- Analysts at Piper Jaffray speculate that Kellogg's MorningStar Farms plant-based brand could give Beyond Meat and Impossible Foods a run for their money when it comes to popular and profitable meat substitutes, according to Bloomberg.
- When the Michigan-based CPG company acquired MorningStar in 1999 from Worthington Foods for $307 million, the brand's soy-based meat substitutes had been in stores since 1975. While Kellogg doesn't break out MorningStar's sales, analysts suggest they could be $210 million annually, Bloomberg reported, making the unit potentially worth $3 billion.
- Barron's estimated that if spun off, MorningStar Farms could be valued between $5 billion to $10 billion.
While plant-based industry talk lately revolves around Impossible Foods and the Beyond Meat — especially since the latter's impressive Wall Street debut in May — Kellogg has one of the segment's original big brands with MorningStar Farms.
With a recent overhaul a few years ago to its packaging, an expansion of its products — particularly grilled items — and an emphasis on clean label when plant-based is booming, MorningStar Farms has seen an "impressive" uptick since 2017, Chris Hood, president of the Kellogg's North America business, said at the Consumer Analyst Group of New York conference in February.
The brand also launched a new vegan "Cheezeburger" earlier this year and committed to converting all of its products to 100% vegan by 2021. According to Fast Company, MorningStar has already switched half of its portfolio over and plans to lift that figure to about 65% by the end of this year. The move could boost its profile up there alongside today's popular plant-based meat alternatives, from Beyond to Impossible and Nestlé's new Incredible Burger.
MorningStar is already sitting pretty in the plant-based meat alternatives sector when it comes to market share. According to Statista, it's the brand used most often in the U.S. this year, with 22.73 million Americans buying its products.
Like Beyond and Impossible, the company acknowledges targeting consumers who aren't necessarily vegans or vegetarians, but who might be interested in trying out such foods if they're tasty. MorningStar products, however, may not be in head-to-head competition with some of the newer meat substitutes designed specifically to deliver a beef-like taste and mouthfeel. However, that doesn't mean Kellogg won't go down that road if the incentives are there and the payoff is sufficient.
Meanwhile, the question lingers about whether the company would consider spinning off MorningStar or filing for an IPO. In an opinion column last month, MarketWatch's Brett Arends said he directly asked Sara Young, Kellogg's general manager, whether an IPO was in the cards.
"She laughed," he wrote, and said, 'Not that I’m aware of.'"
Following the brand refresh, Kellogg may not believe MorningStar needs many more changes. The veggie burger maker appears to be generating revenue, with Arends speculating annual sales at between $350 million and $450 million.