UPDATE: Jan. 20, 2022: PepsiCo and Beyond Meat are planning to introduce a vegan jerky snack as the first product released under their joint venture, according to Bloomberg.
Last January, the two companies announced the creation of The PLANeT Partnership to develop, produce and market snack and beverage products made from plant-based protein. The CPGs said the joint venture will leverage Beyond Meat's technology in plant-based protein development and PepsiCo's marketing and commercial capabilities.
While a plant-based jerky would benefit from the expertise of both companies, it would join a crowded field where Nestlé's Sweet Earth, Krave, Conagra Brands' Gardein and others have introduced their own faux-meat snack lines.
- PepsiCo and Beyond Meat created a joint venture called The PLANeT Partnership that will develop, produce and market snack and beverage products made from plant-based protein, the companies said in a statement. PepsiCo and Beyond Meat did not share financial terms of the agreement.
- The companies said the joint venture will leverage Beyond Meat's technology in plant-based protein development and PepsiCo's marketing and commercial capabilities. "Plant-based proteins represent an exciting growth opportunity for us, a new frontier in our efforts to build a more sustainable food system and be a positive force for people and the planet, while meeting consumer demand for an expanded portfolio of more nutritious products," Ram Krishnan, PepsiCo's global chief commercial officer, said in a statement.
- PepsiCo has prioritized increasing offerings in its portfolio that meet growing consumer demand for foods and drinks that fall in the better-for-you category. Plant-based products have gained particular momentum during the pandemic as people have watched what goes into their bodies more closely.
Even though the near-term boost to Beyond Meat's stock price is enough to excite investors, with a 38% spike as markets opened on Tuesday, it's the long-term impact of this deal that could have the plant-based food maker salivating for years to come. Beyond Meat, along with rival Impossible Foods, have come to dominate the plant-based meat space despite mounting competition from industry heavyweights like Nestlé and Tyson Foods, along with countless smaller startups.
As consumers incorporate more plant-based foods into their diets, faux meat will be just one part of a much larger menu. Beyond Meat has expertise and broad consumer awareness in burgers and sausages, but it will need to expand beyond those categories to further grow revenue and immerse itself in the plant-based trend. Moving into snacks and beverages not only does that, but it should eventually lessen its financial dependence on meat and expand the Beyond name to be synonymous with the plant-based category as a whole.
“This represents another attractive longer-term driver for BYND to capture more share in the expanding plant-based food ecosystem,” Oppenheimer & Co. analyst Rupesh Parikh said in a note, cited by Bloomberg.
PepsiCo — with its portfolio that includes Quaker Oats, Cheetos, baked fruit and veggie snack maker Bare, Naked smoothies, Bubly water and its namesake soda — can expedite the process by using its marketing and commercial capabilities for the new snacks and beverages. PepsiCo already has a major presence in stores, so the new products developed through the joint venture could have a greater chance of commanding more shelf space with the food and beverage giant involved than Beyond Meat could have done alone.
"We look forward to together unlocking new categories and product lines," said Ethan Brown, Beyond Meat founder and CEO. "PepsiCo represents the ideal partner for us in this exciting endeavor, one of global reach and importance."
UBS analysts called the deal a win-win in a note cited by Seeking Alpha.
"We think there are multiple product avenues that the JV could explore - from plant-based dairy (which Impossible Foods indicated it is developing) to plant-based jerky/meat snacks (~$6.5mn sub-category of the ~$3.6bn meat snack category currently per Nielsen data) to completely new categories," the note says.
Beyond Meat controls about 13% of the meat alternatives category in the U.S., according to a CNBC story, citing estimates from Jefferies. For PepsiCo, many of its recent acquisitions, such as Bare, SodaStream and PopCorners, have helped it build on its offerings of healthier snacks and drinks. Beyond Meat's expertise in developing plant-based proteins will ultimately play a key part in improving these and other new products, while enabling the food and beverage giant to tap into a company with a deep bench of knowledge in this area.
PepsiCo also noted that working with Beyond Meat helps it make progress toward reaching its sustainability goals by using "positive" ingredients and expanding its portfolio of products that have been grown and made through practices such as regenerative agriculture and net water- and carbon-neutral production plants. According to Nielsen, 66% of all consumers are willing to pay more for sustainable brands, a figure that is even higher for younger shoppers.
For much of its existence, Beyond Meat was viewed as a scrappy upstart upending the meat industry with its more realistic burgers. Now, it's partnering with an industry stalwart that should give both companies a more meaningful presence in plant-based by tapping into the best skills of each manufacturer.