.
Similar to Beyond Meat Impossible Foods has taken a scientific method of understanding, and recreating the framework of meat, but instead uses soy proteins and genetically modified yeast, which has triggered health concerns for most consumers. Impossible Foods has battled to meet demand as their product has been released into larger restaurant chains, most notably Burger King (QSR), which may show scalability problems with their source chain and manufacturing.
Larger rivals are also getting into the market and the resources these companies have, such as; brand reputation, marketing, distribution and offer interactions and developing capabilities, should be considered a concern for Beyond Meat. These competitors include Nestle (OTCPK: NSRGY) who are planning on introducing a veggie burger in the U.S. Perdue Farms and Tyson Foods (TSN) who are both planning on launching cross types plant-meat products later this year. The other potential rivals for Beyond Meat are cell-cultured meats companies, including JUST, Aleph Farms, and Memphis Meats. These businesses make synthetic meat that is grown in a laboratory and does not require the slaughtering of pets. The cost structure of lab grown up consumer and meats approval remain big questions though.
50 for a burger. Although this price may seem exorbitant, the price of cell-cultured meat is declining and could reach cost parity next few years quickly. Beyond Meat market themselves as a favorable option to meat by promoting the relative benefits for health, climate change, resource conservation, and animal welfare, although some of these claims are questionable. Plant-based meat may sound healthy, but it continues to be a processed food and nutritionists have suggested the Beyond Meat burger only be consumed sometimes, despite agreeing it is a healthier alternative to meats.