A Shifting Market: Tyson Invests in Meat Alternative Startup, Beyond Meat

October 12, 2016

Tyson Foods, the company whose very name is synonymous with the meat industry, is the first key meat company to invest in a meat alternative startup that is aiming to reduce meat production and consumption with plant-based alternatives.

Tyson announced on October 10 that it has acquired a five percent stake in California-based plant-based protein company, Beyond Meat, for an undisclosed amount as part of a financing round that included previous Beyond Meat investor, the Humane Society of the United States.

Earlier this year Beyond Meat began selling plant-based burgers made from pea protein, coconut and canola oils. The burgers have been said to be so close to animal-based burgers that they sizzle and drip “juices” while being cooked. With distribution currently through 11,000 stores across the U.S., Beyond Meat plans to use the new capital to allow it to remain an independent privately-held company while still advancing its product development and expanding its sales network according to company CEO, Ethan Brown, reports the LA Times.

An Alternative Alteration

Although quite small in comparison to Tyson’s 2014 acquisition of Hillshire Brands for $7.7 billion, this move by Tyson carries significant weight in what it signals.

“We’re enthusiastic about this investment,” said Monica McGurk, Tyson Foods’ Executive Vice President of Strategy and New Ventures & President of Foodservice, adding, “which gives us exposure to a fast-growing segment of the protein market. It meets our desire to offer consumers choices and to consider how we can serve an ever-growing and diverse global population…”

Alternative protein sources have been increasingly on the radar of both consumers and investors. Global protein consumption is expected to climb at a CAGR of 1.7 percent, reaching 943 million tons by 2054, according to Lux Research. Over this same time period, alternative protein sources are forecast to command up to a third of the protein market as they fill the void created by slowing growth in meat and seafood production. Indeed, U.S.-based plant-based food and beverages businesses including Beyond Meat, Califia Farms, and Heidi Ho saw sales of $4.9 billion in the twelve months through June and have been growing at a faster rate than traditional food segments, reports the New York Times.

Consumers are not the only ones pushing for this sea-change in consumption. At the end of September, a collation of 40 institutional investors with a combined valuation of $1.25 trillion called for the greater adoption of alternative protein sources including plants, insects, algae, nuts, seeds and grains, and lab-cultured meats. In the treatise, The Future of Food: The investment case for a protein shake up” published by the Farm Animal Investment Risk and Return (FAIRR) initiative, the group claims that over-reliance on livestock production to feed a growing global population would be unsustainable and would “lead a financial, social and environmental crisis.”

Big Food Sees Big Opportunity

This sea change is also certainly being noticed by some of the largest mainstream food companies in the country, as is shown through the acquisition of the Gardein line of plant-based meat alternatives by Pinnacle Foods in 2014, investments made by General Mills’ 301 Inc. in Beyond Meat and Kite Hill, a producer of dairy alternatives made from nuts and other plant proteins, the acquisition of White Wave, a producer of organic and plant-based dairy alternatives by Danone in a deal worth $12.5 billion, and the acquisition of Harvest Innovations, a soy protein and gluten-free company by Archer Daniels Midland (ADM).

Some are concerned that this interest in plant-based alternatives by big meat companies, in particular, is simply a smoke show, or companies trying to divert consumers’ attention from recent bad press.

“The question in my mind with these acquisitions is always why they’re being done,” Michele Simon, executive director of the Plant Based Foods Association told the New York Times. “The most positive view is that this means the meat industry is shifting away from animal meat to plant-based meat, but I don’t think we know that’s the case yet – it could also be a way of distracting attention from their industrial meat business.”

However, Ethan Brown takes a less skeptical position, telling the Wall Street Journal, “We fully recognize vegans who supported our business may not immediately understand why this makes sense but I think the consumer is evolving, the market is evolving and both companies are committed to producing delicious products.”

Lynda Kiernan

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