It’s Unlikely That the Marketing Hype Driving BYND Stock Is Sustainable
Everywhere you look, plant-based meat specialist Beyond Meat (NASDAQ:BYND) is everywhere. From inking new deals with fast-food chains to getting on Costco Wholesale’s (NASDAQ:COST) shelves, the company is turning its marketing machinery to “11.” Ultimately, if you’re bullish on Beyond Meat stock, that’s a positive because this is a marketing investment, not necessarily a food-related one.
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If you analyze the alternative-meat market objectively, you’ll realize that Beyond Meat isn’t forwarding anything unique. However, it appears that they have.
With all the hoopla surrounding the organization and its promotion of authentically tasting fake meats, I’m not surprised that BYND stock mooned the way it has. At the same time, I’m also not shocked that it cratered in October.
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To believe in Beyond Meat stock, you’ve got to assume that the underlying company is different from every other competitor. Furthermore, you’re betting that this time, the American public will finally resonate with plant-based meats. Lastly, this transition must develop at increasingly larger scales.
Sure, BYND stock appears a no-brainer when you consider its groundbreaking deals, such as with Yum! Brands (NYSE:YUM) KFC, but will this popularity surge last? Looking at American culinary history, the situation doesn’t look too hot.
Beyond Meat Stock Not Unique by a Long Shot
From the perspective of young Millennials, I can appreciate why many investors have jumped aboard BYND stock. For instance, American youth have pushed environmental concerns as a top priority. Beyond Meat invariably provides superior morals and greatly reduces the carbon footprint associated with the traditional meat industry.
Again, this speaks to the marketing angle of Beyond Meat stock. Essentially, management is utilizing the language that most Millennials use frequently. And with this demographic being one of the company’s key targets, they’re doing an excellent job.
But the reality is that alternative-meat products originated well before Millennials, Generation X, Baby Boomers, or even the Silent Generation. In 1896, businessman and religious advocate John Harvey Kellogg made a peanut-based “meatless meat” called Nuttose. Not only that, Kellogg went on to “popularize cereal as an alternative to egg- and meat-heavy breakfasts.”
Interestingly, Kellogg was a member of a Christian denomination called the Seventh-day Adventists. In 1933, this religious group founded Loma Linda Foods. One of their claims to fame, if you will, is their soy- and wheat-based fake meats.
Furthermore, a particularly popular (and reasonably priced) alternative meat company is Morningstar Farms. It specializes in black bean burgers, which I’ve been told is quite tasty. Because of this, it’s also a natural competitor to BYND stock. By the way, Morningstar is under the Kellogg Company (NYSE:K) umbrella.
I mention these things because anybody that’s thinking about buying Beyond Meat stock should research this topic. In this country, fake meats have a long and storied history. Yet they really make up an insignificant presence in the overall meat market.
Competition over a Small Market
When you read bullish articles about Beyond Meat stock, you’ll more often than not come across the addressable market argument. That is, because the traditional meat industry is so large, BYND has an opportunity to convert meat-eaters. If successful in scale, this could skyrocket shares.
Of course, I won’t disagree with that logic. However, I’ll say that this is a huge “if.”
Last year, the global plant-based meat market was a $10.1 billion industry. Experts believe that this year will translate to an $11.6 billion industry. And by 2023, the alternative-meat sector should be worth over $20 billion.
That’s great and all but how does that compare to the traditional meat market? Honestly, not very well. In 2018, real meats brought in nearly $946 billion worldwide. This year, analyst forecasts call for $982.6 billion.
Source: Chart by Josh Enomoto
In both annual comparisons, fake meats represented only a little over 1% of real meat sales.
Moreover, by 2023, the global meat industry will generate a value of $1.14 trillion. Even with fake meat booming to $20 billion, that’s less than 2% of its real counterpart.
Now, proponents of BYND stock will counter that the underlying company’s marketing machinery will convert large chunks of meat-eaters. That might be the case but I’m very skeptical.
Since the 1990s, we’ve seen many companies promote their alternative-meat innovations. Some organizations found rousing success. Yet with more than a century of culinary achievements, fake meats haven’t even scratched the traditional meat market share.
This time could be different, but I doubt it.
Some Food for Thought on BYND Stock
John Harvey Kellogg was a deeply spiritual man who strongly advocated clean living. Subsequently, most Christian denominations teach that believers refrain from the temptations of the flesh. Clearly, Kellogg took that lesson literally with his meatless meat inventions. Kellogg was also a staunch opponent of masturbation.
However, people are people. Some may try the clean-living approach, but only a small minority will ever be successful. We as humans are addicted to the pleasures associated with eating flesh. And we can innately tell a counterfeit. That’s why Kellogg ultimately failed in his attempt to change what we masticate.
However, Beyond Meat would like you to believe that they’ve got the secret formula down. In the nearer term, the hype machine surrounding Beyond Meat stock makes it a possible bullish trade.
But I’d be very careful about holding shares over the long run. Most people don’t or can’t deny their base instincts. A century of data augments this point.
As of this writing, Josh Enomoto did not hold a position in any of the aforementioned securities.
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