I’m trying to figure out the puzzle that is Beyond Meat (BYND), the only publicly traded plant-based meat stock.
Is plant-based meat a revolutionary, category shattering food product? In which case shares of Beyond Meat are an absolute bargain even at $110.43 a share (as of the close on February 4) and a market cap of $6.74 billion.
Or is this a fad product and stock? In which case you’d do just as well putting a match to your money as you would buying shares of Beyond Meat.
A great article on Eater.com today by Caleb Pershan adds some perspective important for answer that question. The article suggests, to this investors, that plant-based meat has tremendous upside because, aside from all its global warming crews, is fits right in with the American consumer’s trained preference for process foods.
Pershan’s piece “Let’s Play Chicken” reports on the results of a test of Beyond Meat’s plant-based chicken in KFC’s chicken nuggets. (KFC is part of the Yum Brands! (YUM) empire along with Pizza Hut and Taco Bell) . The test in Charlotte, North Carolina, and Nashville, Tennessee, has been a success and the company is looking at a national rollout. Reviews, Eater notes, have been solid “It tastes like a doggone piece of chicken,” writes Fast Company. Huge crowds have gathered to order the plant-based nuggets.
From the point of view of a potential investor in plant-based meat, the most important insight in Pershan’s post is from Eater chief critic Ryan Sutton. Sutton’s basic point is that plant-based meat has the biggest potential market in products that are already scientifically engineered and not naturally occurring–like chicken nuggets.A 2003 Federal District Court ruling found that “chicken McNuggets, rather than being merely chicken fried in a pan, are a McFrankenstein creation of various elements not utilized by the home cook.”
Which is what makes chick nuggets the ideal market for plant-based chicken. McNuggets, introduced by McDonald’s in 1981, were partially a response to beef consumption and prices. They’re already a high engineered product–like plant-based chicken–and they’re not supposed to taste like beef. They’re supposed to taste like chick nuggets. Pershan adds another Sutton observation, this time about the Impossible Food sliders at the White Castle burger chain. The “indistinctness” of the taste of the patty was actually its advantage. “The genius (or insidiousness) of the Impossible Food folks is not that they’ve created something that tastes like beef—they haven’t—it’s that they’ve taken discrete ingredients from the natural environment and transformed them to mimic the artificial awesomeness (or awfulness) of American processed food,” Sutton wrote.
Which is great news if you’re hoping that these companies are on to a big market. As hefty as the market might be from consumers who care about the planet or animal cruelty or their own health, it’s dwarfed by the market for good ol’ processed food. And it’s especially on point for chicken nuggets since, well, since everything from snake to kangaroo meat is routinely described as tasting like chicken. Pershan quotes a Harvard Museum paper from 1998 that argues animals from rabbits to snakes and kangaroos might “taste like chicken” because they share a common dinosaur ancestor.”The emphasis on chicken in the statement ‘tastes like chicken’ is misleading.” “The common ancestor of most tetrapods would have tasted similarly, if we had only been there to cook and eat it.
The market category for plant-based chicken is Pershan concludes, is the “flexitarian,” that ambivalent class of carnivore seeking an occasional alternative from meat, if it tastes just as good. And especially if it tastes as good as the processed food these consumers are already used to.
And by the way, just in full disclosure, I like chicken nuggets. (My preference is those served at Wendy’s.) But I don’t think they taste like chicken.
(I would assume that I’ll get emails from outraged readers touting the health advantages of the products from Impossible Foods and Beyond Meat. To which I say, read the ingredients and tell me 1) that you know what that stuff on the label is, 2) that it can be found in farm-raised chicken or beef, and 3) that this isn’t a processed industrial food product made in a lab.)