Is Beyond Meat Sustainable?
Beyond Meat is a producer of plant-based products that are alternatives to meat and is the most successful IPO of 2019. Since listing on the NASDAQ in May this year, their stock price has soared by nearly 250% so far and more than 50% just in the last month!
Despite losses of about $30 million on revenue of $88 million in 2018, Beyond Meat is valued at about $5 billion, based on investors believing that the alternative meat market will continue to boom. It’s also the first ‘meat free’ meat company to go public - although their competitor ‘Impossible Foods’ may be joining them soon.
Beyond Meat has received a lot of attention with well known celebrity investors Bill Gates, Leonardo DiCaprio, and Tyson Foods.
But is a ‘meat free’ society sustainable?
Beyond Meat’s website makes a compelling case for why going ‘meat free’ benefits us as individuals and as a society.
There’s a 21% increased risk of heart disease from eating meat
51% of global greenhouse gas emissions are being driven by livestock rearing and processing
45% of global surface area is being used for livestock systems and;
66 billion land animals are being slaughtered every year for food.
What’s more compelling are the stats on the Vegan Society website:
Male calves are of no use to the dairy industry and are less suitable for beef production. This means that every year around 90,000 male dairy calves are shot soon after birth and discarded as a by-product.
40 million day-old male chicks are killed in the UK alone by either being gassed or being thrown into a macerator (basically a garbage disposal unit) - this practice occurs in all egg farming systems, including organic and free-range.
Around half of all antibiotics sold in the UK are used on farmed animals, with 60% of these being used on pigs - it’s no wonder there’s an increased risk of cancer/heart disease!
We kill between 1 - 2.8 trillion fish every year. This is 143-400x the amount of the entire human population - talk about overeating!
For every pound of fish caught, up to 5 pounds of unintended marine species are caught and discarded as by-kill.
And what’s more staggering is that Sharks kill 12 people per year, but people kill 11,414 sharks per hour. - it’s more dangerous to be a shark swimming in the ocean than a human!
With demand for meat-free food increasing by 987% in 2017 in the UK alone and veganism being one of the biggest food trends in 2018, it’s no wonder that Beyond Meat believes that plant-based ‘meat’ could eventually become as big as the $270 billion meat industry - that’s approximately 9.64% of the 2.8 trillion fish we kill each year!
As a meat eater that has also shifted to a predominantly vegetarian diet, I can appreciate that sometimes there’s nothing better than a steak, but as an investor, I can see why Beyond Meat is soaring in stock price, as investors believe that ‘meat free’ meat companies will go the same way as the non-dairy milk industry, which remained a niche market for years before the popularity of almond milk lifted the entire nut milk category from 5% to 15% of the dairy industry.
Beyond Meat has generated a lot of consumer excitement around its product by marketing to meat lovers, moving veggie patties from the freezer section to the fresh meat cooler. It’s burger line is also being sold in retailers like Whole Foods and Kroger, and are on the menu at 1,100 Carl's Jr locations nationwide in the US.
If alternative meat companies, like Beyond Meat, follow in the footsteps of the nut milk industry then low profitability metrics in the short term should not be the focal point for investors.
The demand for ‘meat free’ products is there and growing, rather, it’s the supply side that’s lacking.
It could be time to add Beyond Meat to your watchlist.
Please know, the value of investments can go up as well as down and you may receive back less than your original investment, meaning, when investing your capital is at risk.
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