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The global meat industry was estimated to value at 838.3 billion U.S. dollars in 2020, and was forecast to increase to 1157.6 billion U.S. dollars by 2025. Meat production is also poised to continue to grow, with pork making up the majority of the increases. Over 1 trillion dollars a year of industry, in which only BYND and Impossible are forraying into innovative, branded, and alternative product lines. Beyond Meat has only product lines in beef burgers and are in the process of testing their simulated chicken with KFC. They have yet to expand into the vegan egg, fish, pork, etc. lines that are much more lucrative propositions. Just last week, their Mcdonald's deal ended up showing greater than expected sales and their deal with Pepsico has brought about meat snack foods such as vegan Jerky item lines.
The market has punished BYND because growth seems to have slowed down in recent months, but in reality it is because BYND hasn't launched any new products in the last few quarters - it is relying only on the strength of existing product lines to fuel its growth. Once BYND has the full array of vegan alternative products that are lower calorie, more environmentally friendly, and ethical, they will be well positioned to capture a large portion of this trillion dollar industry. The taste of their products is far above even Impossible, let alone other plant based copycats, so I expect a branded moat will form around their products as time goes on.
Trends in veganism continue to grow well, with the proportion of vegans in the US having tripled in the past 5 years alone, and is projected to continue to increase. The products also appeal to vegetarians, and people who are attempting lower fat foods due to health reasons.
Basic Valuation - Let's say even 1% of the world's meat eating population converts to veganism/vegetarianism over the next 5 years, which is not unreasonable at all considering current trends, this represents $10B of additional revenue opportunity to be captured by BYND and Impossible, whereas its current 12 month run-rate is 400m. Applying a Food sector EBITDA Margin and multiple of .2 and 22.5x, respectively, to this revenue opportunity equates to ~$22B in Equity Value, representing a 7-fold increase from current valuation. This could be realized within 3 years or through an outright buy-out as Pepsico, Nestle, and other conglomerates will likely be interested in entering this new food market.
Conclusion: Price can easily return to its $250 high a year ago and Beyond.
