With meat processing plants closed or operating at minimal capacity, finding your favorite cuts of beef, pork, and poultry is becoming more difficult. And though supermarket giant Kroger says that as long as consumers are flexible, they needn't go without their favorite proteins, delayed gratification is never really a popular option.
This gives Beyond Meat (NASDAQ:BYND) a unique opportunity to go really mainstream and show that plant-based meat alternatives are a truly viable and sustainable option. You're not going to be biting into a pea-protein version of a porterhouse steak, but ground-up look-alikes (and taste-alikes) for beef, pork, and chicken might just find their way to your kitchen menu if you're unable to find those proteins in your supermarket's meat case.
Beef is off the menu
Outbreaks of COVID-19 at the processing plants of Smithfield Foods, Tyson Foods (NYSE:TSN), and elsewhere led to shutdowns. Smithfield, for example, closed some plants on April 12 and only began reopening last week. Tyson found dozens of cases of the virus among its workers in Portland, Maine, and closed its plant there for a thorough cleaning.
With workers standing elbow to elbow at these processing plants, it's not surprising the coronavirus spread easily among them, and it represents a special challenge to control further infection.
It's why there's a shortage of meat at the grocery store as well as at restaurants, with Wendy's (NASDAQ:WEN) being the first chain to begin removing burgers from its menus in some areas because of the lack of ground beef.
No faux results
At the same time, Beyond Meat's business is soaring. Net revenue rocketed 141% this past quarter, and it generated a net profit of $1.8 million, or $0.03 per share, compared with Wall Street's expectation of a $0.06 loss per share.
This comes despite restaurants being closed except for takeout and delivery, and food-service companies finding reduced need for their trucks. Sysco and U.S. Foods Holding are looking to break into the supermarket supply market because serving restaurants has declined precipitously.
Shares of Beyond Meat are up 81% so far in 2020. But with data from Nielsen Holdings showing consumer demand for plant-based meat alternatives was up threefold even before COVID-19 was declared a pandemic, it indicates the stock of the meat-substitute maker is not done rising.
There's still a need to earn recognition
That's not to say Beyond Meat or even Impossible Burger will easily replace meat proteins in the diet of most Americans.
Having finally tried an Impossible Whopper at Burger King, I was left unimpressed. While it definitely didn't taste like I wasn't eating a beef burger, there was also nothing superlative about it. The faux burger seemed rather dry and unexciting.
That may have been a singular experience, but it also suggests that meat-alternative companies are going to have a difficult time persuading consumers to switch if they have the choice of real meat.
Also, Tyson Foods, Kellogg, and Nestle are all launching their own plant-based brands, and they have deeper pockets and more marketing muscle at their disposal.
Seizing the day
No one is saying the pandemic is a good thing for anyone, but when life hands you lemons, make lemonade (or plant-based burgers).
Sara Olson, director of research at emerging-technologies data firm Lux Research, recently said: "Plant-based burgers and chicken alternatives have a window of opportunity right now to present themselves as more reliable alternatives -- or potentially the only choice -- next to empty meat cases in grocery stores. Only products in retail today will benefit immediately, but longer-term, expect more people to shift to 'flexitarian' approaches to protein consumption."
That gives Beyond Meat and Impossible Foods, which already have first-mover status and brand recognition, a head start. They have also established partnerships with popular chains like Starbucks and Burger King that will carry some weight with consumers who are considering giving plant-based substitutes a try.
It may be just the chance Beyond Meat needs to make an impression that will last even after the crisis at the supermarket subsides.