Investors’ appetite for meat-free company
Shares in California-based Beyond Meat more than doubled on their debut on Nasdaq on Thursday (US time), as investors scrambled to get exposure to the fast-growing sector of plant-based food.
The group’s shares closed at US$65.75 in New York after opening at US$46 and surging as high as US$72.95, and triggering a brief halt in the morning session due to the volatility.
The company, which is the first plant-based food group to list on a leading exchange, priced its initial public offering late on Wednesday at US$25 a share, raising US$240.6 million.
Ethan Brown, founder and chief executive of Beyond Meat said that the company’s products would enable people to continue to consume “meat” but he also wanted to change agriculture. Beyond Meat could “restructure agriculture to drive efficiency, but more fundamentally, do it in a way that’s better for the human body and better for the earth,” he said.
Beyond Meat’s flotation comes at a time when appetite for plant-based meat substitutes is growing. Consumers in developed markets are opting to eat less meat or turning to vegan or vegetarian foods, citing environmental and health concerns.
Brown said he had realised that agriculture and food could benefit from science and technology. “[Livestock] has huge health implications for humans and the environment and animal welfare in general, yet we weren’t spending any money on it,” he said. “We were just making an assumption that it was immovable and we had to use animals.”
New spins on traditional vegetarian options are mimicking the taste, texture and smell of meat to attract meat-eating consumers. Beyond Meat attempts to imitate the structure provided by animal muscle by using amino acids, lipids, minerals and vitamins extracted from plants. Beyond Meat’s burger, which accounted for 70 per cent of its revenue last year, is made primarily out of yellow peas and uses beet juice to mimic the “bleeding” of a meat burger. The company’s menu of products includes plant-based substitutes for sausage, chicken and beef.
It said it would use the proceeds from its IPO to invest in new manufacturing facilities and R&D, stepping up competition with rival Impossible Foods, which is also raising money to increase production capacity. Impossible investors are hoping the current fundraising would value that company at about US$1 billion.
Impossible teamed up with Burger King to trial the “Impossible Whopper” this month in St Louis, Missouri, the heart of beef and barbecue country. Jos Cil, chief executive of Restaurant Brands International, the owner of Burger King, told analysts that it was preparing more test markets followed by a nationwide launch at the end of this year.
Beyond Meat’s revenue in 2018 was US$87.9 million, up from US$32.6m in 2017, with net losses flat at about US$30m in each year.
Goldman Sachs, JPMorgan and Credit Suisse are lead underwriters on the offering.