Market Health

Plant-Based Meat Sales Are Booming

We are a nation of carnivores.

The U.S. is the home of the Big Mac, the Baconator, the meat lover’s pizza, the Heart Attack Grill and a host of meat-centric gluttony.

And over the years, our appetite for meat has only grown… though perhaps not for much longer.

In 1960, the average American consumed 167 pounds of red meat. By 2018, this amount had increased 31.7% to nearly 220 pounds.

That’s a record bound to give anyone the meat sweats.

But our red meat monopoly is far from perfect. Just four companies – Cargill, JBS, National Beef and Tyson Foods – control most of the beef processing in this country.

Together, they are responsible for more than 66% of it. And when massive COVID-19 outbreaks at processing facilities forced the shutdown of more than a dozen plants, Americans were faced with a looming meat shortage – not to mention tens of billions of dollars in lost revenue for the industry.

Back in May of 2020, I told readers to short meat processors for this exact reason.

So with the prospect of no meat on the table, a different trend took hold…

Plant-based meat.

The Flexitarian Potential

The plant-based food market is projected to be worth $74.2 billion by 2027.

And some more optimistic forecasts have the industry topping $140 billion by 2030.

But even these lofty expectations may be erring on the conservative side.

During the pandemic, sales of plant-based products skyrocketed nearly 300%.

And my favorite products – from Beyond Meat (Nasdaq: BYND) – are still often sold out at my local grocery store.

Millennials and Gen Z are really driving the rise in plant-based product sales. And though the prevalence of vegetarianism and veganism is increasing, one of the largest opportunities for these products is consumers like me.

I am not a vegetarian. Nor am I a vegan. I eat meat. But I eat plant-based meat substitutes at least a couple of times per week. One, because I like them. And two, because they’re “lighter” to me – they don’t make me feel as heavy.

I fall into the 29% of Americans who consider themselves “flexitarians.” These are people who eat a wide variety of products but consciously try to consume less dairy and meat. That market is far larger than the 6% of Americans who are vegetarian.

It’s that flexitarian potential investors should home in on. Other companies sure are.

Something for Everyone

Beyond Meat recently soared to new all-time highs on a massive piece of news.

The plant-based food company has inked one major deal after another. Its products are on the menus of Carl’s Jr., Del Taco, Dunkin’ Donuts, McDonald’s, Pizza Hut, Subway and more. But this week, the company announced its largest partnership yet… a joint venture with PepsiCo (Nasdaq: PEP).

The duo agreed to form PLANeT Partnership, which will leverage PepsiCo’s marketing prowess with Beyond Meat’s plant-based food technology.

Now, the products are still in development. But investor excitement can’t be contained.

It also gives more credence to the change we’ve seen in consumer eating habits. A couple of years ago, PepsiCo began transitioning to healthier and alternative foods. For example, the company created oven-baked Lay’s and launched Sabra snack cups as hummus sales soared. It introduced Gatorade Juiced and even Alvalle ready-to-drink gazpacho.

Not to mention, PepsiCo purchased the at-home drink system manufacturer SodaStream and gluten-free, non-GMO fruit and vegetable chip maker Bare Foods Company.

So PepsiCo has dropped billions of dollars on acquisitions to capture the tremendous upside that the alternative and plant-based foods market offers.

The company’s most recent joint venture with one of the world’s leading packaged food companies is far from the beginning of its partnerships… but it is a sign that Beyond Meat’s deals are likely to get a lot larger.

And Beyond Meat is the flag-bearer for the industry. At the moment, its retail channel sales are booming. And there will be even more upside in 2021 as its food service channel sales normalize.

This year, as restaurants reopen, the company’s revenue is projected to jump more than 49% to $611.45 million. And it’s expected to become profitable.

We’ll find out more when Beyond Meat reports fourth quarter and full-year 2020 earnings next week.

Here’s to high returns,

Matthew