Skip to main content
The Globe and Mail
Support Quality Journalism.
The Globe and Mail
First Access to Latest
Investment News
Collection of curated
e-books and guides
Inform your decisions via
Globe Investor Tools
Just$1.99
per week
for first 24 weeks

Enjoy unlimited digital access
Cancel Anytime
Enjoy Unlimited Digital Access
Get full access to globeandmail.com
Just $1.99per week for the first 24weeks
Just $1.99per week for the first 24weeks
var select={root:".js-sub-pencil",control:".js-sub-pencil-control",open:"o-sub-pencil--open",closed:"o-sub-pencil--closed"},dom={},allowExpand=!0;function pencilInit(o){var e=arguments.length>1&&void 0!==arguments[1]&&arguments[1];select.root=o,dom.root=document.querySelector(select.root),dom.root&&(dom.control=document.querySelector(select.control),dom.control.addEventListener("click",onToggleClicked),setPanelState(e),window.addEventListener("scroll",onWindowScroll),dom.root.removeAttribute("hidden"))}function isPanelOpen(){return dom.root.classList.contains(select.open)}function setPanelState(o){dom.root.classList[o?"add":"remove"](select.open),dom.root.classList[o?"remove":"add"](select.closed),dom.control.setAttribute("aria-expanded",o)}function onToggleClicked(){var l=!isPanelOpen();setPanelState(l)}function onWindowScroll(){window.requestAnimationFrame(function() {var l=isPanelOpen(),n=0===(document.body.scrollTop||document.documentElement.scrollTop);n||l||!allowExpand?n&&l&&(allowExpand=!0,setPanelState(!1)):(allowExpand=!1,setPanelState(!0))});}pencilInit(".js-sub-pencil",!1); // via darwin-bg var slideIndex = 0; carousel(); function carousel() { var i; var x = document.getElementsByClassName("subs_valueprop"); for (i = 0; i < x.length; i++) { x[i].style.display = "none"; } slideIndex++; if (slideIndex> x.length) { slideIndex = 1; } x[slideIndex - 1].style.display = "block"; setTimeout(carousel, 2500); } //

A cooling of the U.S. stock market’s taste for plant-based meat makers has raised doubts among some investors and analysts about Impossible Foods’ plans to achieve a US$10-billion flotation.

Impossible is seeking to go public through an initial public offering or via a merger with a blank-cheque company within the next 12 months, sources told Reuters this month.

The market value of larger competitor Beyond Meat , however, has sunk from a peak of US$14-billion to closer to US$8.5-billion and is predicted by several brokerages to fall further.

Story continues below advertisement

Both firms carry expectations of being big players in a so-called faux meat market, which some predict could be worth US$85-billion a year by 2030 as dietary habits shift.

But with retail sales of some products sliding, four sectoral investors told Reuters that Beyond’s 420-per-cent rise in value since listing in September, 2019, was now seen as overcooked.

“It’s pretty shocking when you see some of these valuations come out,” said Patrick Morris, whose Eat Beyond vehicle has invested in three Canada-listed plant-based ventures.

“The [US]$10-billion for Impossible Foods, with Beyond Meat at [US]$8 or [US]$8.5-billion? The first reaction is that these valuations are coming from outer space,” added Mr. Morris, who said he is looking at investing in Impossible if it opens its books.

Some existing investors have told Impossible that it should aim to go public at a valuation below where Beyond is trading, a person familiar with the discussions told Reuters.

Impossible declined to comment.

BIG DEALS

While the signs remain positive for plant-based food, COVID-19 has halted restaurant sales, and sector studies suggest that the industry has yet to convincingly win over shoppers.

Story continues below advertisement

Nevertheless, both Beyond and Impossible have signed deals with major restaurant and grocery chains and the U.S. industry as a whole grew by 44 per cent last year during the pandemic.

Revenues at Beyond and some other producers are growing, but the rate of volume sales growth of fresh and fully cooked plant-based meat alternatives has been declining steadily at U.S. retail stores since July last year, NielsenIQ data show.

Unit sales growth eased from 32.6 per cent in the July to September period last year to 1 per cent in January to March quarter of 2021, when compared with the same period a year ago, the data showed.

Beyond’s sales over all were still just US$407-million last year, and its stock trades at nearly 21 times sales per share, according to Refinitiv data, versus 1.6 times and 1.9 times for Kellogg Co. and the Kraft Heinz Co. , which last year had sales of US$13.78-billion and US$26.19-billion, respectively.

“Food companies need to trade in a multiple that has some logic to it,” said Christopher Kerr, chief investment officer at Unovis Asset Management, an early investor in Beyond Meat who cashed out and now holds stakes in Oatly and Zero Egg.

“The question is can they get to something that represents market valuation tied to revenues ... right now we’re seeing some pretty premium valuations out there,” Mr. Kerr added.

Story continues below advertisement

SPAC BOOM

One reason for the valuation floated for Impossible is the boom in special-purpose acquisition deals and initial offerings that has seen big jumps for a range of startups at launch.

Brian Schaeffer, managing director of private equity trading platform InvestX, which allows investors to trade in pre-IPO companies, said Impossible had been one of the top five traded stocks on the platform since introducing it this year.

“The SPAC trend is super aggressive right now ...so those kind of public valuations are being translated into interest on the private platforms,” Mr. Schaeffer added.

Some market debuts, however, have not gone as well.

British-based food delivery service Deliveroo flopped on its debut last month.

While Impossible does not publish sales numbers, some industry estimates give it a less than 4-per-cent share of the U.S. imitation meat industry, compared with Beyond Meat’s 25 per cent.

Story continues below advertisement

Beyond has signed deals with McDonald’s , PepsiCo and KFC and Taco Bell owner Yum Brands while Impossible last year gave up on McDonald’s, citing its inability to supply on the required scale.

Impossible’s burgers and sausages are available at only 20,000 stores globally, versus Beyond’s 122,000 and it is still seeking regulatory approval in Europe and mainland China, where the genetically modified yeast it uses is banned.

“There is so much money [from SPACs] looking for so few places to go, because the space is so new,” Curt Albright, managing member of alternative protein investment firm Clear Current Capital said.

“Whether the valuations are too much or too little, that the market will figure out eventually.”

Be smart with your money. Get the latest investing insights delivered right to your inbox three times a week, with the Globe Investor newsletter. Sign up today.

Your Globe

Build your personal news feed

  1. Follow topics and authors relevant to your reading interests.
  2. Check your Following feed daily, and never miss an article. Access your Following feed from your account menu at the top right corner of every page.

Follow topics related to this article:

View more suggestions in Following Read more about following topics and authors
Report an error
Tickers mentioned in this story
Due to technical reasons, we have temporarily removed commenting from our articles. We hope to have this fixed soon. Thank you for your patience. If you are looking to give feedback on our new site, please send it along to feedback@globeandmail.com. If you want to write a letter to the editor, please forward to letters@globeandmail.com.

Welcome to The Globe and Mail’s comment community. This is a space where subscribers can engage with each other and Globe staff. Non-subscribers can read and sort comments but will not be able to engage with them in any way. Click here to subscribe.

If you would like to write a letter to the editor, please forward it to letters@globeandmail.com. Readers can also interact with The Globe on Facebook and Twitter .

Welcome to The Globe and Mail’s comment community. This is a space where subscribers can engage with each other and Globe staff. Non-subscribers can read and sort comments but will not be able to engage with them in any way. Click here to subscribe.

If you would like to write a letter to the editor, please forward it to letters@globeandmail.com. Readers can also interact with The Globe on Facebook and Twitter .

Welcome to The Globe and Mail’s comment community. This is a space where subscribers can engage with each other and Globe staff.

We aim to create a safe and valuable space for discussion and debate. That means:

  • Treat others as you wish to be treated
  • Criticize ideas, not people
  • Stay on topic
  • Avoid the use of toxic and offensive language
  • Flag bad behaviour

If you do not see your comment posted immediately, it is being reviewed by the moderation team and may appear shortly, generally within an hour.

We aim to have all comments reviewed in a timely manner.

Comments that violate our community guidelines will not be posted.

UPDATED: Read our community guidelines here

Discussion loading ...

To view this site properly, enable cookies in your browser. Read our privacy policy to learn more.
How to enable cookies