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CASE 10
Beyond Meat, Inc.
®
Arthur A. Thompson
The University of Alabama
G
oing into 2020, Beyond Meat, a producer
and marketer of plant-based protein products
intended as a substitute for animal-based meat
products, had evolved into one of the fastest growing
food companies in the United States. Company
revenues had increased from $8.8 million in 2015
to $32.6 million in 2017 to $88 million in 2018 to
$298 million in 2019, equal to a compound annual
growth rate of 102 percent. Its portfolio of plant-based
meats had expanded from just plant-based burger
patties to include several varieties of Beyond Sausages,
a Beyond Breakfast Sausage, one-pound packages
of ground Beyond Beef, and two flavors of Beyond
Beef crumbles found on the frozen meat aisle at
supermarkets. The company’s Beyond Chicken frozen
grilled chicken strips, introduced in 2018, generated
only modest customer acceptance and was quietly
discontinued; however, the company immediately
put a team of chefs and scientists to work on getting
a better, tastier version of a Beyond Chicken product
back on retail shelves and restaurant menus. In August
2019 Beyond Meat partnered with KFC, to conduct a
one-day test of new “Beyond Fried Chicken” at a single
Atlanta location. This taste test of what KFC advertised
as “a Kentucky Fried Miracle” attracted so many
customers that the store sold out of the faux chicken
in less than five hours.1 As of May 2020, Beyond Meat
had not introduced a second version of its Beyond
Chicken product.
Beyond Meat’s brand commitment, “Eat What
You Love,” reflected a belief that by eating its plantbased meat offerings, consumers could enjoy more
of their favorite protein dishes while helping address
concerns related to human health, animal welfare,
resource conservation, and climate change. As of
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March 31, 2020, the company’s fresh and frozen
plant-based protein products were being sold at some
94,000 grocery stores, restaurants, hotels, and other
foodservice outlets in more than 65 countries worldwide, up from 77,000 at year-end 2019.
COMPANY BACKGROUND
Beyond Meat was founded in 2009 by Ethan Brown,
and then later incorporated in Delaware in April
2011 under the name “J Green Natural Foods Co.”
In October 2011, the company changed its corporate
name to “Savage River, Inc.,” with “Beyond Meat”
being its “doing business as” name. In September 2018,
the corporate name was changed to “Beyond Meat,
Inc.” Beyond Meat’s principal executive offices were
located in El Segundo, California. Ethan Brown was
President and Chief Executive Officer of Beyond Meat
and had served in this capacity throughout all of the
corporate transitions since the original company was
founded. Brown grew up on a family farm in Maryland
that specialized in dairy operations and became fascinated with animal agriculture, meat-raising practices,
and animal protein consumption. But he also started
to wrestle with a question that continued to nag him for
many years to come: Do we need animals to produce
meat? During the course of his business and industry
career, Brown held a variety of positions in the energy
business that provided him with growing familiarity
about clean energy technologies, the impacts of animal
meat consumption on human health, and the effects of
livestock on greenhouse gas emissions, along with the
related burdens on land, energy, and water.
Copyright ©2021 by Arthur A. Thompson. All rights reserved.
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CASE 10
These experiences expanded his understanding of
animal meat. The key understanding he learned was
that it was not necessary to limit the definition of meat
to just cows, pigs, and poultry; rather, meat could just
as accurately be defined in terms of its composition
and structure—amino acids, lipids, trace minerals,
vitamins, and water woven together in the assembly
of muscle (or meat). None of these core elements of
meat was exclusive to animals; they were abundant in
the plant kingdom. While animals served as a bioreactor, consuming vegetation and water and using their
digestive system to organize these inputs into meat,
it was equally feasible to take the constituent parts of
meat from plants and, together with water, organize
them into the same basic architecture as animal-based
meat, thereby bypassing the need for animals and the
cholesterol associated with consuming animal meat.
Then, as climate change issues moved into the
public spotlight, Brown became increasingly troubled
by studies reporting that the livestock industry was estimated to contribute 18 to 51 percent of global greenhouse gas emissions, depending on the methodology
used. And there were numerous studies in the medical
journals about the adverse impacts of eating red meat on
human health, which heightened his concerns about satisfying his children’s protein requirements totally with
animal meat. In 2009, driven by the health and environmental implications of intensive animal protein production and consumption, Brown decided to found Beyond
Meat and begin the process of producing and marketing
nutritious and good-tasting plant-based meat products.
Brown’s vision for Beyond Meat was to perfectly build a
plant-based meat. Believing that there was a better way
to feed the planet than by relying so heavily on animal
meat, Brown’s mission for Beyond Meat was “to create
The Future of Protein® – delicious plant-based burgers,
beef, sausage, crumbles, and more.”2 The goal was “to
deliver a consumer experience that is indistinguishable
from that provided by animal-based meats.”3 Brown
saw four socially beneficial outcomes associated with
Beyond Meat’s efforts to try to shift a significant portion of the world’s protein requirements from animal to
plant-based meat: improving human health, positively
impacting climate change, addressing global resource
constraints, and improving animal welfare.
Beyond Meat’s Early Successes
To begin the process of learning how to build a delicious tasting plant-based meat, Brown opened the
company’s first operation in a small commercial
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kitchen in Maryland to develop and test recipes for
plant-based meat products using (1) proteins from
peas, mung beans, fava beans, brown rice, and sunflower seeds, (2) various fats (cocoa butter, coconut oil, sunflower oil, and canola oil), (3) such
minerals as calcium, iron, salt, and potassium chloride, and (4) beet juice extract, apple extract, and
assorted other natural flavors. Ethan Brown began
working extensively with two researchers at the
University of Missouri’s Bioengineering and Food
Science Department and faculty and students in the
University of Maryland’s Nutrition & Food Science
Department. Ultimately, the company ultimately
licensed a process developed by the researchers that
combined proteins from plants into a basic structure
resembling animal muscle, or meat, and used this
as an initial foundation for Beyond Meat products.4
With this basic protein platform and an understanding that the balance of parts of meat, namely lipids,
trace minerals, and water, were also present in abundance outside the animal, it became clear that with
appropriate resources, building meat from plants was
indeed possible.
The young company began selling an early plantbased product to Whole Foods Markets in the MidAtlantic region. It quickly discovered that traditional
veggie burgers and soy-based meat had limited appeal
to traditional meat eaters, who commonly criticized
their inferior taste.5 Its own market research with
consumers revealed that, when choosing among
plant-based meat options, taste was definitely the single most important product attribute for plant-based
foods. Legacy vegetarian brands typically aimed to
compensate for poor taste appeal by positioning their
products as a noble sacrifice—something consumers
should do for the benefit of their health, the environment, and/or animal welfare.
A “The Future of Protein” marketing campaign
was launched in the summer of 2015.6 The goal
was to mobilize brand ambassadors to help raise
brand awareness and make Beyond Meat products
aspirational. A joint announcement with Leonardo
DiCaprio about his becoming a Beyond Meat
brand ambassador in October 2017 generated over
378 million earned media impressions, including a
viral video that drew more than 8.5 million views.
Beyond Meat launched its flagship Beyond Burger
in 2016 and used an unprecedented marketing approach
for a vegetarian meat product.7 Instead of marketing
and merchandising The Beyond Burger to vegans and
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PART 2
Cases in Crafting and Executing Strategy
vegetarians (who represented less than five percent
of the population in the United States), the company
requested that the product be sold in the meat case at
grocery retailers where meat-loving consumers were
accustomed to shopping for center-of-plate proteins.
In May 2016, the Rocky Mountain Division of Whole
Foods Market became the first grocery chain to place
The Beyond Burger in its meat section alongside animal-based equivalents; soon other Whole Foods Market
regions followed. In April 2017, Safeway of Northern
California and several Kroger divisions began to do the
same. In the Southern California division of Ralph’s, a
Kroger subsidiary, The Beyond Burger was the number
one selling packaged burger patty by unit in the meat
case for the 12-week period ending August 4, 2018.
Marketing personnel at Beyond Meat believed merchandising in the meat case in the retail channel had
helped drive greater brand awareness with consumers.
During 2017–2019, many restaurant, hotel, and
other foodservice customers choose to prominently
feature the Beyond Meat/Beyond Burger name on their
menu and within item descriptions, in addition to displaying Beyond Meat branded signage. Beyond Meat
used its sales to foodservice businesses as a form of
paid trial for its products to help drive additional retail
demand and create greater brand awareness for Beyond
Meat through the on-menu and in-store publicity it
received.8 Top executives believed that Beyond Meat
had established its brand as one with “halo” benefits
to its partners as evidenced by the speed of adoption by
key partners. For example, Beyond Meat was the fastest
new-product launch in the history of TGI Friday’s and
A&W Canada (more than 90,000 patties were sold in
the first three days). In January 2018, A&W conducted
concept and focus group testing to gauge consumers’
appetite for The Beyond Burger. The results of the consumer testing were very positive, indicating that the concept of a plant-based burger that tasted like real meat,
but without its health baggage, held strong appeal. In
the taste testing, Beyond Meat’s burger received high
marks from surprised consumers. A&W CEO, Susan
Senecal commented, “We were blown away by the flavor and taste and delicious ‘burgerness’ of Beyond.”9
On the strength of these results and reports from store
managers that guest counts were up, A&W Canada
began investing significant amounts of money across
television, digital media and press to promote the addition of The Beyond Burger to its menu.
By late 2018, the Beyond Burger was being merchandised in approximately 17,000 supermarkets and
retail groceries across the United States, and food
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service distributors were delivering the Beyond Burger
to approximately 11,000 restaurant and foodservice
outlets in the United States. The Beyond Burger
launched in Europe in August 2018 through contracts
with three major distributors, with strong expressions
of interest from some of Europe’s largest grocery
and restaurant chains. Beyond Meat’s revenues from
international markets (excluding Canada) represented
13 percent of net revenues in the first half of 2019,
up from 2 percent in the first half of 2018. The company expected to begin production of its plant-based
products in Europe in 2020 at a new co-manufacturing
facility constructed in the Netherlands by Zandbergen
World’s Finest Meat. In 2018, Zandbergen started distributing Beyond Meat’s products throughout Europe
across both foodservice and retail grocery channels.
For several years, Beyond Meat had maintained a presence and generated brand awareness in Asia through a
local distributor in Hong Kong. Further expansion in
Asia was expected in 2020 and beyond.
Throughout 2017–18 and continuing into 2019,
Beyond Meat relied primarily on its growing number of
brand ambassadors (celebrities and influencers), free
sampling of its products from food trucks at over 300 special events, a digital newsletter (with over 200,000 subscribers as of Sept 2018), visits to the company’s website,
strong social marketing, and consumer word-of-mouth as
the cornerstones of a campaign to promote greater consumer awareness of the Beyond Meat brand name. As of
Spring 2019, the company’s website had drawn approximately 5 million visitors; the website featured packages
of the company’s products, provided information on
where they could be purchased, highlighted nutritional
facts and news about the company, and offered an assortment of recipes for using the products.
Meanwhile, Beyond Meat continued to invest heavily in research, development, and innovation—spending about 10.9 percent of net revenue of R&D in fiscal
year 2019 and 6.9 percent in fiscal 2019.10 In 2018,
the company opened its state-of-the-art 30,000 squarefoot Manhattan Beach Project Innovation Center as a
part of its world headquarters complex in El Segundo,
California. The Innovation Center included 5 laboratories, a pilot plant, and a test kitchen, staffed with a
team of scientists, engineers, and cooking specialists
focused on improving the company’s existing products
and developing new products that better replicated the
sensory experience of animal meats—from the look of
the package to the sizzle on grills and in skillets, and
the satisfaction of eating one of the company’s products. A second-version plant-based chicken product
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CASE 10
was the top new product priority following the market
testing at the Atlanta KFC unit in August 2019.
As of 2018, Beyond Meat operated approximately
100,000 square feet of production space in two
facilities in Columbia, Missouri, where it manufactured
the woven protein that was the key ingredient of its
products. This woven protein was then converted
according to the company’s proprietary formulas
and specifications into a packaged product, either at
the facilities in Columbia, Missouri, or by a network
of co-manufacturers. All third-party co-manufacturers
signed non-disclosure agreements to ensure that
Beyond Meat’s proprietary intellectual property and
trade secrets were protected. Management believed that
the partnering with co-manufacturers (who produced
Beyond Meat products in facilities alongside their own
products) was a capital efficient production model that
allowed Beyond Meat to scale production more quickly
and cost-effectively to supply the rapidly increasing
demand for its products. Plans called for the company
to continue expanding its internal production facilities
domestically and abroad to produce the needed volume
of woven protein while forming additional strategic
relationships with co-manufacturers to complete the
production of the items comprising Beyond Meat’s
product line.
In 2018, the United Nations officially called attention to the trailblazing accomplishments of Beyond
Meat and Ethan Brown, awarding them its highest
environmental accolade, “Champion of the Earth.”
Beyond Meat Becomes
a Public Company
Shortly after the corporate name change to Beyond
Meat in September 2018, the company filed Form
S-1 with the Securities and Exchange Commission
EXHIBIT 1
Beyond Meat, Inc.
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in November 2018 seeking approval to conduct an
initial public offering of its common stock. On May
1, 2019, the company announced (1) the pricing
of its initial public offering of 9,625,000 shares of
common stock at a price to the public of $25.00 per
share and (2) the company’s decision to grant the underwriters a 30-day option to purchase up to 1,443,750 additional shares of common stock to cover over-allotments,
if any, at the initial public offering price less underwriting
discounts and commissions. Beyond Meat shares began
trading on the Nasdaq Global Select Market on May 2,
2019, under the ticker symbol “BYND.” The opening
trade for the stock was $46.00 and trading on the first
day closed at $65.75, 163 percent above the IPO price.
Buoyed by investor enthusiasm over the company’s longterm prospects, the stock price climbed steadily higher
in the ensuing weeks and months, reaching a peak of
$234.90 on July 22, 2019. Various analysts estimated that
the market for plant-based protein products could reach
$85 billion in sales by 2030. But investor excitement and
aggressive buying of Beyond Meat stock started cooling
off as scrappy rival Impossible Foods announced major
new grocery and restaurant chain customers for its plantbased Impossible Burger and as major meat producers
Tyson Foods, Smithfield Foods, Perdue Farms, Nestlé,
Hormel Foods, and Maple Leaf Foods all announced
introductions of variously-formulated plant-based meat
alternatives and began shipping an array of plant-based
burgers, ground meat, sausage, and chicken products to
their supermarket customers for display in both fresh
and frozen meat sections. By late October 2019, Beyond
Meat’s stock price had plummeted to the low 80s and by
December 2019 was trading in the mid-70s.
Exhibit 1 shows the rapid growth of Beyond
Meat’s quarterly revenues from 2017 forward to Q2
of 2020. Exhibit 2 shows the company’s recent financial performance.
Beyond Meat’s Quarterly Net Revenues, 2017 through Q2 2020
2017
2018
2019
2020
Quarter 1
$ 6.2 million
$12.8 million
$ 40.2 million
$ 97.1 million
Quarter 2
$ 5.6 million
$17.4 million
$ 67.3 million
$113.3 million
Quarter 3
$ 9.4 million
$26.3 million
$ 92.0 million
Quarter 4
$11.5 million
$31.5 million
$ 98.5 million
Annual Total
$32.7 million
$88.0 million
$297.9 million
Sources: Presentation at Barclay’s Global Consumer Staples Conference, September 5, 2019, posted in the Investor Relations section at
www.beyondmeat.com, accessed December 10, 2019; company press release, February 27, 2020; and company press release, May 5, 2020.
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EXHIBIT 2
Cases in Crafting and Executing Strategy
Selected Financial Data for Beyond Meat, 2016–2019 (in thousands)
Years Ended December 31
Selected Income Statement Data
2016
2017
2018
2019
$16,182
22,494
(6,312)
5,782
12,672
----18,454
(24,766)
$32,581
34,772
(2,191)
5,722
17,143
3,509
26,374
(28,565)
$87,934
70,360
17,574
9,587
34,461
1,515
45,563
(27,989)
$297,897
198,141
99,756
20,650
74,726
4,869
100,245
(489)
(380)
(1,002)
---(380)
(25,146)
3
$(25,149)
6,850
(812)
(1,814)
(30,379)
5
$(30,384)
8,186
(1,128)
(1,120)
352
(1,896)
(29,885)
1
$(29,886)
6,287
(3,071)
(12,503)
3,629
(11,945)
(12,434)
9
$(12,443)
42,275
Selected Balance Sheet Data
Cash and cash equivalents
Inventory
Total current assets
Property, plant, and equipment, net
Total assets
Total current liabilities
Total long-term liabilities
$16,998
6,185
24,499
10,277
34,935
5,134
2,570
$39,035
8,144
51,969
14,188
66,463
12,150
2,032
$54,271
30,257
102,826
30,527
133,749
25,167
20,136
$275,988
81,596
403,594
47,474
451,923
47,697
30,792
Total stockholders’ equity (deficit)
$(66,573)
$(95,913)
$(121,750)
$384,090
Selected Cash Flow Data
Cash flows (used in) provided by operating activities
Capital expenditures
Net cash provided by financing activities
$(23,495)
4,955
31,914
$(25,273)
7,908
55,425
$(37,721)
22,228
76,199
$(46,995)
23,795
294,876
Net Revenues
Cost of goods sold
Gross profit (loss)
Research and development
Selling, general, and administrative expenses
Restructuring expenses
Total operating expenses
Profit (loss) from operations
Other income (expense), net
Interest expense
Remeasurement of warrant liability
Other, net
Total other (income) expense, net
Loss before taxes
Income tax (benefit) expense
Net profit (loss)
Weighted average shares of common stock
outstanding
Sources: Beyond Meat, Form S-1, November 16, 2018, pp. F3–F8; Company 10-K Report, 2019.
BEYOND MEAT’S STRATEGY
During 2016–2019, Beyond Meat’s revenue growth
was driven largely by two factors: expanding its
lineup of plant-based protein products and securing additional retail grocery customers to stock and
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merchandise its products and additional foodservice
firms (chiefly restaurants) to include its Beyond
Meat burgers on their menus. The company’s plantbased burger patties had been its best-selling product
since they were first introduced in 2016; there were
two 4-ounce patties per package, and the typical
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CASE 10
retail price was about $5.99. A marbled, meatiertasting burger patty was introduced in June 2019,
replacing two earlier versions. Starting in 2020 eightpatty packages were available for $14.99. The company’s second biggest seller was Beyond Sausage,
introduced in 2018, which was available in two
varieties, Bratwurst and Italian; four-link packages
were normally priced at $8.99. Frozen Beyond Beef
Crumbles, available in two flavors—Beefy and Feisty,
became widely available in early 2018 and retailed
for about $5.99 per 10-ounce package; these crumbles could be used in chili, tacos, spaghetti, lasagna,
pizza toppings, and other recipes calling for ground
meat. In mid-2019, the company introduced a onepound plastic-sealed package of ground plant-based
beef that could be used in any ground beef recipe,
including chili, spaghetti sauce, meatballs, burgers,
and tacos. This product was very similar in appearance to the branded one-pound ground beef packages found in the fresh meat cases at supermarkets
and grocery stores. The company’s Beyond Breakfast
Sausage patties began hitting retail grocery shelves in
March 2020. Beyond Meat’s next-version plant-based
chicken product was expected to be introduced sometime in 2020.
Growth Strategy
Going into 2020, Beyond Meat executives believed
there was significant opportunity to expand beyond
the company’s current market footprint in the retail
grocery and foodservice channels, both domestically and internationally. As of March 31, 2020, the
company had secured 94,000 points of distribution
worldwide, including 25,000 stores in the grocery
channel across the United States, 34,000 foodservice
outlets (chiefly restaurants), in the United States,
and 18,000 outlets in the international retail grocery
channel, and 17,000 international foodservice outlets. Major supermarket chains marketing Beyond
Meat products in 2019–2020 included Kroger/City
Market, Albertson’s, Publix, Whole Foods Market,
Target, Walmart, Costco, Giant, Hannaford, Stop
& Shop, Safeway, Harris Teeter, Natural Grocers,
Jewel-Osco, Food Lion, Ralph’s, Wegmans, Sprouts
Farmer’s Market, The Fresh Market, Mariano’s,
Loblaws, and Sobeys. Restaurant and foodservice
outlets offering Beyond Meat products in North
America included Denny’s, Dunkin Brands, Subway,
Del Taco, Carl’s Jr. (approximately 1,100 units),
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TGI Friday’s, BurgerFi, Tim Horton’s, Chronic
Tacos, Hello Fresh, Bareburger, WhiteSpot, A&W,
Cinemark Theaters, Disney World, Marriott and
Hilton hotels, and foodservice distributor Sysco. The
company was aggressively developing more relationships with international partners; current customers
included grocery chains Tesco (Great Britain and 6
other countries in Central Europe and Asia), Kesko
(Finland), Edeka (Germany), Lidl (28 European
countries), Albert (Netherlands), Coles (Australia),
and Ahold Delhaize (Netherlands, Belgium, 5 other
European countries, Greece, Indonesia).
McDonald’s Begins Experimenting with Plant-Based
Burgers Starting in 2017, McDonald’s began offering McVegan® burgers, a soy-based sandwich created with Swedish vegan food company Anamma,
at its restaurants in Sweden and Finland; in these
two countries, vegetarianism was well entrenched, as
many consumers shunned meat due to high prices
and concerns about climate change. In April 2019,
McDonalds introduced a Big Vegan® burger, a soy
and wheat patty colored with beet juice, intended
as a permanent addition to its menu offerings, at all
1,500 locations in Germany. The Big Vegan utilized
a plant-based “Incredible Burger” made by Nestlé,
the world’s largest food and beverage company, headquartered in Switzerland.
In late September 2019, in collaboration with
Beyond Meat, McDonald’s began a test run of a plantbased burger called the Beyond Meat P.L.T., short for
plant, lettuce, and tomato, at 28 Canada locations;
McDonald’s described the P.L.T. as “juicy, delicious,
perfectly dressed;” it contained no artificial colors,
flavors, or preservatives. Beyond Meat’s CEO and
Founder, Ethan Brown, said in a statement: “Being of
service to McDonald’s has been a central and defining goal of mine since founding Beyond Meat over a
decade ago. It comes after a long and productive collaboration to make a delicious plant-based patty that
fits seamlessly into McDonald’s menu. . . .”11
In January 2020, McDonald’s expanded its
test run of the P.L.T. to 52 Canadian locations for a
12-week period starting January 14, 2020. Industry
observers believed this more extensive market test
would provide management with a clearer picture of
whether the addition of a Beyond Meat plant-based
burger to its menu offering would catch on sufficiently with customers to increase store traffic and
drive sales growth. McDonald’s announcement of
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the expanded test with Beyond Meat prompted management at rival Impossible Foods to discontinue
efforts to persuade McDonald’s to conduct a market
trial of its plant-based Impossible Burger. News of
the bigger test also prompted investors to bid up the
price of Beyond Meat common stock by 25 percent.
In late January 2020, Denny’s Corp. announced
it would give away free Beyond Meat Burgers,
dressed with sliced tomatoes, lettuce, onions, pickles, All-American sauce, and American cheese on a
multi-grain bun, with the purchase of any beverage
on January 30 from 11am to 10pm while supplies
lasted. The promotion, following on the heels of a
highly successful market test of the Beyond Burger
in Denny’s restaurants in Los Angeles, served to
launch the Beyond Burger menu item nationwide at
all 1,700-plus Denny’s locations in the United States
and Canada. Denny’s announcement triggered a rush
on the part of investors to purchase Beyond Meat
shares, driving the stock price up another 8 percent
to $129 per share.
In April 2020, Starbucks debuted a new menu
in its 4,200 stores in China that included Beyond
Meat’s plant-based beef products in pasta and lasagna selections.
Distribution Strategy
Meat was the largest category in food. The size
of the global meat category was estimated to be
$1.4 trillion in 2019; the estimated size of the market
for meat in the United States was $270 billion. The
most common sources of meat were domesticated
animal species such as cattle, pigs, poultry, and, to
a lesser extent, buffaloes, sheep, and goats. In some
regions of the world, other animal species such as
camels, yaks, horses, ostriches and game animals,
crocodiles, snakes, and lizards were also eaten as
meat. Pork was the most widely eaten meat in the
world accounting for roughly 36 percent of the world
meat intake, followed by poultry and beef with about
35 percent and 22 percent respectively.12
Because the market for meat was so large,
company executives saw ample room for Beyond Meat
to become and remain the major disruptor in the
meat category worldwide for some years to come. To
achieve this role as a major disruptor and change agent
in the market for meat, it was essential for Beyond
Meat to sustain its efforts and successes in securing
additional distribution points in the North American
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and international grocery and foodservice channels in
2020 and beyond. However, because the United States
had the highest level of animal meat consumption
per person of any country in the world, management
considered the United States as the company’s core
target market from a geographical standpoint and
believed that over time plant-based meats could
become a $35 billion food category.13 Market research
firm CFRA forecasted that the global alternative meat
industry would grow to $100 billion in sales by 2030,
up from about $19 billion in 2018.14 As of October
2019, analysts had estimated that sales of plant-based
meat products in the United States were only about
$2.4 billion.
In the grocery channel, Beyond Meat’s strategic
objective was to capitalize on the company’s success
as the first plant-based protein offering in supermarket meat cases not only by growing the number of
grocery stores carrying Beyond Meat’s products but
also by (1) adding more plant-based meat products
to its offerings in supermarket fresh and frozen meat
cases and (2) helping drive increases in the overall
size of the plant-based protein category, as more consumers shifted their diets away from animal-based
proteins. At the same time, it was strategically important for Beyond Meat to further disrupt the meat
offerings in the restaurant channel by getting its products on more restaurant menus across an ever wider
geographic area and in more dishes on these menus.
This meant devoting more resources to outcompeting
rival Impossible Meats and other new entrants in the
plant-based meat category in convincing restaurants
to use its branded products in their plant-based meat
offerings rather than the brands of other makers of
plant-based meats.
Growing penetration of the foodservice channel was yet another component of Beyond Meat’s
strategy; this channel included food distributors who
supplied food products to the food operations at hospitals, schools, hotels, entertainment and hospitality
vendors, country clubs, banquet facilities, sporting
events, and other such venues where food was served.
In 2019–20, having received significant interest from
several prominent foodservice enterprises, Beyond
Meat was aggressively working to expand its distribution through foodservice enterprises and food distributors in a number of different geographic locations
across the world, particularly Europe, Australia, New
Zealand, Israel, South Korea, Taiwan, South Africa,
and parts of the Middle East.
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The company had recently increased its staffing
of experienced employees in sales and marketing to
achieve its distribution objectives in the grocery and
foodservice channels.
Shipping Retail products sold in the grocery fresh
meat sections as part of Beyond Meat’s “fresh”
platform, such as The Beyond Burger and Beyond
Sausage, were shipped to the customer frozen.
Foodservice customers were provided instructions
on ‘slacking,’ which was typically done by moving frozen products to a refrigerator to allow them to slowly
and safely thaw before being cooked. Retail grocery
stores merchandising burgers and sausage in refrigerated fresh meat cases had to apply a “use by date”
sticker of seven days for Beyond Sausage or ten days
for The Beyond Burger. In addition to or as a substitute for their fresh meat displays of Beyond Meat
products, some supermarkets and smaller groceries sold Beyond Burger patties and Beyond Sausage
products in their frozen meat cases alongside various
branded packages of frozen chicken and animal meat
patties; this was done partly (sometimes mainly) to
avoid spoilage losses of unsold products—the frozen
versions required no use-by dates.
R&D Strategy
Beyond Meat had invested significant resources in
building its capabilities to develop plant-based meat
alternatives to popular animal-based meat products.
In 2020, the company’s innovation team consisted of
about 40 scientists from such disciplines as chemistry, biology, materials, food science, and biophysics
who collaborated with process engineers and culinary specialists in developing and testing improved
versions of existing products with better taste, texture, and aroma and also discovering ways to make
new plant-based meat products. New learning about
taste, texture, and aroma for one product was quickly
applied to the formulations of other existing product
offerings and tested for use in new products under
development. In addition, the innovation team
devoted time and effort to exploring and testing the
use of additional plant protein options, searching
for ingredients that could be sourced more easily or
more cheaply than current plant ingredients and that
would retain and build upon the quality and appeal
of current product offerings. The company sourced
plant ingredients from a variety of vendors, but was
heavily dependent on a single supplier, Roquette
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America, for the pea protein that was the main ingredient in all of its products.15
Since opening the new 30,000 square foot
Manhattan Beach Project Innovation Center in El
Segundo, California, which was ten times the size
of the company’s previous lab space, Beyond Meat
has increased its pipeline of products and product
improvements in development and become more
proficient in shortening the time it took to transition its laboratory findings, test kitchen results, and
pilot plant operations into scaled production. As the
company’s knowledge and expertise had deepened,
its pace of innovation had accelerated, allowing for
reduced time between new product launches. After
taking multiple years to develop the first Beyond
Burger, it took less than a year to develop a second
version with improved taste, texture and aroma attributes and still fewer months to develop an even better third version. Management expected that this
faster pace of product introductions and meaningful
enhancements to existing products would continue
as ongoing R&D efforts at the Manhattan Beach
Innovation Center strengthened the company’s innovation capabilities.
Production Strategy
The core of Beyond Meat’s production strategy was
to invest in state-of-the art domestic and international
production facilities and expand the capacity of these
as needed to supply all of the company’s requirements for woven protein, the principal ingredient of
its plant-based products. Self-manufacture of woven
protein allowed the company to keep the details of
its manufacturing process for woven protein proprietary, thereby making it harder for rival makers of
plant-based protein products to replicate the meat-like
texture of Beyond Meat’s products. The remainder of
the manufacturing process was done by partnering
with “co-manufacturers” to complete the production
process in facilities they operated. While the company
completed the manufacture of Beyond Burger patties
that it sold to the foodservice channel at its production
facilities in Columbia, it depended on its co-manufacturing partners to complete the production process
for Beyond Burger patties sold through retail grocery
channels and for all of its other products at facilities
operated by the co-manufacturers. All third-party comanufacturers signed non-disclosure agreements to
ensure that Beyond Meat’s proprietary intellectual
property and trade secrets were protected.
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In the first quarter of 2019, Beyond Meat’s internal monthly production capacity was triple what
it had been in the second quarter of 2018. Further
increases in production capacity occurred in the
remainder of 2019 and in early 2020. The company had ongoing efforts underway to evaluate and
improve the company’s supply chain processes for
woven protein and to collaborate closely with the
growing number of its co-manufacturing partners
to increase manufacturing efficiencies and product
quality, while reducing overall production costs.
Beyond Meat’s manufacturing process for woven
protein is displayed in Exhibit 3. A dry blend containing pea protein was mixed in the company’s manufacturing facility in Columbia, Missouri. The dry blend
then entered an extruder, where both water and
steam were added. A combination of heating, cooling, and variations of pressure were used to weave
together the pea protein into formed woven protein,
which was used as the basis for all of the company’s
products.
The formed woven protein not used to produce
Beyond Meat patties for foodservice customers in
North America was then cut into smaller pieces to
expedite the freezing process, and the frozen woven
protein was shipped via third-party logistic providers to cold storage facilities or directly to production
facilities operated by the company’s co-manufacturers. At a co-manufacturer’s production facility,
thawed woven protein was further processed by adding other ingredients and flavorings, after which the
final product was packaged and then shipped frozen
to retail grocery stores and foodservice distributors.
To control the quality of its products throughout the
production process, the company utilized a type of
Six Sigma quality control process called DMAIC
EXHIBIT 3
(short for “define, measure, analyze, improve and
control”) that served to “improve, optimize, and stabilize” its product formulation and production processes. In-process quality checks were performed
throughout the manufacturing process, including temperature, physical dimension, and weight.
Specific instructions were provided to foodservice
vendors and restaurants for storing and cooking the
company’s products. Cooking instructions for frozen Beyond Beef Crumbles, which were intended
to be prepared from their frozen state, were on the
packaging.
Supply Chain Practices
Raw Material Procurement Beyond Meat’s products had about 20 ingredients (the Beyond Beef
burger had 22)—these included pea protein isolate,
canola oil, coconut oil, amino acids, lipids, trace
minerals, vitamins, salt, methylcellulose (a binding
agent), and assorted flavorings. The company procured raw materials for woven protein that were readily available from a number of different suppliers,
except for pea protein, which in the United States as
of 2018 was available only from a single supplier. A
second supplier in Canada supplied yellow peas for
Beyond Beef Crumbles.
All flavorings in the company’s products were
developed at the company’s Innovation Center in
collaboration with the suppliers chosen to produce
the flavors, and all these flavorings were produced
exclusively for use by Beyond Meat. Flavoring ingredients considered for use were qualified through
trials at Beyond Meat’s Innovation Center to ensure
manufacturability. The Innovation Center staff, using
only ingredients deemed manufacturable, created a
Beyond Meat’s Manufacturing Process
Beyond Meat manufacturing facilities
Cutting and
Freezing
Extrusion
Dry
Blend
Primarily co-manufacturing facilities
Woven
Protein
Frozen
Woven
Protein
Processing and
Packaging
Finished
Product
Source: Beyond Meat, Form S-1, November 16, 2018, p. 92.
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number of alternative formulas for each of the flavors being considered for use in one or more products. Each formula was extensively tested to identify
the specific flavoring formula and the specific combination of flavorings that best impacted the final
product’s taste, texture, and appearance. While supplies of each ingredient in a flavoring were obtained
directly by the supplier producing a specific flavoring for Beyond Meat, as new ingredient shipments
arrived at a flavoring supplier’s production facilities,
the supplier was required to submit a Certificate of
Analysis to Beyond Meat to confirm that the ingredient quality and flavoring formula used in production
runs met the quality control standards previously
established at the Innovation Center.
Shipping Retail products sold in grocery store meat
cases as part of Beyond Meat’s “fresh” platform,
such as The Beyond Burger and Beyond Sausage,
were shipped to the customer frozen. Retail grocery
stores merchandising burgers and sausage in refrigerated fresh meat cases as part of Beyond Meat’s
“fresh” platform had to apply a “use by date” sticker
of seven days for Beyond Sausage or ten days for The
Beyond Burger; at the end of the use-by date, unsold
packages in fresh meat cases had to be discarded. In
addition to or as a substitute for their fresh meat displays of Beyond Meat products, some supermarkets
and smaller groceries kept incoming shipments of
frozen Beyond Burger patties and Beyond Sausage
products in a frozen state and placed the packages
in their frozen meat cases alongside various branded
packages of frozen chicken and animal meat patties;
this was done partly (often mainly) to avoid spoilage
losses of fresh products—the frozen versions required
no use-by dates.
Foodservice customers receiving shipments of
frozen Beyond Meat products were provided instructions on ‘slacking,’ which was typically done by moving frozen packages to a refrigerator to allow them to
slowly and safely thaw before cooking.
Supplier Selection Practices Beyond Meat did not
have long-term supply agreements with most of its suppliers; this included raw materials suppliers, suppliers
making flavorings, and co-­manufacturers. Most all
supplies of raw materials, flavorings, and final products produced and shipped by co-­manufacturers were
obtained on a purchase order basis. Because most
of the ingredients used in its flavorings were readily
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available in the market from many suppliers, the company believed it could obtain needed supplies from
other vendors in the event of supply interruptions
from the ingredient vendors it typically used. It was
the company’s practice to maintain a 20-week supply of flavoring ingredients that would ultimately be
shipped to producers of its flavorings.16
Packaging supplies were sourced in the United
States with the exception of the Beyond Sausage tray
which was sourced from China. The company maintained approximately 10 weeks of inventory of sausage trays to mitigate the risk of supply interruptions.
The trays used for burgers sold through grocery channels were slotted for two 4-ounce patties. Packaging
specifications for all products were clearly defined
and provided to all packaging suppliers.
HEALTH AND
ENVIRONMENTAL IMPACTS
OF ANIMAL-BASED MEAT
CONSUMPTION
Consumer interest in plant-based proteins, particularly among millennials and younger generations,
had been driven in part by growing awareness of the
health and environmental impact of animal-based
meat consumption. The Internet and social media
channels provided consumers with easy access to
voluminous amounts of information about nutrition,
the pros and cons of eating various food products,
climate change, resource scarcity, and the assortment of health and environmental issues surrounding the consumption of animal meats. Management
at Beyond Meat expected heightened global awareness of and concerns about these issues to have a
positive impact on consumer demand for the company’s products.
Health Impacts
The negative impact on health caused by certain
meats has been well publicized in recent years. In
2004, the World Health Organization highlighted
a paper indicating that dietary factors, including
consumption of certain meats, accounted for at least
30 percent of most cancers in developed countries
and up to 20 percent in developing countries. The
WHO had since added processed meats such as hot
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dogs, ham, bacon, and sausage to its Group 1 category
of carcinogens. A similar conclusion was presented at
the American Heart Association, where researchers
conducting a 2017 dietary study of over 15,000 adults
between 2003 and 2013 highlighted that people who
ate mostly a plant-based diet were associated with
a 42 percent reduced risk of developing heart
failure. Additionally, animals and livestock were
also susceptible to various diseases such as Mad
Cow (beef), Swine Flu (pork), and Avian Influenza
(poultry) that may cause further health risks from
consuming potentially infected animal meats. As an
example of the nutritional benefits of plant-based
meats, Beyond Breakfast Sausage patties had 11 grams
of protein per serving with 50 percent less total fat, 35
percent less saturated fat and sodium, and 33 percent
fewer calories than a leading brand of pork sausage
patties, plus it was made without any genetically
modified ingredients, soy, gluten, or artificially
produced ingredients.
Climate Impacts
A number of research studies had indicated that the
global livestock industry was responsible for about
one-third of global methane emissions, with animal
manure accounting for perhaps 10 percent of global
nitrous oxide (carbon dioxide) emissions. According
to a series of reports by the Intergovernmental Panel
on Climate Control (an intergovernmental body of
the United Nations which periodically compiles comprehensive “assessment reports” of published studies concerning climate change, its causes, potential
impacts, and response options), there was mounting
consensus among climate scientists that greenhouse
gas emissions were likely to cause “severe, widespread, and irreversible impacts” on the natural environment unless carbon emissions were rapidly and
sharply reduced.17 Several studies had concluded that
behavioral changes, including such dietary changes
as eating less animal meat, could have a significant
role in cutting carbon emissions.
Environmental Impacts
According to the Food and Agricultural Organization
(FAO) of the United Nations, rising global meat
consumption and livestock production had adverse
impacts on the world’s land and water resources.18
According to the FAO, livestock-raising activities
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occupied 30 percent of the planet’s land surface
and accounted for 78 percent of all agricultural land
use.19 A report by the World Resources Institute
(WRI) indicated that 29 percent of agriculturerelated water use was directly or indirectly used for
animal production.20 The WRI also concluded that
meat consumption was environmentally burdensome from the standpoint of production inputs.
According to the same WRI report, beef was highly
inefficient to produce because only 1 percent of the
feed consumed by cattle was converted to calories
that people consumed from eating beef, while pork
converted approximately 10 percent and poultry
converted approximately 11 percent of their feed
to human-edible calories. During 2017 and 2018,
Beyond Meat engaged the University of Michigan to
conduct a peer-reviewed, third-party-led Life Cycle
Assessment comparing the environmental impacts
associated with producing a quarter-pound Beyond
Burger versus a quarter-pound, standard 80 percent
lean/20 percent fat beef burger.21 The study showed
that compared to the beef burger, The Beyond Burger
generated 90 percent less greenhouse gas emissions,
required 46 percent less energy, had 99 percent less
impact on water scarcity, and 93 percent less impact
on land use.
Animal Welfare
Worldwide, it was estimated in 2017 that about
60–70 billion farm animals were produced for food
annually; with two out of every three being factory farmed.22 Over the past decade, animal welfare groups had publicized a range of investigations
highlighting the issues related to safety, welfare, and
well-being of animals caused by mass livestock production, which Beyond Meat’s management believed
had prompted a consumer shift toward more plantbased alternatives.
COMPETITORS
Beyond Meat operated in a highly competitive environment that included both animal protein suppliers
and plant-based meat suppliers. In North America,
the leading suppliers of fresh meats (beef, pork,
and poultry) and assorted branded meat products
included:
• The world’s largest meat supplier, JBS, a company
headquartered in Brazil whose meat portfolio
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•
•
•
•
•
consisted of Swift® beef and pork products, 19
brands of fresh beef and hamburger, Butterball®
brand turkey, and Pilgrim’s Pride® chicken.
Tyson Foods, a global supplier of meats with 2019
sales of more than $42 billion and a meat portfolio
that consisted of Tyson® fresh and frozen chicken
products, fresh beef and pork, and such meat
brands as Jimmy Dean®, Hillshire Farms®, Ball
Park®, Wright®, Aidells®, IBP®, and State Fair®.
Tyson’s plant-based meat brand, Raised & Rooted,
was available in 7,000 stores as of November
2019. As of early 2020, Tyson’s Raised & Rooted
product line consisted of (1) frozen Nuggets—a
battered chicken-like dish made of pea protein,
bamboo fiber, egg whites, and golden flaxseed
and (2) The Blend—burgers patties blended with
Angus Beef, pea protein, dried egg white solids,
and assorted flavorings and seasonings that were
displayed in grocery fresh meat cases.
China-based WH Group, whose North American
brands included Smithfield pork products,
Eckrich®, Nathan’s®, Farmland®, John Morrell®,
Armour®, Gwaltney®, and Cook’s® hams.
Farmland was marketing its plant-based meat
under the Pure® brand.
Cargill, one of the world’s biggest global suppliers of fresh beef and poultry products with 2019
sales of over $113 billion. In April 2020, Cargill
announced it would begin selling a complete line
of plant-based meat products, including hamburger patties and ground meat. Shortly thereafter, three KFC restaurants in China conducted a
three-day test of a plant-based fried chicken nugget
supplied by Cargill.
Hormel, a well-known company with 2019 sales
of $9.5 billion, whose meat brands included
Hormel® bacon and chili, Applegate® (bacon,
breakfast and dinner sausage, chicken burgers and
strips, hot dogs, frozen beef and turkey burgers),
Jennie-O® turkey, and Columbus® deli meats.
Maple Leaf Foods, a Canadian consumer packaged meat company with 2019 sales of about
$3.5 billion, whose brands included Maple Leaf,
Maple Leaf Prime, Schneiders, Greenfield, Swift,
Field Roast Grain Meat, and Lightlife. Field Roast
and Lightlife specialized in plant-based meat
substitutes. Field Roast’s product offerings were
largely made of wheat and other grains; the main
ingredients in Lightlife’s plant-based burger patties
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and ground meat were pea protein, coconut oil,
and beet powder. Lightlife’s other products were
plant-based chicken nuggets (a menu offering at
all A&W locations in Canada), chicken tenders,
hot dogs, bacon, sausages, and tempeh.
There were significant variations among the
various commonly available types of beef burger
products regarding calorie count, total fat grams,
saturated fat grams, protein grams, cholesterol, milligrams of sodium, carbohydrates, dietary fiber, and
other nutritional measures—see Exhibit 4.
In addition to the above animal-protein
companies, Beyond Meat confronted competition
from a number of plant-based protein brands,
including Kroger’s Simple Truth brand of plant-based
products, Impossible Foods, Boca Foods, Field Roast
Grain Meat Co., Gardein, Lightlife, Morningstar
Farms, and Tofurky. The products of these
companies were commonly available throughout the
supermarket and grocery store channel, including
most national and regional supermarket chains,
specialty grocer Trader Joe’s, such natural foods and
health food chains as Whole Foods, Natural Grocers,
Sprouts Farmer Markets, Fresh Market, and Earth
Fare, plus thousands of mostly local natural/health
food stores.
The different brands of plant-based meat products used soy protein or pea protein or potato protein
or wheat protein, or other grains as the main ingredient; lesser ingredients could include coconut oil,
sunflower oil, canola oil, or some other type of vegetable oil, binding agents (food starch, potato starch,
methylcellulose, xanthan gum), yeast extract, maltodextrin, beet juice extract, salt, water, and a varying
assortment of spices, vitamins (C, B6, B12, niacin,
thiamin, riboflavin), minerals (potassium, iron, zinc,
calcium, phosphorus), and natural flavorings. There
were sometimes significant variations from brandto-brand and product-to-product regarding calorie
count, total fat grams, saturated fat grams, protein
grams, cholesterol, milligrams of sodium, carbohydrates, dietary fiber, and other nutritional measures—
see Exhibit 5, Most plant-based meats had protein
levels comparable to their animal counterparts,
but had lower cholesterol, less saturated fat, higher
dietary fiber, and no antibiotics or hormones. Both
4-ounce plant burger patties and 4-ounce animal
burger patties typically contained about 20 grams of
protein.
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EXHIBIT 4 Comparative Nutrition Facts for Selected Brands of Animal Beef
Burger Patties, February 2020
Grain Fed Beef
80% Lean
Grain Fed Beef
93% Lean
Ground Bison
90% Lean
Grass Fed Beef
85% Lean
Amount per 4-oz.
serving
Amount per 4-oz.
serving
Amount per 4-oz.
serving
Amount per 4-oz.
serving
Calories
Calories
from fat
Total fat 27g
Saturated fat 10g
Trans fat 0g
Cholesterol
95mg
Sodium 90mg
Total
Carbohydrate 0g
Dietary fiber 0g
Sugars 0g
Protein 23g
Vitamin A
Vitamin C
Calcium
Iron
350
240
% of
Daily
Value
42%
52%
0%
32%
4%
0%
0%
0%
46%
0%
0%
2%
15%
Calories
Calories
from fat
Total fat 8%
Saturated fat 3.5g
Trans fat 0g
Cholesterol
70mg
Sodium 75mg
Total
Carbohydrate 0g
Dietary fiber 0g
Sugars
Protein 24g
Vitamin A
Vitamin C
Calcium
Iron
170
70
% of
Daily
Value
12%
17%
0%
24%
3%
0%
0%
48%
0%
0%
2%
15%
Calories
Calories
from fat
Total fat 11g
Saturated fat 4g
Trans fat 0g
Cholesterol
50mg
Sodium 60mg
Total
Carbohydrate 0g
Dietary fiber 0g
Sugars 0g
Protein 23g
Vitamin A
Vitamin C
Calcium
Iron
190
100
% of
Daily
Value
17%
20%
0%
17%
3%
0%
0%
0%
46%
0%
0%
0%
10%
Calories
Calories
from fat
240
Total fat 17g
Saturated fat 7g
Trans fat 1g
Cholesterol
75mg
Sodium 75mg
Total
Carbohydrate 0g
Dietary fiber 0g
Sugars 0g
Protein 21g
Vitamin A
Vitamin C
Calcium
Iron
150
% of
Daily
Value
26%
33%
--26%
3%
0%
0%
0%
42%
0%
0%
2%
15%
Source: Brand labels.
Competition revolved around a host of factors:
• Taste, meat-like appearance, and texture
• Ingredients (being gluten-free and avoiding use of
•
•
•
•
genetically modified ingredients) and nutritional
profile (protein, carbohydrates, sugar, and fiber)
Distribution capabilities (being able to secure a
strong presence in both the retail grocery channel
and the restaurant/foodservice channels, including favorable shelf and display locations in the
grocery channel and menu offerings in the restaurant/foodservice channel
Breadth of product offerings
Competitive production costs and product prices
Brand awareness and customer loyalty.
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• Advertising/media spending
• Ability to secure intellectual property protection
on products (to aid in blocking rivals’ efforts to
produce and market copycat products)
While Beyond Meat and other companies offering plant-based meat products were alert to all of
these competitive elements, most all companies
in the animal meat sector had substantially greater
financial resources, more comprehensive product
lines, broader market presence, longer standing
relationships with distributors and suppliers, longer
operating histories, greater production and distribution capabilities, stronger brand recognition, and
greater marketing resources than any plant-based
meat company.
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EXHIBIT 5 Comparative Nutrition Facts for Selected Brands of Plant-Based
Burger Patties, February 2020
Beyond Meat
Impossible Foods
Amount per 4-oz. serving
Amount per 4-oz. serving
Amount per 4-oz. serving
Amount per 4-oz. serving
Calories
250
Calories
250
Calories
Calories
230
Calories from fat
160
% of
Daily
Value
28%
30%
0%
0%
16%
1%
Calories from fat
160
% of
Daily
Value
28%
30%
0%
0%
16%
Calories from fat
Calories from fat
160
% of
Daily
Value
16%
45%
0%
0%
17%
2%
Total fat 18g
Saturated fat 6g
Trans fat 0g
Cholesterol 0mg
Sodium 390mg
Total
Carbohydrate 3g
Dietary fiber 2g
Sugars 0g
Protein 20g
Vitamin A
Vitamin C
Calcium
Iron
8%
40%
0%
0%
8%
25%
Total fat
Saturated fat 6g
Trans fat 0g
Cholesterol 0mg
Sodium 390mg
Total
Carbohydrate 3g
Dietary fiber 2g
Sugars
Protein
Vitamin A
Vitamin C
Calcium
Iron
Pure Foods
Total fat 18g
Saturated fat 12g
Trans fat 0g
Cholesterol 0mg
Sodium 600mg
Total
Carbohydrate 8g
Dietary fiber 2g
Sugars 0g
Protein 14g
Vitamin D 0mcg
Potassium 374mg
Calcium 192mg
Iron 2mg
Kroger Simple Truth
240
% of
Daily
Value
24%
60%
0%
0%
26%
2%
8
0%
26%
0%
8%
16%
12%
Total fat 14g
Saturated fat 9g
Trans fat 0g
Cholesterol 0mg
Sodium 390mg
Total
Carbohydrate 6g
Dietary fiber 0g
Sugars 0g
Protein 20g
Vitamin A
Potassium 136mg
Calcium 41mg
Iron6 mg
0%
0%
26%
2%
35%
Source: Brand labels.
Kroger’s Simple Truth Product Line. In January
2020, Kroger—one of the world’s largest foot retailers
with 2019 sales of about $125 billion—announced the
launch of its Simple Truth® Emerge™: Plant Based
Fresh Meats. Kroger’s Simple Truth brand was the
best-selling brand in the natural and organic foods
category, and its Emerge-branded entry into plantbased meats was aimed at offering its 11 million daily
customers fresh burger patties and grinds at more
affordable prices.23 Emerge patties and grinds contained 20 grams of pea-based protein per serving,
and packages were located in the refrigerated meat
cases alongside other plant-based and animal meat
brands. Going into 2020, Kroger operated almost
2,800 supermarkets in 35 states ’under such brands
as Kroger, City Market, Fred Meyer, Harris Teeter,
King Soupers, Ralph’s, Roundy’s, Pick’n Save, Metro
Market, and Mariano’s Fresh Market. Kroger also
operated 36 food manufacturing plants, principally
to produce its private-label products.
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Kroger anticipated that consumer interest in
plant-based products would continue to grow in
2020 and beyond. The entire Simple Truth portfolio already included more than 1,550 natural
and organic products and were located throughout
Kroger grocery aisles, with new items launching
monthly. Kroger expected to launch 50 additional
Simple Truth plant based products in 2020 to grow
sales of its Simple Truth brand, which exceeded
$2.3 billion in sales in 2019.
Analysts expected that Kroger’s entry into the
plant-based meat segment would likely stimulate
Whole Foods, Trader Joe’s, and other major supermarket chains to follow Kroger’s lead and introduce
their own private label brands of plant-based meat
alternatives.
Impossible Foods. Founded in 2011 by current
CEO Pat Brown, Impossible Foods had an ambitious mission: “To drastically reduce humanity’s
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destructive impact on the global environment by
completely replacing the use of animals as a food
production technology.”24 The company hoped to
accomplish this mission within two decades by creating the world’s most delicious, nutritious, affordable
and sustainable meat, fish, and dairy foods directly
from plants.
Going into 2020, Impossible Foods, whose main
product was the Impossible Burger, had gained brand
awareness by convincing some 15,000 restaurants
to put its Impossible Burger on their menus, and
by recently securing distribution of its burgers and
crumbles in growing numbers of supermarkets,
grocery stores, and natural food stores. In August
2019, after running market tests in several units,
Burger King added the Impossible Whopper to its
menu offering at all of its 7,200 Burger King locations
in the United States and was featuring the Impossible
Whopper in some of its national TV ads (including
ads run during NFL games). The Impossible
Whopper included everything that came on a regular
Whopper: a quarter-pound patty, tomatoes, lettuce,
mayonnaise, ketchup, pickles, and white onions on
a sesame seed bun. Instead of a flame-grilled beef
patty, the Impossible Whopper had a flame-grilled
Impossible Burger patty consisting principally
of a unique ingredient called soy leghemoglobin
that made Impossible burgers taste so meat-like.
Leghemoglobin was a protein found in many plants
and it carried an iron-rich molecule called heme that
during the cooking process caused the Impossible
Burger to “bleed” and take on the product’s signature
blood-red color. The patties that Impossible Foods
supplied to Burger King were based on the company’s
new 2.0 formulation that was announced in January
2019.25 Among other upgrades, this formulation
worked well in restaurant environments because
version 2.0 burgers held up well in hot holding
trays and could withstand the 6-inch drop at the
end of Burger King’s conveyor that grilled the patty
for exactly 2 minutes , 35 seconds at 630 degrees
Fahrenheit. The Impossible Whopper was usually
priced $1 more than the regular Whopper.
In January 2020 Burger King introduced a
new Impossible Sausage Croissan’wich to its breakfast menu offerings at 139 Burger King restaurants
in five test locations: Savannah, Georgia; Lansing,
Michigan; Springfield, Illinois; Albuquerque,
New Mexico; and Montgomery, Alabama.26 The
croissan’wich featured an egg, cheese, and Impossible
tho35176_case10_C124-C139.indd
138
Sausage patty sandwiched in a toasted croissant. A
raw ­two-ounce serving of Impossible Sausage had
7g protein, 1.69mg iron, 0mg cholesterol, 9g total
fat, 4g saturated fat, and 130 calories. It was also
gluten-free and designed to be both halal and kosher.
Concurrent with Burger King’s announcement,
Impossible Foods announced its official launch of
Impossible Sausage for distribution through retail
grocery and foodservice/restaurants channels. In
2019, Impossible Foods had collaborated with Little
Caesar’s to test its new Impossible Pork product as a
pizza topping. Impossible Pork was suitable for use
in a wider assortment of applications and recipes
for ground pork as compared to Impossible Sausage.
Pork was especially popular in China, making
Impossible Pork an important product for the company’s global expansion. Like the Impossible Burger,
both Impossible Pork and Impossible Sausage used
soy leghemoglobin, a plant-based protein carrying
the heme iron molecule that produced the bleeding
effect, as their main ingredient. Both products were
gluten free, had no animal hormones or antibiotics,
and were designed for halal and kosher certification.
While burgers were an iconic part of the
American diet, the founder and CEO of Impossible
Foods, Pat Brown, believed that within a couple of
years his company would conquer the biggest challenge in the alternative meat marketplace—plantbased steaks and that fast casual steak chains like
Outback or Texas Roadhouse would put them on
their menus. He thought the R&D efforts the company had put into the Impossible Burger had prepared it for the challenge, boldly stating in 2019 “I
can say, with complete confidence, that we’re going
to nail it and not only make a great steak, but we’re
going to make a steak that’s as good as anything
that ever fell out of a cow.”27 Many observers and
plant-based meat experts, familiar with plant-based
proteins and the speed with which product R&D
was accelerating, agreed with Pat Brown. According
to Bruce Friedrich, executive director of the Good
Food Institute, which championed plant- and cellbased meats, “Once we have products that taste the
same or better and that cost less, plant-based and
clean meat will simply take over.”28
In early March 2020, Impossible Foods
announced a 15 percent price cut on its plant-based
products, and requested that its foodservice distributors pass the price cuts on to their restaurant customers. Impossible Foods CEO Patrick Brown said:29
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Final PDF to printer
CASE 10
Our stated goal since the founding of the company has
always been to drive down prices through economies of
scale, reach price parity and then undercut the price of
conventional ground beef from cows.
Morningstar Farms Morningstar Farms was a
division of Kellogg that produced vegetarian foods;
its product line in 2020 consisted of 49 items that
included veggie bacon strips, 5 varieties of breakfast
sausage, 2 varieties of vegan burgers (made with 10
vegetables, grains, and seeds, with 9 grams of protein), 12 varieties of veggie burgers, 3 varieties of
crumbles, vegetarian buffalo wings and parmesan
garlic wings, vegetarian chicken strips, vegetarian
hot dogs and corn dogs, vegetarian chicken nuggets
and BBQ chicken nuggets, and 2 varieties of vegetarian chicken burgers. All products sold to the grocery
channel were frozen and displayed in grocery freezer
cases. Morningstar sold 26 of its products in the
foodservice channel.
Until 2020, one key difference between
Morningstar and the other plant-based meat brands
was that most Morningstar products had egg ingredients and thus did not qualify as vegan. But in 2019
management decided to discontinue production and
marketing of Morningstar egg products, abandon use
of egg ingredients, and begin phasing in new vegan
versions of the company’s entire lineup of vegetarian
products. By the end of 2020, Morningstar planned
to have completed the process of transitioning all the
products it sold through the retail grocery and foodservice channels to vegan.
Beyond Meat, Inc.
C-139
Field Roast Grain Meat Co. Since its founding in
1997 as a privately-owned company, Field Roast had
been a pioneer in the plant-based industry by creating
flavorful, high-quality products using fresh whole-food
ingredients—grains, vegetables, legumes, and spices—to
craft artisanal plant-based meats and cheeses. Its bestselling products were sausages (three varieties—apple
sage, chipotle, and Italian), frankfurters, corn dogs, and
Chao cheese slices, but its product line also included
breakfast sausages, vegetarian deli meats, vegan field
burgers, roasts (three varieties), breaded cutlets, and
Fruffalo wings (apple sage sausage cut on the bias, battered and lightly fried, with buffalo sauce). Its newest
product was bratwurst, which, like Field Roast sausages, came four to a package. All of the meat products
were high in protein because wheat gluten was a principal ingredient. Wheat gluten was wheat flour with all
the starches removed—removing the starches left pure
wheat protein. Field Roast meats were soy-free and contained no GMOs. The company’s products were available in most supermarket chains, medium and large
natural foods stores, and a few online food retailers in
both the United States and Canada.
Except for its three varieties of roasts which
were displayed in grocery freezer sections, Field
Roast meat products were located in the refrigerated
section of grocery stores and had a “use-by” date.
However, their freshness could be extended by freezing them for up to a year; once thawed, they were
good for about 65 days.
Field Roast was acquired by Maple Leaf Foods
in 2018.
ENDNOTES
1
John Fingus, “KFC’s plant-based ‘chicken’
sold out in five hours,” posted at https://
www.engadget.com/2019/08/27/kfcbeyond-fried-chicken-popular/ (accessed
December 9, 2019).
2
As posted on www.beyondmeat.com
(accessed December 9, 2019).
3
Beyond Meat, Form S-1, November 16, 2018,
p. 82.
4
Ibid., p. 83.
5
Ibid., p. 81.
6
Ibid., p. 82.
7
Ibid., pp. 81–82.
8
Ibid., p. 82.
9
Ibid., p. 91.
10
Presentation at Barclay’s Global Consumer
Staples Conference, September 5, 2019,
posted in the Investor Relations section at
www.beyondmeat.com (accessed December 10,
2019) and Company 10-K report for 2019.
tho35176_case10_C124-C139.indd
139
11
Jemima Webber, “McDonald’s and Beyond
Meat Launch Vegan ‘P.L.T.’ Burger,” posted at
https://www.livekindly.co/mcdonalds-veganbeyond-meat-burgers/, September 26, 2019
(accessed December 30, 2019).
12
Food and Agriculture Organization of the
United Nations, “Sources of Meat,” http://www.
fao.org/ag/againfo/themes/en/meat/backgr_
sources.html (accessed January 9, 2020).
13
Beyond Meat, Form S-1, November 16,
2018, p.84.
14
Tonya Garcia, “Beyond Meat, Tyson’s Raised
& Rooted and other plant-based foods are
officially mainstream,” www.marketwatch.
com, January 10, 2020 (accessed January 11,
2020).
15
Ibid., pp. 15, 71, 92.
16
Ibid., p. 92.
17
Ibid., p. 85.
18
Ibid., pp. 85–86.
19
Ibid., p. 86.
Ibid.
21
Ibid.
22
Ibid.
23
Company press release, January 8, 2020.
24
Posted at www.impossiblefoods.com
(accessed January 2, 2020).
25
Brian Cooley, “National rollout of Burger
King’s Impossible Whopper is here,” posted at
www.cnet.com, September 1, 2019 (accessed
December 30, 2019).
26
As reported in Nicole Lee, “Impossible
Sausage to be in Burger King’s breakfast croissants,” www.engadget.com, January 6, 2020
(accessed January 9, 2020).
27
Cooley, “National rollout of Burger King’s
Impossible Whopper is here.”
28
Ibid.
29
Company press release, March 3, 2020.
20
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