Shares of Beyond Meat Inc. (NASDAQ: BYND) soared over 17% in afternoon hours on Tuesday after the company announced a partnership with PepsiCo Inc. (NASDAQ: PEP) to develop plant-based food products. Beyond Meat’s stock has jumped over 49% since the beginning of this year.
Deal
Beyond Meat and PepsiCo announced plans to form a joint venture named The PLANeT Partnership, LLC (TPP) that will focus on producing and marketing snacks and drinks made from plant-based proteins. Financial terms were not disclosed.
The deal will bring together Beyond Meat’s expertise in producing plant-based food products and PepsiCo’s vast scale and reach in marketing and distribution.
“We are thrilled to formally join forces with PepsiCo in The PLANeT Partnership, a joint venture that unites the tremendous depth and breadth of their distribution and marketing capabilities with our leading innovation in plant-based protein. We look forward to together unlocking new categories and product lines that will inspire positive choices for both people and planet. PepsiCo represents the ideal partner for us in this exciting endeavor, one of global reach and importance.” – Ethan Brown, Founder and CEO, Beyond Meat
Market opportunities
There is a rising demand for plant-based food products as people continue to turn to vegetarianism and veganism due to reasons related to health as well as environmental issues. This has led to many food product companies diversifying their product portfolios to include plant-based food products.
Retailers have started stocking plant-based products on their shelves while fast food chains are altering their menus to include plant-based snack options. According to data from ADM and Food Navigator, the US market for plant-based food grew by 29% from 2017 to 2019. Based on a report from Research and Markets and Globe Newswire, the global plant-based protein market size is projected to grow from $10.3 billion in 2020 to $14.5 billion by 2025.
PepsiCo has been tweaking its product offerings over the years to include more healthy snacks and beverages, like baked chips and sugar-free drinks, to cater to health-conscious customers. The company has made a number of acquisitions as well to help it diversify its portfolio. These include Bare Snacks, which produces baked fruit and veggie chips, as well as sparkling water brand SodaStream.
“Plant-based proteins represent an exciting growth opportunity for us, a new frontier in our efforts to build a more sustainable food system and be a positive force for people and the planet, while meeting consumer demand for an expanded portfolio of more nutritious products.” – Ram Krishnan, Global Chief Commercial Officer, PepsiCo
Some experts believe this deal is a great opportunity for Beyond Meat while some remain sceptical about the consumer demand for plant-based snacks and drinks.