More than perhaps any other company, California-headquartered Beyond Meat and its plant protein-derived Beyond Burger that “bleeds” beet juice has come to symbolize the evolving landscape of consumer demand facing agricultural producers.
Recent years have seen much ink and many pixels devoted to the question of whether, how and when the evolution of the American diet towards healthier, more environmentally-friendly alternatives would impact conventional producers. Throughout, such missives have often included reports of the Beyond Burger’s steady infiltration of global restaurant menus and supermarket aisles and the praise it has elicited for the company’s contribution to environmental sustainability.
After progressing through private funding rounds populated by boldface names like Bill & Melinda Gates, Kleiner Perkins and Tyson Foods since its 2009 founding, reports surfaced last month suggesting that Beyond Meat has hired bankers to prepare for an IPO.
Given its profile and influence within interlinked public debates surrounding food, climate and social responsibility, Beyond Meat’s next moves are likely to influence the strategies of future food startups and help define the role for private equity within the burgeoning market.
Last month, Agri Investor had the opportunity to see the next crop of young food companies hoping to plod the path Beyond Meat has helped clear among investors when Rabobank’s FoodBytes startup competition was held in New York.
Styled as a rapid-fire Sharktank style pitch fest where one group of companies presented 1.5 minute synopses of their businesses and a smaller group was given 3 minutes to present to an industry audience and panel of judges, the competition included everything from robots designed to reduce kitchen labor costs to sushi-replacements derived from vegetables.
Pitches by this year’s winners – dairy-focused deep-learning startup SomaDetect; restaurant foodwaste-focused Winnow; and Wasteless, which offers a dynamic pricing system to groceries also designed to reduce food waste – all demonstrated the extent to which each company’s social mission was presented as being at least, if not more, important than its profit potential.
With each company’s representatives jogging onto the stage to a repeating 10 second snippet of a classic Rolling Stones tune (unless they had chosen to distinguish themselves by replacing it with something more obscure and current, as a few did), the competition also demonstrated the extent to which the worlds of food and entertainment have come to influence each other.
This convergence helps explain a certain sense of alienation one encounters when discussing these consumption trends with some conventional agricultural producers and will likely play a role in how Beyond Meat’s IPO is received in public markets.
While many private equity managers have reported watching for investment opportunities emanating from consumer moves towards plant-based foods, most relevant companies are at early stages of development better suited for venture capital.
Beyond Meat is very high on a short list of companies with enough market share to have been a plausible acquisition target, and it does not take too much imagination to picture a well-capitalized, publicly-funded Beyond Meat expanding Beyond Milk, to Beyond Cheese, or Beyond Bugs as it comes to serve as a natural aggregator of future standouts in the effort to keep pace with consumers’ changing food preferences.
Conversely, if it fails catch the imagination of public markets, Beyond Meat could shape the long-term goals propelling entrepreneurs just entering the market through FoodBytes or the exit strategies of investors backing early their financing rounds.
Either way, PE managers would be well served to watch carefully as the plant-based foods market moves beyond its initial stages and likely towards an even greater influence over the agricultural system is seeks to augment.