Beyond Meat Looks Rich
The company's a pioneer in plant-based meat, but competition is set to intensify.
Beyond Meat (BYND) is a pioneer in the plant-based meat industry. It offered the first burger to look and taste like meat, targeted to omnivores and sold in the meat case. Beyond was soon followed by Impossible Foods and several others. Maple Leaf Foods’ Lightlife brand and Smithfield Foods’ Pure Farmland brand have already launched similar products, with many more expected in the next year: Kellogg’s (K) MorningStar Farms Incogmeato, Conagra’s (CAG) Gardein Ultimate Burger, Nestle’s (NSRGY) Sweet Earth Awesome Burger, Hormel’s (HRL) Happy Little Plants, Kroger’s (KR) Simple Truth, and Tyson’s (TSN) Raised & Rooted burger, which blends beef and plant-based protein. Given the rapidly changing marketplace, we think it is too early to tell if Beyond’s first-mover advantage will result in a sustained market leadership position or if the onslaught of competitive products will challenge Beyond’s position. Until we have better visibility on the strength and durability of Beyond’s brand, we assign the company a no-moat rating.
We are optimistic on the prospects for the meatlike plant-based meat market, which provides a great option for omnivores seeking to increase their consumption of vegetables. We expect the primary growth driver to be the 20% of consumers willing to adjust their daily habits in order to benefit the environment. We assume these consumers will shift one fourth of their meat consumption, converting 5 points of ground meat market share to plant-based meats. We also assume a modest amount of ground meat share shifts to plant-based meats for health reasons. While Beyond Burger (70% of 2018 sales) has the same amount of calories and saturated fat as an 85% lean beef burger (and 5 times more sodium), the health benefits of Beyond Sausage are more evident, with lower fat, calories, sodium, and cholesterol than the pork equivalent. We expect the global plant-based meat market to grow to $48 billion by 2028 from $5 billion in 2018. We model Beyond’s market share increasing from 1.9% in 2018 to 6.5% in 2028, as meatlike plant-based meats gain a larger share of the overall category, and as Beyond’s brand continues to win with consumers, given its strong performance in taste tests and ongoing research and development investments.
Rebecca Scheuneman does not own (actual or beneficial) shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.