Mock Meat Moment: Pandemic Pumping Plant-Based Pretend Poultry

May 9, 2020

And maybe that’s a good thing.

McClatchydc.com:

A combination of a looming meat shortage and empty store shelves during the coronavirus pandemic has people turning to alternative sources of protein: plant-based meat. 

A new report from Nielsen indicated that substitution meat sales soared in mid-March, increasing by nearly 280% compared with the same time last year, according to NPR. Problems with agriculture in the U.S., specifically the closure of meat-processing plants and slaughterhouses due to outbreaks, are starting to affect the country’s meat supply chain, and people are taking notice, Vox reported. 

The plant-based meat industry has taken notice as well, according to Vox. Ethan Brown, the founder of Beyond Meat — a plant-based meat company — says the company is beginning to sell new value packs for a competitive price to supermarkets and restaurant chains to make up for the lack of supply, Yahoo Finance reported.

“This is the industry’s moment,” Brown told Yahoo Finance. “We need to make sure that we are part of a solution.”

Nielsen data showed fresh plant-based meat sales increased by 279% during the week of March 14, and fully cooked alternative meat sales increased by 84% that same week, according to NPR. Because the demand has climbed so vastly, Beyond Meat will be lowering the price of its products in the coming months, Yahoo reported. 

“We are going to use the summer as an opportunity to bring new consumers into our brand, increase the overall consumer base, so you will see us be aggressive in stores with longer discounting than we’ve done in the past,” the company said in a statement to Yahoo.

Other plant-based meat companies are following suit, Forbes reported. Tofurky, a company that sells 35 different alternative meat products, says its sales increased by 40% in the last 12 weeks, according to Forbes. 

Tofurky’s plant-based ham sales increased by 631% from last year, the company told Forbes. Impossible Foods says because demand for the Impossible Burger skyrocketed during the pandemic, it will expand the burger’s retail presence at 1,700 Kroger-owned stores all over the U.S., according to Vox.

Meat alternatives have become increasingly popular, even before the pandemic set in, Forbes reported. Sales were up 158% in the last week of February this year compared with last year, according to Forbes. 

The coronavirus pandemic has exacerbated that trend, as big meat processing companies including Tyson and Smithfield Foods close plants amid COVID-19 outbreaks among workers, Forbes reported. 

The coronavirus pandemic has exacerbated that trend, as big meat processing companies including Tyson and Smithfield Foods close plants amid COVID-19 outbreaks among workers, Forbes reported. 

Yahoo Finance:

In a call with Yahoo Finance on Tuesday afternoon, Beyond Meat founder Ethan Brownsounds like a man ready to get his earnings day over quickly so he could start executing on what may be a defining summer in the 11-year history of his plant-based meat outfit.

Amid a shortage of traditional meat and poultry as the likes of Tyson struggles to keep plants safely open during the coronavirus pandemic, Brown is poised to unleash fury on a meat market in bad need of healthier alternatives…and actual supply. Brown’s weapons in this meat war? New value packs for supermarkets with more plant-based food in them and competitive pricing on traditional product lines and on offerings at restaurant chains.

All of these efforts should make Beyond Meat’s offerings cheaper to consumers at long last and drive trial. With that trial, there is a good chance of gaining plant-based food loyalists.

Here is how Beyond Meat (BYND) performed versus Wall Street estimates in the first quarter:

  • Net Sales: $97 million vs. estimates for $88.2 million
  • Gross Margin: 38.8% vs. estimates for 30.73%
  • Diluted EPS: 3 cents a share vs. estimates for a loss of 7 cents a share
  • 2020 Guidance: company pulled its full-year guidance (previously called for sales of $490 million to $510 million)

Beyond Meat plans to make a big statement on product pricing this summer in a bid to gain new customers. Here is how Brown explains the actions:

“We’re still priced at a premium, but we have to become relevant to the consumer cost basis because we can get people to try our products in a way that we may not have otherwise. So we will be be aggressive on pricing this summer. It makes sense. We’re not going to reset our long-term margin targets. We are going to use the summer as an opportunity to bring new consumers into our brand, increase the overall consumer base, so you will see us be aggressive in stores with longer discounting than we’ve done in the past. Deeper with the discounts as well, as well as special promotions with our quick-service restaurant partners. We want to use this opportunity to introduce people to plant-based meat and hopefully get them to stick with it.”

How Wall Street reacts to Beyond Meat’s earnings day will be interesting to watch. The company blew away analyst forecasts yet again (due to strong demand at retailers and restaurants), across the board. It has ample liquidity ($246.7 million in cash to be exact) to fund its growth ambitions. Brown sounded impressed in our interview with the early response to new Beyond Meat products at Starbucks stores in China.

Shares were up almost 5% in after-market trading Tuesday.

The wildcard here is how the Street views more aggressive discounting on Beyond Meat’s traditionally premium-priced product. While the initial read may be of margin concerns amid price drops, we would suggest that those worried investors revisit the thesis on Beyond Meat. At its core the investment thesis is to get people into plant-based meat in large volumes — one way to do that is to price competitively in a period in the world (now) where there are mass shortages in proteins.

Sounds like the investment thesis is still intact right now, no?

UPDATE-
Houston Chronicle:

But the price volatility brought about by the pandemic is a whole different animal (pun intended).

In just the past couple of weeks, that $3.50 wholesale price for raw brisket is approaching $6-$7 per pound. From the customer point of view, that might mean an increase in retail prices at your local barbecue joint from $20 to $25 per pound of cooked brisket.

In this case the price increase is due to the closing of meat processing plants rather than an increase in consumer demand or a lower supply caused by natural forces. And this has created an unprecedented strain on beef supplies.

Very generally, the beef supply chain works like this: ranchers sell cattle to feed lots/meat packers, who process the cattle into “boxed beef” and then market that to distributors and retailers, who then sell the end product to restaurants and consumers.

In this case, because the disruption is with the beef packing component of the supply chain, the effect has been especially impactful. The meat processing industry is highly concentrated — some would say monopolized— such that most of the beef and other proteins in America are processed through giant facilities that leverage economies of scale to output huge volumes of meat at a low expense.

By shutting down just a few of these facilities, meat production has decreased by 35% from the same time last year.

This has two critical knock-on effects for the supply chain and the economy as a whole. From the supply side, meat packers are buying less cattle from ranchers due to plants being closed, resulting in a drop in price for live cattle. Most cattle ranchers are family businesses, and this greatly lowers their income.

On the demand side, consumers are still clamoring for beef either at the local grocery store, burger joint, or barbecue restaurant, especially now that businesses are starting to re-open. But the meat packers are producing less beef, and thus demand outstrips supply and the price rises, in this case to unprecedented levels.

Until recently, consumers have been skeptical of the true nature of these price increases, mainly because grocery stores and big box outlets like Costco have been well-stocked and normally priced. But this is a factor of how these outlets purchase meat — that is, many weeks in advance, often at a guaranteed price. Eventually though, the price and supply will change. Costco just announced a limit on the amount of meat each customer can purchase.

11 Responses to “Mock Meat Moment: Pandemic Pumping Plant-Based Pretend Poultry”

  1. Gingerbaker Says:

    Good luck. Fake meat is still pretty yucky. Even turkey trying to emulate beef or bacon is hard to like.

    That when meat is missing from supermarket shelves, it drives people to fake meat rather than pure vegetarian fare seems to underscore how much people like meat.

    • jimbills Says:

      Have you ever tried the Impossible burger personally?

      • greenman3610 Says:

        the impossible whopper is actually pretty good.
        If you’re on the Freeway and happen to be hungry, I think it’s a decent choice.
        accessible and reasonably priced

        • Gingerbaker Says:

          When I am on the road is the only time I allow myself to indulge in fast food, traveling being rare and awful.

          The day starts out with a diet soft drink and a peanut butter Whoopie Pie, and lunch is a a freaking Whopper with cheese with fries and a gallon of ketchup.

          Life is short. 🙂

          • jimbills Says:

            Try the Impossible Whopper then. One time. I dare you.

          • Gingerbaker Says:

            There is no way I will like it more than a Whopper. They put the flavor of 1000 hamburgers into each Whopper. They are a marvel.

            I’m not saying I won’t like it – I daresay it would not taste horrible. All that Chinese pea protein and synthetic hemoglobin is masked by 50 other ingredients and cheese and lettuce and onion and tomato and mayo. But I will regret not having the Whopper.

            And, in case you missed the subtle hints and understated clues I have carefully hidden around here, I do not feel compelled to restrict my beef intake for moral reasons. ;>D

            Alright, I’ll try one. But I’m getting one of each. 🙂

    • rhymeswithgoalie Says:

      The Beyond Burger I tried last night was meh at best.

      I have higher expectations for the Impossible Burger.

      • jimbills Says:

        Yes, if one is going for a ‘meat’ taste as opposed to an old school veggie burger taste, Beyond is definitely inferior to Impossible. Beyond has a sort of rubbery texture to me, and it needs a lot of spice and other flavoring to get it to a reasonably pleasing alternative. Some prefer it for that feature, though, as well as the lack of GMO.

        I have had the Impossible burger both as a Whopper several times and in burgers from two higher end restaurants. The latter two experiences were amazingly good. I had to pull apart the burger itself to check and make certain it was the Impossible burger as opposed to actual beef. You can tell if it’s Impossible by the texture inside it – it’s slightly different.

        If someone cooked just the Impossible faux meat and just real beef in a pan with no seasoning, I do think there’d be a lean towards the taste of real beef. But with seasoning, and especially in a burger with fixings, I’d dare anyone to honestly say there’s a huge difference.

        It’s just amazing to me that some think that technologies like solar can improve with time, but fake meat can’t. The Impossible burger itself is still just in a second generation phase, and there will be real competitors to it going into the future. There are so many good reasons for this tech to continue to advance, and it will. Some prefer to think it’ll just stay the same level of taste as a veggie burger from the Bush II era, though, not unlike a recent documentary film did with solar from 2008.

  2. grindupbaker Says:

    Food taste is a requirement that increases substantially with fatness & lower biological power output. If you bicycle 155 km between oatmeal & lunch then a sandwich & a lump of unspiced tofu taste pretty good. If you get fat like I’m getting then you crave meat & spice because you don’t have any real need for food. At least those apply to me.

    • Gingerbaker Says:

      Okey dokey.

      Luckily, I have never biked 155 km between oatmeal and lunch. I’m safe.

      ‘Pretty sure, though, that normal people enjoy food that tastes good. Could be wrong – could be that people despise food that tastes good.

      Hence turkey burgers.

  3. rhymeswithgoalie Says:

    Meat processing is a tough, tiring job, and the people who work there…are not regular folks.

    Chief Justice Roggensack on the Wisconsin State Supreme Court is a piece of work:
    https://www.youtube.com/watch?v=bTeuzC0d0hA#t=3m30s


Leave a Reply

Please log in using one of these methods to post your comment:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s

%d bloggers like this: