Beyond Meat ‘Tastes Like Overpriced Falafel'

The speed fake meat products capture market share from the real stuff is dependent on money from investors.

George Atuan has some interesting and astute observations about your competition, and a vision that may impact your financial success. His latest column is titled “Beyond Meat: An Overpriced Falafel.”

Wait…this is more than just a carnivore’s rant about fake meat. Atuan is a financial columnist for Seeking Alpha, and his study of the plant-based protein startup was designed to help him offer sound investment advice for Beyond Meat stock.

I, along with other card-carrying members of the Heartland Chapter of GCA (that’s Gravy Connoisseurs of America) am convinced fake meat will remain a niche player in the meat industry for the foreseeable future. But how fast these fake meat products capture market share is dependent on money from investors, so the observations of someone like Atuan are important.

George Atuan is the founder and portfolio manager at RedFox Capital, Santiago, Chile, which offers investment advice to high net worth individuals and institutional investors. He holds a Bachelor of Applied Science from the University of Toronto, an MBA from York University and he speaks English, Spanish, Portuguese and Arabic. Whew.

He writes as a free-lance contributor to Seeking Alpha, which offers market insights and financial analysis, investment ideas and stock research written by finance experts.

Atuan is not a dietician or a chef. But, after an in-home comparison of beef burgers and Beyond Meat, Atuan declared the plant-based stuff tasted like “overpriced falafel.”

That word sent me scrambling for a dictionary, because (for me) Atuan might as well have been using Arabic words. Falafel, according to Webster, is “a small croquette made with ground chickpeas or fava beans and spices, often served with salad and tahini in pita bread.”

Here’s Atuan’s description of his first bite of the Beyond Burger:

“At first, I couldn't pin it, but the second bite took me to my teenage years back in Bethlehem in the Middle East... that is when I realized that Beyond Burgers are just glorified Americanized falafels.”

But, while we may like his comparison, we’re not interested in Atuan’s taste buds. His financial and stock expertise is what we want. Well…if you’re anti-fake meat, Atuan doesn’t disappoint.

Indeed, he offers seven reasons for not buying Beyond Meat stock. Here’s the list:

Problem #1: Tasty, but far from tasting like a real burger.

Problem #2: No moat. Meaning – when better products are made the competition will quickly copy any upgrades.

Problem #3: Tough Competition Ahead. Think Tyson, Nestle and other global behemoths.

Problem #4: Production Bottleneck. Beyond has co-manufacturers, which actually put the product together, and to grow Beyond needs more partners.

Problem #5: Unattractive business economics in steady-state. As Beyond expands it will cease being a niche player, and thus compete with meat packers and find lower returns.

Problem #6: Not a Healthy Substitute. Beyond’s patty has more fat, less protein and four times as much sodium as a beef burger.

Problem #7: Valued to perfection. Atuan says to justify Beyond’s $150 stock price, sales have to reach $22 billion by 2030. Analysts on average forecast full-year 2019 sales of $205 million. In other words, current sales are less than 1% of $22 billion.

Presently, the Beyond patties are priced about 2.4 times higher than the real stuff. I’m no Wall Street analyst and I can’t speak a lick of Arabic, but cowboy logic suggests reaching sales of $22 billion in 10 short years is a tall order.

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