Believe it or not, the two major companies producing plant based meat are doing extremely well in the market right now.
Beyond Meat raised $240 million when it priced its IPO at $25 per share in May 2019. IPO stands for Initial Public Offering and it is when a company offers their private shares to the public for purchase. Despite planning to offer 9.5 million shares priced at $23-$25 each, they were able to sell 9.6 million shares. With the first stock raised to $46 per share, an IPO price 84% higher than the original. To everyone's surprise, the IPO price increased to $65.75, 163% above the original IPO price of $25, making it the best performing first-day IPO in nearly two decades. [1]
Their strategy in ensuring their success was to market their products to meat-eaters, as vegans and vegetarians only account for 5% of the U.S. population. [2] By creating a new revolutionary product, they not only challenged the "animal-lovers" stereotype we've come to associate with the words "vegetarian" and "vegan", but rather addressed the urgent climate change problem through a product loved by people all over the world.
To further their message and impact, they have made their products available to 11, 000 grocery stores in the U.S. [3] It’s also available in Canada, in popular restaurants like A&W and Tim Hortons.
Well, okay. They've accomplished all this, but what's next?
Are you ready for it? Well...
Beyond Meat might potentially dominate the meat market. They are expected to take a significant share of the $1.4 trillion global market for meat by utilizing strategies employed by the plant-based dairy industry. [3] In 2017, the plant-based dairy industry controlled 13% of the dairy milk industry totaling up to $2 billion. [3] The strategies included: creating a product better than other existing substitutes, as well as, packaging and merchandising the product in the same location as it's equivalents. [3]
With this being said, restaurant companies should take into account that there would be a higher demand for meatless products in the coming future. With more than 3 million Canadians identifying as vegetarian or vegan (10% of population), restaurants should consider newer approaches that are more inclusive and would appeal to this increasing group. [3] With most of them identified as being under the age of 35, it is inferred that they would raise their children with the same diet and values they cherish. [4] Thus, it is expected that this number will only rise in the future as people follow this diet plan.
However, they will face challenges from their well-developed competitors, who also produces plant-based protein like Impossible Foods. Additionally, there are other smaller companies in the U.S. like Boca Foods, Field Roast Grain Meat Co., Gardein, Lightlife, Morningstar Farms, and Tofurky that hold a portion of the market share. [3] Thus, in order to maintain the large market share Beyond Meat currently has, they would have to introduce newer products that differentiate from what is offered by other companies in order to avoid economic loss in the long term.
If Beyond Meat simply created plant-based meat products that recognizably taste better than other plant-based substitutes, they can boost their gains to $270 billion in the meat category in the U.S.[3]
Work cited:
1. "Beyond Meat Just Had the Best IPO of 2019 as Value Soars to $3.8 Billion." Fortune. Accessed June 14, 2019. http://fortune.com/2019/05/02/beyond-meat-ipo-stock-price/.
2. McCarthy, Niall. "Who Are America's Vegans And Vegetarians? [Infographic]." Forbes. August 06, 2018. Accessed June 14, 2019. https://www.forbes.com/sites/niallmccarthy/2018/08/06/who-are-americas-vegans-and-vegetarians-infographic/.
3. Linnane, Ciara. "Beyond Meat Goes Public with a Bang: 5 Things to Know about the Plant-based Meat Maker." MarketWatch. May 28, 2019. Accessed June 14, 2019. https://www.marketwatch.com/story/beyond-meat-is-going-public-5-things-to-know-about-the-plant-based-meat-maker-2018-11-23.
4. Flanagan, Ryan. "More than 3 Million Canadians Vegetarian or Vegan: Study." CTVNews. July 25, 2018. Accessed June 14, 2019. https://www.ctvnews.ca/canada/more-than-3-million-canadians-vegetarian-or-vegan-study-1.4027606.