Beyond Meat wants retailers to forget everything they think they know about veggie burgers. In fact, they want everyone to forget the term “veggie burger” and replace it with Beyond Burger — a plant-based protein that is not only shaking-up America’s kitchens, but is leaving a lasting impression on Wall Street, too: This spring it enjoyed one of the largest stock market debuts of 2019, surging 163 percent in first-day trading after its initial public offering.
Is plant-based protein just a fad — or are consumers really changing the way they approach the center of the plate? Seth Goldman, the same trend-setting executive who co-founded Honest Tea 20 years ago, is also executive chairman of Beyond Meat. He is trying to do for protein portions what he already did for bottled drinks: make them healthier and tastier. Goldman discussed the future of Beyond Meat and plant-based proteins with STORES contributing writer Bruce Horovitz.
Why did you go from co-founding Honest Tea to helping to build Beyond Meat?
I started Honest Tea because I was thirsty, and I joined Beyond Meat because I was hungry.
When I started Honest Tea, there wasn’t a tasty drink without tons of sugar. As for Beyond Meat — my family and I have been vegetarians for 13 years and we’ve been consistently disappointed with the plant-based options.
But how did you end up at Beyond Meat — even though you’re CEO of Honest Tea?
My wife read an article about this company on her 50th birthday. Beyond Meat had a vision that I totally appreciated: They wanted to transform the grocery store meat case into the protein case. By that I mean you have the cow, chicken and plant-based options all in the same case. Of course, this wasn’t the case at the time. Back then you went to the freezer for plant-based protein.
I sent an email to firstname.lastname@example.org. They found my interest and assistance helpful. So I got involved as an investor, advisor and board member. I enjoyed the interaction so I got more deeply involved in 2015 when I took on the title of executive chairman. I owned roughly 2 percent of the company before we went public.
Why should retailers care about Beyond Meat?
There’s a powerful story here. Retailers have to be familiar with what’s happened in the dairy case. Twenty years ago, it was all cow’s milk. Today, 13 percent of the dairy case is plant-based. At Whole Foods Market, it’s more than 40 percent plant-based. Clearly, an evolution is taking place in the way consumers shop. Now, we see the same thing happening in the meat case, but it’s happening much more quickly than we anticipated.
And it’s not just for the Whole Foods Market crowd anymore, right?
Safeway was the first mainstream retailer to put our product in the meat case, then Whole Foods, then Kroger. We are attracting consumers who are not just vegans. At Kroger, 93 percent of the shoppers who purchase Beyond Meat also have other meat in their shopping cart. This is validation of the belief that we are attracting people who are not just vegans and vegetarians.
How do you coax grocers to put Beyond Meat in the meat case, not the freezer?
When we first started talking to retailers, we got some pushback. They didn’t want us in the meat section but with the refrigerated tofu. We told them that’s OK, but that they’d receive no promotional support or discounts from us if that’s what they chose to do. Some held out, but most retailers came around when they saw our growth. We’re now in more than 30,000 stores in the United States. We’ve also launched in Canada and Europe. Even Walmart carries us, but not in every store. And we’re in 1,000 Target stores.
You’re not only impacting grocery stores, but some big restaurant chains, too, no?
I was surprised by how much Del Taco focused on us in a recent earnings report. Their CEO said that we moved the needle for them and attracted new and lapsed users. In the U.S., we’re also sold at TGI Friday’s and Carl’s Jr. locations. In Canada, we’re sold at A&W restaurants. They say that people are coming into their stores who they have never seen before because of the new offerings.
What’s bigger: your supermarket sales or restaurant sales?
Until the first quarter of 2019, the majority of our sales was at grocery. But food service has grown and it’s now 51 percent of our sales.
How do you market the Beyond Meat brand?
Previously, fast-food chains called plant-based burgers veggie burgers. But when ours is on the menu, it always includes our name. For example, at Carl’s Jr., it’s the Beyond Famous Star Burger. Until now, consumers had very low expectations for veggie burgers. So the name sounds more appealing when our name is on it. It wouldn’t make sense to call it anything else but Beyond Burger because they are paying a premium to use it.
This spring, Beyond Meat enjoyed one of the largest market debuts of 2019. Can you explain that success and its relevance?
It’s not just about stock price but about validation: This is a business segment that people recognize has a lot of growth ahead. When you see growth numbers like we’ve seen, that says something. Our first quarter sales of 2019 were triple the first quarter of 2018. This isn’t typical for the food business to see this kind of growth. This is more than just a fad.
There are a lot of celebrity names linked to Beyond Meat — from Bill Gates to Leonardo DiCaprio and Kyrie Irving to Snoop Dog. What impact do celebrities have on the company?
They are owners who are helping us grow our business. When Kyrie or Snoop Dog post a video, it’s because they believe in the product. No one is paying them to do it. They are investors and credible spokesmen. We knew that athletes could be really valuable. If Beyond Meat is working for some of the most incredible athletes in the world, it must work for you. Kyrie wore our hat to post-game news conferences during the All-Star Game. Chris Paul wore our hat at a news conference during the playoffs. We’re not telling him to do that. He’s excited about the brand.
Beyond Meat has been around for 10 years, but it’s still not profitable — losing $30 million last year. Should that be worrisome to investors and retailers?
This is a different model than Honest Tea. Beyond Meat raised more than $100 million. We are talking about the largest category in food (protein) — at $1.4 trillion globally. I’m not worried about getting to profitability. I’m confident over time we’ll get there. We have good gross margins for a protein company.
Impossible Foods has gotten a lot of press for its Impossible Whopper. Can you compete with them?
We have a lot of respect for them. We think this category is big enough for the two of us — if not more. We are growing the category together. It’s healthy to have two. But we approach the space differently.
Beyond Meat uses pea protein instead of soy — how can you produce enough of it?
Last year was tough and we did have some shortages. That’s a good problem to have. We have expanded our supply chain dramatically. We are encouraged because recently we grew sales threefold and handled the demands.
Why does Beyond Meat cost more — not less — than meat?
In a word: scale. We’re in the very early innings. Consumer demand will grow. We are looking at an industry we launched in 2016. We are just getting started and we are confident that we can get to a place of more competitive pricing. Our product uses 99 percent less water and 93 percent less land than meat.
How many employees does Beyond Meat have?
It’s in the hundreds at our manufacturing facility. We also have 63 scientists and engineers.
What were your sales last year — and what’s on tap for this year?
We sold $88 million last year but seeing sales triple in the first quarter of 2019 was an encouraging sign.
What inspires you?
Every day when I look on Instagram and see what’s posted about Beyond Meat.
What about in real life — beyond Instagram?
I was at a summit this morning on innovation where they served Beyond Burgers. I sat with a guy who told me he’s a meat guy and he said he really didn’t want to like Beyond Burgers. He loved them. He told me he planned to pick some up on the way home.
How has Beyond Meat changed you?
I love being back in the trenches and the challenge of building a new category and challenging people’s assumptions.
Unlike at Honest Tea, you’re not the CEO at Beyond Meat. Is that ever a problem?
Every once in a while, I have to remind myself I’m not the CEO. I’m just so grateful to have found this next act.
Can Beyond Meat and the meat industry happily co-exist?
I think so. We are part of the meat industry. We rely on meat co-packers to work with us. We are simply expanding the spectrum of meat. We are not trying to abolish meat. Consumers will not stop eating meat. We’re just providing another way for consumers to eat what they love.
Some say plant-based protein is a fad. Is it?
This is not just a Northern California phenomenon. There’s a huge tailwind. This is a movement.
Bruce Horovitz, a freelance writer, is a former USA Today marketing reporter and Los Angeles Times marketing columnist.