Tyson jumps into one of grocery’s fastest-growing categories.
By: Dave Hanson
Tyson Foods, the world’s second largest processor of chicken, beef and pork, is entering the quickly-growing “alternative proteins” category. The move is a response to a global trend in more sustainable eating, with Barclays estimating the sales of plant-based meat alternatives to grow by up to 1,000% in the coming decade, reaching $140 billion.
Tyson announced they would begin selling a plant-based alternative to chicken nuggets, made from pea protein, in grocery stores this summer. Tyson also plans on launching a blended burger, made from a combination of beef and pea protein, later this year. Both products will be sold under the label of the new brand, Raised and Rooted. Tyson intends to market the Raised and Rooted products to both grocers and restaurants, going forward.
The news comes on the heels of startup competitor Beyond Meat’s jaw-dropping initial public offering. Going public on May 2nd, Beyond Meat (BYND) was set to sell 9.5 million shares at a price of $23-$25 apiece. By the end of opening day, the shares were going for $65.75, 163% over its IPO price, making it the most successful first day performance in the market in nearly 20 years.
But it didn’t stop there. BYND stock has been soaring ever since. Beyond Meat’s stock took yet another jump this Monday, after CNN confirmed that the company would be launching a new ground beef product in stores on June 24th. As of closing on Monday, June 17th BYND stock was sitting at $170.00 a share, more than six and a half times its $25 IPO price from just a month and a half ago.
All of this activity certainly affirms Tyson’s desire to jump into the market. The company has had a toe in the waters for years, with stakes in several alternative protein brands. Tyson’s investment arm actually purchased a 5% share of Beyond Meat in 2016, but sold the stake prior to Beyond Meat’s IPO. The company still holds stakes in other alternative protein startups, most notably Memphis Meats and Future Meat Technologies, who grow meat from cells in a lab setting, and MycoTechnology, who is developing mushroom-based meat alternatives. While diversification is good, diving head-first into the market with their own product seems to be the prudent move now.
Tyson will hope to leverage their massive scale, distribution network and deep pockets to strike while the iron is hot in the rapidly growing category. They know now is the time to carve out a sizeable portion of the pie while the market still discovering their preferences.
One particularly interesting brand with whom Tyson will look to compete as they enter the market is Impossible Foods. Impossible has made great headway inside and outside of the grocery store setting though partnerships with restaurants, piggybacking on their advertising and PR efforts.
Impossible Foods, who launched their signature Impossible Burger in 2016, has formed partnerships with Burger King, Red Robin, White Castle, Carl’s Jr. and Qdoba, among others. Their collaboration with Burger King to create an Impossible Whopper earlier this year made national headlines. The Impossible Burgers have been a huge hit for other restaurants as well, with news coming last week of Impossible Burger shortages at White Castle and Red Robin.
The news waves being made by Impossible Foods have benefitted the category overall in terms of awareness and perception of meat alternatives. After the news of Impossible Burger shortages last week, Beyond Meat stocks took yet another upward jump. And Tyson, with its full marketing coffers and unmatched production capabilities, will no doubt create even more waves, drawing more consumers into the fold.
To put it in perspective, while Beyond Meat and Impossible Foods have sales measuring in the hundreds of millions, Tyson reported $40 billion in sales for 2018. Likely 100 times the 2019 sales of both competitors combined. That’s a whole different world, when it comes to resources at a company’s disposal.
Armed with these resources, the potential for impact when it comes to growing the category is huge. When we look back in 10 years, the measure of Tyson’s impact will be a fascinating case study to examine.
What do you think about Tyson diving into the “alternative proteins” market? Do you think this burgeoning category will reach its $140 billion potential, as predicted by Barclays? Have you sampled any of these meat alternatives? We’d love to know what you think. Sound off on social media now and join the conversation.