Americans are hooked on pea proteins. Beyond Meat’s pea proteins, to be exact.
The fake meat purveyor filed for an initial public offering with the U.S. Securities and Exchange Commission on Friday in a bid to be the first plant-based protein startup in the industry to go public. The company estimated an initial offering size of $100 million and applied to trade under the symbol BYND.
Beyond Meat’s proposed IPO demonstrates just how much demand there is in the market for meatless meat. Ethan Brown, Beyond Meat’s founder and CEO, launched the company in 2009, and Impossible Foods, a direct plant-based protein competitor, arrived on the scene two years later. The startups challenged legacy faux meat providers like Tofurkey and Morningstar Farms by rebranding plant-based protein as a healthy, accessible option for everyone, not just vegetarians and vegans.
In actively avoiding marketing solely to people who don’t eat meat, Beyond Meat opened the door to a much wider customer base. At the same time, there’s been a cultural shift towards wellness that includes a renewed interest in healthy, vegetable-centric eating, regardless of an individual’s stance on the ethics of eating meat. Beyond Meat was able to tap into that intersection, filling a demand from both vegetarians and meat-eaters for alternatives to meat that are better tasting and better branded than, well, Tofurkey.
Business Is Booming
Beyond Meat’s regulatory filing with the SEC shows how demand has risen exponentially for plant-based protein in the U.S., both in grocery stores and on restaurant menus.
The bulk of Beyond Meat’s business is done in thousands of grocery stores primarily in the U.S. The company’s widespread market reach largely stems from several key accounts with national food distributors. Sales to United Natural Foods, an organic and natural food distributor, represented 38 percent of Beyond Meat’s total revenues in 2018. Dot Foods, another national distributor, represented 17 percent of the company’s total revenues.
In the nine months ending in September 2018, the company reported $37.1 million in revenue generated from retail sales, an 121.3 percent increase compared to revenues in the channel over the same period the prior year.
Restaurants represented a much larger growth market over the past year for Beyond Meat. The company reported $4.3 million in total revenue within the restaurant and foodservice channel in the nine months ending in September 2017. Fast forward to this year, and the company recorded $19.2 million in total revenue from restaurant and foodservice accounts. The change amounted to a 344.2 percent increase in revenue in the channel this year.
The Success of the Beyond Burger
Much of that growth is due to Beyond Meat’s signature product, the Beyond Burger. According to the company, sales of that one product in both restaurant and retail channels have accounted for 71 percent of Beyond Meat’s total revenue so far this year.
The Beyond Burger initially launched in 2016. Demand for the burger grew exponentially the following year when Beyond Meat signed an exclusive distribution agreement with Sysco, a global foodservice distributor. The agreement paved the way for the Beyond Burger to get on menus at approximately 11,000 restaurants and foodservice providers across the U.S., and sales to Sysco currently represent 14 percent of Beyond Meat’s overall revenue. The company is hoping to recreate that success with other products: this year, Beyond Meat signed a similar agreement with Sysco for its Beyond Sausage product.
Restaurant Chain Partnerships
Aside from the Sysco distribution agreement, Beyond Meat drove restaurant sales through several partnerships with national and regional restaurant chains, including A&W Canada, TGI Fridays, and Bareburger.
When A&W Canada and TGI Fridays launched the Beyond Burger on their menus, it was the fastest new-product launch that either chain had ever seen, according to Beyond Meat. At A&W Canada, the chain sold over 90,000 Beyond Burger patties in the first three days after launch, before the start of any media promotions for the new burger. The demand was above and beyond what both A&W and Beyond Meat had projected for the partnership, leading stores to sell out of the product.
Impossible Foods has seen similar success with its own major chain partnership. White Castle started testing an Impossible Slider made with the faux burger meat in April 2018; six months later, the chain rolled the slider out nationwide, confident that demand for the meatless meat existed across all of White Castle’s 377 restaurants.
Going into 2019, Beyond Meat expects to sign more deals with national restaurant chains and better build brand awareness for all of the company’s products. “We have received significant interest from new potential partners and are expecting to launch at several prominent restaurant chains in 2019,” the filing stated.
Beyond Meat expects to triple its monthly production capacity by the end of the first quarter of 2019 to keep up with incoming demand.
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