On the surface, the case for Beyond Meat (NASDAQ:BYND) is compelling on multiple levels. For one thing, the novel coronavirus presented an excellent real-time test about the virtues of plant-based meat. With food supply chains disrupted, many consumers gravitated toward alternative protein, thereby lifting Beyond Meat stock.
Further, the underlying company appeals to a generally shared ethos among millennials for environmental sustainability.
No matter how you look at it, the fact is that millennials represent the largest demographic in the U.S. workforce. And that trend will increase over the next few years as the “white hairs” pack it in and call it a career. Therefore, whatever millennials think and believe, that’s what corporations will cater to. Of course, as several reports have demonstrated, millennials care about sustainability.
And it’s not just talk, either. According to data from EnvironmentJournal.online, 75% of young consumers “are willing to pay extra for sustainable products.” That’s one of the catalysts for the meteoric rise and popularity of Beyond Meat stock. Obviously, it’s a huge benefit because Beyond products – and plant-based competitors – aren’t exactly cheap.
Further, with purchasing power within this key demographic increasing, it’s likely they will continue with the alternative-meat push. As well, another tailwind for Beyond Meat stock is that it’s not just young people considering making the switch.
After all, older people have to worry about positive health outcomes. And many Americans are concerned about their red-meat intake. By substituting much of their real meat consumption with plant-based alternatives, they won’t miss out on the bulk of the experience of eating meat but will enjoy (supposedly) healthier eating.
But for me, there was only one way to find out.
In Isolation, Beyond Meat Stock May Have a Case
For a long time – even when Beyond Meat stock has rallied to incredible market premiums – I’ve been skeptical. It wasn’t just about Beyond itself. The whole concept of plant-based meat didn’t make sense if the counterfeit was at the same price or more expensive than the real deal.
Nevertheless, I decided to have a go with some fake ground meat. For full disclosure, I didn’t try Beyond’s products because I read several reviews about the terrible smell that they emit when raw. Being sensitive to odious environments, I took their word for it.
Instead, I went with Simple Truth, a store brand of Kroger (NYSE:KR). From the time that I opened the package, I was pleasantly surprised that the smell wasn’t offensive. It smelled like plants – something that you would expect. However, you do notice it because it’s completely unlike real meat, which in this context isn’t so bad.
Cooking the product was uneventful. There were no off-putting fumes emitted from the Simple Truth product, which I again appreciated. But what people really want to know of course is how it tastes.
From a skeptic’s point of view, I must say I was impressed. Granted, you know that the taste is a little bit off from red meat. The squishy texture of plant-based meat doesn’t have the multi-layered rigidity of animal protein. Nevertheless, when mixed with other ingredients, it was impressive. And based on Beyond’s many popular views, I’d say Beyond Meat stock may have something here.
However, I did notice one thing that may influence my decision on making a committed transition: aftertaste. Let’s just say I felt weird after consuming the product. However, your experience may vary.
In Competition, BYND May Have Some Problems
As an alternative to red meat, I’d give the plant-based meat industry a solid B, perhaps a B+. After having tried it myself, I can appreciate why so many are making the switch. But the question is, will they exclusively or largely make the shift to Beyond Meat?
That’s where I get concerned regarding the commoditization threat regarding fake meat. As I mentioned, these products aren’t cheap no matter which brand you try. While I understand the argument that as the technology gets better, the price will decline, here’s a reality check: commoditization is already doing this right now.
With large food manufacturers recognizing the soaring demand for green alternatives, it’s inevitable that they will shift their production to accommodate it. Moreover, competitors don’t have to start from scratch. They can leverage food-processing companies like Archer Daniels Midland (NYSE:ADM) to fast-track their plant-based ambitions.
Finally, IDTechEx noted that at the present market capitalization of Beyond Meat stock, “investors are paying $50 for every burger Beyond Meat sells.” I’m not sure if I want to pay that much of a premium, especially when others – particularly store brands – can perform at least an adequate job.
On the date of publication, Josh Enomoto did not have (either directly or indirectly) any positions in the securities mentioned in this article.
A former senior business analyst for Sony Electronics, Josh Enomoto has helped broker major contracts with Fortune Global 500 companies. Over the past several years, he has delivered unique, critical insights for the investment markets, as well as various other industries including legal, construction management, and healthcare.
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