If I’ve learned anything from my own health and fitness routine, it’s that there are no shortcuts. Undoubtedly, many have made resolutions this year to lose weight. For that to happen, you’ve got to grind, as the kids say. Therefore, I’m cautious about Beyond Meat (NASDAQ:BYND). Although Beyond Meat stock has jumped higher since its initial public offering, ultimately, you can’t have your cake and eat it too.
Many years ago, I saw a television advertisement for a vibrating belt that allegedly toned your abs while you went about your daily routine — even if that routine involved doing absolutely nothing. Theoretically, it sounded like a blast. Who wouldn’t want to get ripped while lounging around playing video games all day?
Of course, when something is too good to be true, it usually is. As Forbes contributor Bruce Y. Lee noted, vibrating platforms may help you lose weight … if you’re a lab mouse. For humans, the evidence is tenuous at best. And this brings me back to Beyond Meat stock.
The underlying company isn’t so much an alternative meat producer as it is an excellent marketer. Management has convinced consumers that they can enjoy the taste of red meat without the consequences: after all, it’s a vegetable, so it can’t be bad for your health, right?
Well, not so fast. Despite rising popularity, a few notable companies, such as Chipotle Mexican Grill (NYSE:CMG) refuse to serve fake meat due to the many ingredients, most of which are not recognizable to the average person.
That will be a problem for Beyond Meat stock as millennials are incredibly health conscious. Over time, I see the company’s meatless offerings as a deteriorating fad.
Beyond Meat Stock Lacks a Sustaining Catalyst
In fact, we might not have to wait that long to see Beyond Meat lose relevance. Evidence suggests that consumers don’t really care for how fake meat products taste.
Last year, retail sales of meat alternatives hit approximately $995.2 million. Further, Statista used data from the U.S. Census and the Simmons National Consumer Survey to calculate that 79.65 million Americans used fake meat in 2019.
On the surface, this sounds like a lot of people. However, when you break it down, each person bought $12.49 worth of fake meat. That’s the equivalent of buying Beyond Meat’s two-pack four-ounce patties twice, which really isn’t much.
Consider that in 2018, the red meat market totaled $72.3 billion. If we divide this figure by the number of non-fake-meat eating consumers, each person bought $293.95 worth of real meat. Admittedly, it’s not a perfect comparison. For example, those who used meat alternatives could have also used genuine red meat. However, it gives you an idea of the vast gulf in consumption trends.
Although the fundamentals can always shift favorably for Beyond Meat stock, I doubt that it will. Following the statistical evidence, let’s use a little common sense: there’s really no way to screw up red meat. So long as you cook it at least somewhat decently, red meat is almost universally delicious. That’s why burgers are classic fare at beach parties: they’re virtually idiot-proof.
But with Beyond Meat burgers, they are far from universally appealing. While many like the taste and support Beyond Meat’s mission, others find it lacking and not worth the (hefty) price. Interestingly, out of nearly 500 reviews of Beyond Meat patties on Amazon (NASDAQ:AMZN), over 31% were negative. That’s an awful lot for a product that again should be near-universally appetizing.
There’s Nothing New Here
As I mentioned above, Beyond Meat stock has benefited from superior marketing. But once this euphoria fades, the underlying company is surprisingly irrelevant.
For one thing, fake meat has been around forever. A great example is Kellogg’s (NYSE:K) Morningstar Farms. According to its website, the subsidiary is America’s No. 1 veggie burger brand. More importantly, they’re cheaper than Beyond Meat and offer more sustenance. Even with this advantage, the fake meat market overall remains a sliver of the real market.
Second, millennials and the emerging Generation Z are very savvy. Eventually, they’ll figure out that Beyond’s products are highly processed, if they haven’t already.
Third and finally, I go back to my common-sense argument: there are no shortcuts in life. If you want to eat healthy, you got to suck it up and eat that kale. Beyond Meat is just another fad that will pass like the wind.
A former senior business analyst for Sony Electronics, Josh Enomoto has helped broker major contracts with Fortune Global 500 companies. Over the past several years, he has delivered unique, critical insights for the investment markets, as well as various other industries including legal, construction management, and healthcare. As of this writing, he did not hold a position in any of the aforementioned securities.