What happened
Shares of Beyond Meat (BYND -1.98%) went down in flames on Friday, plunging as much as 9.2% while simultaneously hitting a new 52-week low. As of 2:52 p.m. ET, the stock was still down 8.4%.
The catalyst that sent the maker of plant-based meat substitutes down was a report that privately held rival Impossible Foods had just inked a potentially lucrative deal.
So what
During an investor event, leading grocery store chain Kroger (KR -0.04%) announced a strategic partnership with Impossible Foods to develop and sell a line of plant-based appetizers and entrees under Kroger's Home Chef label. The brand provides customers with "ready-to-eat meals, rotating seasonal programs, new appetizers as well as our first plant-based protein, in partnership with ... Impossible (Foods)."
Image source: Getty Images.
Credit Suisse analyst Robert Moskow went on record saying the tie-up could represent a fundamental threat to Beyond Meat, resulting in co-branded, plant-based meat substitutes for Impossible. "The test is still in the early stages, but it looks like it will be similar to the co-branding strategy that Costco's (COST -0.11%) Kirkland brand uses in the fresh meat case with big suppliers like Tyson (TSN 0.74%)," Moskow wrote.
"We view this test as a threat to Beyond Meat because it demonstrates the willingness of a big competitor to 'margin down' into co-branded private label products in order to maximize the reach of its products," Moskow added.
Now what
Beyond Meat has had a difficult year, with its stock down more than 75% from its high reached last summer. In the early days of the pandemic, investors had bid up Beyond Meat shares as supply chain issues caused shortages for many meat products, and some consumers substituted plant-based meat substitutes in lieu of meat.
Unfortunately, the company's recent earnings report suggests that carnivores are reverting back to their protein of choice, resulting in falling sales for Beyond Meat and added pressure on its already withering stock.
This latest bit of news is leaving a bad taste in the mouth of Beyond Meat investors.
