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Alternative Meat Industry

Alternative Meat Industry

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Yale School of Management
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In 2009, when experienced entrepreneur Ethan Brown decided to build a better veggie burger, he set his sights on an exceptional goal – create a plant-based McDonald’s equally beloved by the American appetite. To do this, he knew he needed to transform the idea of plant-based meat alternatives from the sleepy few veggie burger options in the grocer’s freezer case into a fundamentally different product.

Since 2016, Beyond Meat products have been widely available in retail outlets, from major grocery chains like Walmart and Kroger to upscale food stores like Whole Foods. The company has also successfully penetrated the restaurant market, offering its products in national fast-food chains like Subways, Denny's, and Dunkin'. Beyond Meat (BYND) went public in May 2019 at an initial price of $25 per share. By July of 2019, the stock was trading at more than $200 a share, giving the young company a market capitalization of over $12 billion.

Although Beyond Meat was the first major mover in the plant-based meat alternative market, by 2019 competition was growing quickly. Other plant-based options were introducing products and gaining shelf space as well as spots on restaurant menus. Meanwhile, a number of start-ups were working on a very different type of alternative to traditional meat, cultured meat.

In late 2019, with both demand and competition for meat alternatives exploding, investors and observers wondered about Beyond Meat's prospects and its market valuation. Would the increase of plant-based options drive down Beyond Meat's margins? Would consumers be able to differentiate Beyond's products from other plant-based options? How would cultured meat affect the competitive landscape? Would further investments in research and development help give Beyond Meat an edge? Would Americans continue to embrace meat alternatives, or would the initial fanfare subside below investor expectations?

Publication Date: January 22, 2021

Citation: Nikki Springer, Leon Van Wyk, Jacob Thomas, K. Geert Rouwenhorst and Jaan Elias, "Alternative Meat Industry: How Should Beyond Meat be Valued?", Yale SOM Case 20-033, January 22, 2021.