Tattooed Chef (NASDAQ: TTCF) is a plant-based food company that produces products for the frozen food aisle and went public via a special purpose acquisition company (SPAC) in 2020. Tattooed Chef is run by the Galetti family, who own approximately 45% of the business.
Tattooed Chef is attempting to tap into the growing plant-based food market and catering to changing consumer preferences such as vegetarian, vegan, and flexitarian. It estimates its near-term market opportunity to be in the region of $33 billion. As of fiscal Q1 2021, its products were sold in 4,300 stores and will be stocked in a further 1,162 in Q2. It also expects to expand its product range from 42 in Q1 to 200 in the long-term.
It is rapidly growing, with revenue growth of 59% in Q1 to $53 million, driven by a record $36 million in sales of its branded products. Management expects this high growth to continue and has forecast $500 million in revenue by 2023 and $1 billion by 2026. However, it is unprofitable with a net loss of $7.9 million in Q1.
With a global megatrend in motion, we take a look at three companies attempting to gain market share in the plant-based food market.
Nestle (SWX: NESN) is a Swiss multinational food and drink conglomerate and is the largest food company in the world. The company was founded in 1886 and now operates over 2,000 brands ranging from coffee to pet food and more. To put the sheer size of Nestle in perspective, it has a market cap of approximately $320 billion compared to Tattooed Chef at $1.8 billion.
In 2017, Nestle entered the plant-based foods market with its acquisition of Sweet Earth Foods for an undisclosed price. This acquisition allowed it to enter both the frozen and plant-based food space simultaneously and is a direct competitor to Tattooed Chef in the U.S. This acquisition of Sweet Earth has enabled it to expand its plant-based offerings from under 50 to 75 today. These include many of the same frozen products as Tattooed Chef, such as cauliflower mac and cheese, burritos, bowls, and meat substitutes.
Despite slow revenue growth in Q1 2021 of 1.3%, Nestle has the financial power to enter the space and acquire brands without doing the heavy lifting. Its vegetarian and plant-based food offerings recorded double-digit growth in the latest quarter as its brands continue to pivot and benefit from this trend.
Conagra Brands (NYSE: CAG) is an American pure-play consumer food company founded in 1919 and operates several brands. The company has continued to grow and evolve and is valued at just under $18 billion.
Conagra is focusing on millennials and younger generations with its products. Conagra has made several acquisitions in frozen food and plant-based meat space with Pinnacle and Gardein. Across its range of five frozen brands, it has consistently grown in the last two years. It has also had success due to synergies from the Pinnacle acquisition with new brands such as Birds Eye and products such as cauliflower wings and veggie spirals.
In fiscal Q3 of 2021, its retail sales outpaced the industry in each of its domains, leading to an 8.5% increase in revenue to $2.77 billion. This was further fueled by superior penetration and repeat purchases than that of its top 15 peers. It is also profitable with a net income of $281 million in Q3.
Beyond Meat (NASDAQ: BYND) is not listed as a direct competitor by Tattooed Chef but would be impossible to ignore as the only pure-play plant-based meat substitute on the market. The company was founded in 2009 by current CEO Ethan Brown and went public in 2019. Beyond Meat is also a disruptor and is relatively small, with a market cap of roughly $9.2 billion.
The company has a wide range of meat substitutes and is well-known for its Beyond Burger and other products such as its sausages which compete directly with Tattooed Chef. In addition, beyond has partnered with a number of high-profile chains such as McDonald's and retail stores like Walmart. Despite the challenging environment due to COVID-19, Beyond has continued to expand with 11.4% revenue growth, driven by retail sales and a net profit of $1.8 million in 2021. The retail side of the business should also improve as restrictions ease and fuel future growth.
With the plant-based revolution underway, Beyond Meat is yet another competitor to Tattooed Chef in the space.
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