Where’s the Beef?

Question


Hi Scott,

I am a proud and very passionate vegan who normally couldn’t give a stuff about investing. (Okay, so your book really helped me, but I have never get my head around investing in businesses that harm the planet for future generations). However, some of my vegan friends have been telling me about an amazing company called Beyond Meat that has perfected plant-based meat, which some food critics weren’t able to tell wasn’t meat. It’s backed by Bill Gates and a host of other smart people. Should I follow their lead, and if so how do I invest?

Bree

Scott's Answer


Hi Bree

As a farmer, I’ve been watching Beyond Meat for a while.

And I’ve been saving up your question until they had their IPO (initial public offering), so I could tuck into it like a juicy Sunday roast.

Grab your fork, Bree. Let’s chew some investment jerky!

Beyond Meat’s signature product is the Beyond Burger patty, which has 20 grams of protein, and by all accounts smells, tastes and even bleeds like a real burger (because of beetroot juice … rather than blood). It’s a plant-based product, not meat grown in a lab. Coles actually stock their products at selected supermarkets, and in the US their burgers are sold in thousands of supermarkets and restaurants, like TGI Fridays.

It’s a massive market.

Aussies are some of the biggest meat-eaters in the world, consuming around 100kg per person per year!

(Think about your pipes, people!)

Globally, meat consumption has increased from 70 million tonnes in the 1960s to more than 330 million in 2017, according to the United Nations.

Why?

Because the world population is growing, and this is the wealthiest time in human history … and wealthier people eat more meat.

However, there are environmental impacts — depending on who you believe, producing 1kg of beef requires somewhere between 550 litre of water (beef lobby group) or 100,000 litres (Greens Party). And then there’s the growing backlash from animal welfare and vegan groups.

So it’s not surprising that food conglomerates have been shovelling millions of dollars into producing a low-cost alternative. Beyond Meat debuted on the NASDAQ this week, and its share price rocketed 163% on the day.

In 2017, insiders were buying in at a reported valuation of $US250 million.

Today, investors are buying in at a valuation of $US3.6 billion!

Key point: insiders like Bill Gates and Leonardo DiCaprio got in to Beyond Beef at very, very low prices.

Now they’re selling their shares to the general public (via the share market) at very, very high prices.

They’re all eating rib eye … but are investors getting the ‘mystery sausage’?

After all, Beyond Beef is still very much in start-up phase and has yet to turn a profit (in fact, last year the company lost $US30 million).

So what’s my advice?

Call me old-fashioned, but I personally don’t invest in companies that don’t make money, regardless of how attractive the future looks (and the more attractive the future, the more competitors a company will have).

However, if I were in your shoes, I’d probably have a crack: it’s something you’re passionate about, and if you believe in the company and the change it makes, put your money where your tofu is. You can buy shares through your bank’s online international share broker. The ticker code is BYND.

Scott