With the apparent entry of one of the nation’s — heck, the world’s — largest meat and poultry marketers to the alt-meat category, products once considered marginal are going mainstream.
Tyson Foods has sold its stake in plant-based food processor Beyond Meat. According to multiple news reports, Tyson held a 6.5% stake in the alt-meat start-up.
The move should come as no surprise to anyone even slightly familiar with the evolution of a food industry start-up that shows signs of being successful.
Usually, an entrepreneur develops a new product or even a whole new category — the first-generation of veggie patties aimed at offering alternatives to hamburgers comes to mind — and after a regional run of promising sales, one of the industry’s big boys swoops in and makes an offer the start-up can’t refuse.
If the line shows strong enough growth, the corporate owner simply maintains the brand, and most consumers are none the wiser. They continue to buy the “new” products, thinking they’re supporting some small-scale, family-owned company, without realizing their purchases are putting more profits into the coffers of the corporate titans to which they typically hold such minimal affection.
The other acquisition route is the one that Tyson Foods apparently plans to pursue. In this scenario, a major player chips in some investment funding to help launch a start-up, then watches, listens and learns as the fledging product line’s manufacturers work to gain visibility, establish positioning and acquire market share.
If all goes well, and the products appear to be meeting consumer needs and providing a substantive point of difference, the corporate entity unloads its stake and uses its far greater resources to launch a competitive brand line.
It’s called free enterprise, although in either scenario, nothing is done for free.
A mere matter of scale-up
So what does Tyson’s exit-to-jump-into-the-category this mean for the alt-meat sector? Probably even faster and more expansive acquisition of the upscale consumer’s discretionary food dollar, that’s what.
Beyond Meat, it should be noted, has been losing money since its inception 10 years ago, a situation not uncommon for many a start-up. But its recent IPO raised some $241 million, according to Bloomberg, as the company sold 9.63 million shares for $25 apiece late last month.
That bodes well for Beyond Meat’s expansion plans, but for Tyson, the technology needed to develop vegetarian analogs to beef patties and pork sausage is advanced enough that jumping into that category requires only the kind of investment in equipment, personnel and distribution infrastructure the Arkansas-based processors is well-equipped to provide.
The R&D’s been done for them — okay, maybe some reverse engineering will be required — such that the company’s poised to execute category dominance via the kind of high-volume, lower cost production strategies that have driven their success in the beef, pork and chicken sectors.
In a statement to Reuters, Tyson spokesman Worth Sparkman said that “Tyson Ventures is pleased with the investment in Beyond Meat and has decided the time is right to exit ... [Tyson] plans to launch an alternative protein product soon, with market testing anticipated this summer.”
Translation: “Thanks for allowing us to scope out your manufacturing systems and marketing tactics. We’ll take it from here.”
It’s like in the movies, when the federal agents show up at the scene of a hostage siege or a terrorist incident and tell the local cops, “Stand down. We’ll let you know when your help is needed.”
There’s only one drawback to Tyson plans: Their brand projects a very different image from that of Beyond Meat or Impossible Burger. Not only is “Tyson” inextricably connected with animal foods, but its corporate identity and legacy don’t align with the values embraced by the alt-meat sector’s most eager customers.
That’s easily solved, however. In a similar fashion to how companies absorb the brands they acquire, but continue to market them as if they were still made by some independent competitor, Tyson just needs to throw some cash at a marketing agency to create a new brand that will also appear to be separate and different from the imagery associated with the company’s beef, pork and chicken lines.
As the CEO at the marketing firm where I was once a partner some years ago liked to put it, “It ain’t rocket surgery.”
The opinions in this commentary are those of Dan Murphy, a veteran journalist and commentator.