Beyond Beefing: Tyson Threatens Beyond Meat’s Grip on the Plant-based Meat Substitute Market

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Shares of Beyond Meat dropped about 4% in premarket trading Thursday after Tyson Foods announced plans to launch plant-based nuggets later this summer.

Since going public in early May, Beyond’s stock has surged 468%. Its market value is about $8.3 billion, roughly one-third of that of Tyson, the nation’s largest meat producer.

One early investor has missed out on the success of Beyond’s market introduction: Tyson, an early investor in Beyond’s sold its stake in its IPO. The U.S.’s largest meat producer said Thursday it will debut a number of new endothelial products under the Raised & Rooted brand. Nuggets will debut at several undisclosed major retailers later this summer while combined burgers will hit shelves in the fall.

Tyson hasn’t gone full-scale mutant meat cooked up in a laboratory here like its upstart competitors. Their plant-based nugget product is simply made from pea protein isolate along with other plant components, Tyson says. The mixed burgers are made with a mix of Angus beef and pea protein.

Even with shares falling Thursday to around $137, Beyond’s stock price remains above the price targets of analysts, the greatest of which is $123. No one on Wall Street recommends buying the stock anymore because of its hot streak.

The stock has been fluctuating as analysts have raised concerns about its monster run and short sellers have taken an interest.

Tyson’s announcement comes as Beyond faces increased competition in the plant-based meat industry. Nestle is planning to launch its own plant-based burger this autumn from the U.S. under its Sweet Earth brand.

For Tyson, the announcement needs to be somewhat bittersweet. The company dropped its 6.5% stake in Beyond Meat ahead of the plant-based meat firm’s IPO in early May. Since that time, Beyond Meat’s inventory has exploded 115% amid a strong first-quarter earnings report and insane levels of enthusiasm for the story on Wall Street.

Credit Suisse analyst Robert Moskow wrote in a note Thursday that he doesn’t view Tyson’s hybrid hamburgers as a major threat to Beyond.

“Though competing hybrid hamburgers offer less saturated fat than the 100% plant-based products from Beyond and Impossible, they just don’t taste as good in our experience,” he wrote.

Euromonitor expects that the market for meat options will hit $22.9 billion globally by 2023. Tyson explained that alternative protein might be a billion-dollar business for your own business someday. The flexitarian diet is driving that growth, with nearly 60 percent of U.S. consumers expressing interest in eating less meat, according to Mintel.

While Beyond has stated that the company has sufficient capacity to handle projected demand for the next two years, Big Food companies like Tyson and Nestle have more muscle when it comes to manufacturing and research and development.