Can Tyson Foods (TSN) , Goliath of meat and chicken, challenge the David of ersatz burgers, Beyond Meat (BYND) ? Can Tyson straddle the worlds of real animal food and plant-based versions or is it not in the company's DNA? Can a little, loss-making outfit, loss-making like Beyond Meat, tussle with the immensely profitable Tyson and have any hope of surviving?
These are questions swirling around this, the hottest thing on Wall Street since the launch of Tesla (TSLA) , and I know you are searching for answers about the category.
First, I think that Beyond Meat is the real deal. It's burgers are loved. Management, led by the incredibly strong Ethan Brown, spent 10 years developing the ideal plant-based burger and he's willing to put his burger to the taste test against any and all offerings. I know I misjudged the love for this product which, like Tesla, gave Beyond Meat cravers a chit in the stock game. That's how you could get a near 600% appreciation right out of the chute.
Now on Squawk on the Street this morning I questioned if Tyson has the DNA to match Beyond Meat with its newly launched "Raised & Rooted" plant-based division.
Don't get me wrong. I have been behind Tyson for ages, ever since I figured out that millennials love protein over fats and Tyson is protein with its monster share in chicken and beef. The company did have a pretty serious earnings hiccup since I had them on Mad Money in November of 2017. Still, in the last year its been a terrific performer.
Still, I figured that a focused plant-based outfit has to be able to win the category. I will cede Tyson the plant-based chicken nugget category and I think, when the company struts its stuff at its analyst meeting on June 20th, its stock will get a lift from the prospects of the chicken product both in the supermarket and in quick serves, although they will have to be careful which chain they pick to sell their plant-based nuggets.
But I grew concerned when Tyson cashed out of its 6.5% stake in Beyond Meat before the company came public. How could they misjudge the stock I figured, without misjudging the category. Could they be like McDonald's (MCD) which at one point owned 90% of Chipotle (CMG) but sold it because it was a distraction for a pittance of what it was ultimately worth?
But after doing more digging and speaking to Tyson, I have to admit that there might be more to their plant beef foray than initially thought.
First, while analysts were talking this morning about blended meat products, something I think could be a loser, the company will unveil an all plant-based burger that they think tastes terrifically. Second, their distribution and scale are unrivaled. Third, demand is so strong there is absolutely no reason to think they both can't coexist.
Of course we haven't had a chance to taste Raised & Rooted's burger yet. I like Beyond Meat, but I like Impossible Meat better and I await the new entrant from Nestle's (NSRGY) . But the Impossible Burger has GMOs and, in the end, that could be a non-starter. Remember these ersatz burgers appeal to much more than just the vegan/vegetarian crowd but the overlap between plant-based burger eaters and anti-gmo'rs has got to be pretty heavy.
So let's wait and taste what Tyson has. We know Beyond Meat's stock has soared way too high to the sun, or to close to the Kingsford's or whatever. Maybe Tyson can bring the stock down. But the company itself? No way.