Beyond Meat (BYND) Gains on Partnership Talks With Taco Bell
The growing popularity of plant-based alternatives has kept Beyond Meat, Inc. BYND on wheels, with regard to undertaking innovation and partnerships in this realm. Incidentally, the plant-based meat products giant is teaming up with Taco Bell, a subsidiary of Yum! Brands YUM, for a fresh plant-based product, per various media sources. Clearly, the news spurred investors’ sentiments, as shares of Beyond Meat rallied as much as 13.7% on Jan 14.
Well, sources revealed that the plant-based product will be tested next year and mark Taco Bell’s first-ever plant-based meat offering on its menu. Notably, Taco Bell has long been revamping its menu options, including several meatless options. This, however, will be the Mexican fast-food chain’s first step toward plant-based meat, which is likely to attract vegetarian customers.
Certainly, the abovementioned move goes in tandem with Beyond Meat’s efforts to strengthen its presence in the quick-service arena, through partnerships with fast-food restaurants. In this regard, the company has worked with McDonald's MCD in the past for plant-based products. Apart from teaming up with fast-food chains, Beyond Meat has been expanding its distribution with retail giants like Walmart WMT and Kroger, to name a few, which is aiding it amid the pandemic, wherein strength in the retail channel is helping food companies counter foodservice declines.
We note that the pandemic-led social distancing has been weighing on Beyond Meat’s foodservice channel. On its third-quarter earnings call, management stated that the Zacks Rank #5 (Strong Sell) company continues to reel under major sluggishness in its foodservice business. This is accountable to increased stay-at-home mandates and curbs on operating capacity, which have resulted in closures or considerably reduced operations for many foodservice customers. Incidentally, U.S. foodservice revenues declined 11.1% and International foodservice revenues plunged 65.1%.
Nonetheless, strength in the retail channel, courtesy of higher at-home consumption amid the pandemic, was a breather. During the quarter U.S. retail revenues surged 40.5% and International retail revenues grew 26.7%. That said, we believe that Beyond Meat’s constant endeavors to bolster its offerings through innovative products, such as Beyond Breakfast Sausage Links, Beyond Meatballs, Cookout Classic and Beyond Breakfast Sausage, among others, along with expanding distribution at renowned retailers are likely to continue aiding the stock.
Also, the aforementioned potential deal with Yum Brands’ Taco Bell is likely to help Beyond Meat further extend its presence and availability to customers looking for plant-based meat alternatives.
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
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