It’s a fast-growing fad that even has the big fast-food chains involved, so it’s no surprise that seed and grain companies want to capitalize on the market that now makes up 5% of U.S meat purchases. Some of the biggest grain traders are cashing in with Bunge Ltd (NYSE: BG) revealing it had purchased a 1.63% stake in the start-up Beyond Meat (NASDAQ: BYND). Since the faux burger and sausage maker went public with its offering in May, the stock has skyrocketed more than 800%. This showed in the companies second-quarter results as a $135 million net unrealized gain. However, in October last year when the lock-up period finished, Bunge significantly decreased its holding in Beyond Meat.
Meanwhile, Cargill, one of the world’s top producers and distributors of agricultural products, invested $75 million in August last year in North American pea-protein producer Puris, which supplies Beyond Meat. This figure is triple the initial investment of $25 million in 2018.
There have also been discussions by seed developer Corteva about research or small acquisitions in vegetable seeds. Chief Executive Jim Collins told Reuters that their ability to research breeding and genetics of corn and soybean crops could be applied to vegetables.
What is the benefit?
The big agricultural businesses are investing in these fake meat producers as a defense mechanism. Traditionally, the grain traders supply the world’s livestock farms with animal feed, an industry that will suffer as the faux meat industry expands. The Good Food Institute says the fake meat industry relies heavily on soy, wheat, and peas. However, a big variety of other products are used, meaning a good relationship with farmers is essential.
How has the fake meat industry evolved in the past year?
It could be the sudden fame of the documentary ‘Game Changers’ or the increase of ‘Flexitarians’— those who eat meat sparingly — driving the trend. In 2019, Impossible Foods secured partnerships with dozens of restaurants and franchises like Burger King. This led to an additional $300 million in investor funding. Then, competitor Beyond Meat started selling at chains like Del Taco (NASDAQ: TACO), Subway, and Dunkin Donuts (NASDAQ: DNKN). There is no sign of the industry slowing down, with recent reports predicting the substitute meat market could be valued at $140 billion in the next decade.
The trend isn’t confined to the U.S by any means, with Chinese plant-based substitute start-up Zhenmeat seeking around $2 million of funding as it expands its business. The company has revealed it is talking aggressively with investors from Europe, the U.S, and China about the funding. China has a massive market for fake meat, with the industry worth about $883.8 million in 2018, that’s a 14.2% year-on-year growth according to The Good Food Institute. But they could have the competition of U.S rivals like Beyond Meat, who aim to start producing its plant-based products in China by the end of the year.
The world’s biggest food company Nestlé (SWX: NESN) has also recently added vegan sausages to its menu of faux meat products. While the second-largest meat producer, Tyson Foods (NYSE: TSN) has launched its own line called “Raised and Rooted.”
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Written by Alsha Coppolina.
MyWallSt Contributor, Author at MyWallSt Blog
This article was written by one of our MyWallSt freelancers.