Beyond Meat vs Impossible Burger | We've Got Beef | 5

0:07I'm David Brown and this is Business Wars.

0:30The food company Beyond Meat recently had a short-lived spike in its stock, mostly thanks to internet trolls. But now shares are back to where they have been for a while, hovering around just a dollar per share. Its biggest competitor, Impossible Foods, is privately held, but their financial outlook is allegedly not much better. Meat alternatives were once trendy. Now the top purveyors are struggling to stay afloat. Online wellness influencers have stepped up their attacks on the brands for being ultra-processed, pointing to a long list of hard-to-pronounce ingredients. Beyond and impossible have clapped back with videos and documentaries of their own, but those haven't seemed to generate quite as much buzz.

1:13So where does all this leave these brands at a time when the tides have shifted? Here to talk about it is Clint Rainey, an investigative journalist who's covered Beyond Meat and Impossible Foods since their beginnings. A few years ago, he was approached by these companies to investigate a social media disinformation campaign, allegedly funded by big meat companies to eliminate Beyond and Impossible from the competition. Clint will join us to explain where this beef with fake meat came from and whether these online rumors were true. But first, Dina Shanker of Bloomberg Businessweek dives deeper into how Beyond became a meme stock this fall and whether there's a place for it on Wall Street's table moving forward.

1:55Stick around because all that's coming up.

2:08Dina Shanker, welcome to Business Wars. Thank you so much for having me. Hey, tell us a little bit about your time on the packaged food beat at Bloomberg. When did Beyond Meat hit your radar? Was it for work or were you just sort of at the grocery store one day and you stumbled upon something interesting? So Beyond Meat came onto my radar before I even started at Bloomberg. Before Bloomberg, I was at Quartz, still covering food. And people were talking about these bleeding burgers. There was the Beyond Meat burger and there was the Impossible burger. And they were kind of going head to head. And at the time, it was really hard to get your hands on one, to try one.

2:46I think I made it to a Beyond Meat burger party. And it was like a hop-in party in the East Village. and everybody wanted to try those burgers. And like, you could get like a quarter of a burger. Like, there really wasn't a lot of it. So you had some Beyond Meat at this little Beyond Meat party. What did it taste like to you? So I should say that I'm not a meat eater. So I mean, I've eaten meat in the past for sure, but I'm not a regular meat eater. I stopped eating meat probably like 10 years ago with some exceptions while I was pregnant. I let myself eat meat because I can't do a lot of other fun stuff.

3:20So at the time, you know, I was like, I think we all had kind of the same reaction, which was like, hey, that's that's pretty good. And I think there was the same reaction to the Impossible Burger. It was all like up until this point, you know, every veggie burger had been kind of like a soy mush patty. Sometimes you get a crispy. Sometimes sometimes you could see like like a garden burger, like you could see the vegetables in it. But there was nothing that really felt like it was really competing with a beef burger. Certainly the only time meat eaters ever were interested in the veggie burgers I was bringing was when I brought a Beyond Burger in those early days and I brought a package and people were like, oh, I heard about those things.

4:08So they were very buzzy. And I think that in the early days, they really did represent a huge leap in terms of what could be made for vegetarians to replace the beef in between the buns. See, my wife doesn't eat meat either. And she's put off by like the red coloring of the burger and the fact that it sort of has the same texture, you know. And this is something that I know that both companies worked really hard on was getting the similarity right. And sometimes I've wondered just looking back on it, was that really the right strategy to try to come up with something that emulated a burger so that people wouldn't miss out at the barbecue.

4:52I don't know. I don't know what the thinking was. Why emulate meat when you've got something that's unique unto itself and that tastes, as we both said now, pretty good, right? Well, so it really comes down to the total addressable market. And if Beyond Meat wants to say we're going to be huge, they want to show that they have a huge total addressable market. You might hear it referred to sometimes as TAM. It's a term that's used by, you know, Wall Street analysts and the like. And they will say, this is a product that you're only selling$100 million of this year, but there's a total addressable market of$6 billion or whatever.

5:31It's your potential for growth or something. Yeah. It's the ability, like how many plates do you think that this thing can land on? And so there was a time when they would actually compare themselves to plant-based dairy products, plant-based milk. And what they would show there was that the amount of fluid milk that, and I'm using milk in quotation marks loosely because the amount of it that was actually vegan, that was made from soy or oats or whatever, was actually pretty big. and something like 10 to 15 % of milk sales were going to plant-based milk. So there's this idea that if you could replicate that, maybe you could even get bigger than that, you have these potential like blockbuster, like total game-changing products.

6:21If you're looking to replace a garden burger, it's a much smaller total addressable market than if you're looking to replace a beef burger. Got it, got it. Okay, now you've tried both. was there one that was superior, Impossible versus Beyond Meat? Well, so it's interesting because, first of all, these products have been iterated and improved upon, and they also have a number of different products in their lines. And generally speaking, consumers often say that they like the Impossible Burger better than the Beyond Burger, but I've also heard that the Beyond Sausage is better than the Impossible Sausage.

6:59And I actually heard that from a restaurant, Bear Burger, that was selling both Impossible and Beyond Burgers at once. And they eventually dropped the Beyond Burger because the Impossible Burger was outselling it so much. Before they dropped it, they were really talking up the Beyond Sausage. And they said that was such a great product and people really loved it. But they ended up dropping that too. And it was just not the right product for that setting. You know, it's a sausage product. It kind of maybe would make more sense out of, you know, a baseball game or something like that. But they ended up going with Impossible Burgers.

7:39I wonder if that's part of their problem because you ask someone, hey, should I try Beyond or should I try Impossible? And then you get an answer like, well, their sausage is kind of good. But, you know, but that was two years ago and now they've got something else. And I mean, in a way, it's kind of hard to know what you're asking about, right? Very true. If I said I liked that Beyond Burger I had last year or two years ago, I'm going to go back and I'm going to get it and make it again. I'm probably buying a different product. And maybe I like that product more or maybe I don't, but they do change their products are supposed to be getting better and better.

8:15And, you know, I think part of in retrospect, everything's much easier in hindsight, right? And in retrospect, when they really became such a big deal after they went public and their IPO was huge, and they, Ethan Brown, the CEO and the founder, would often say, listen, we know the product is not where we want it to be yet. We're getting closer. We're getting closer. And at the time, it seemed like honest, you know, okay, sure. Enjoy. I think we think you'll enjoy this, even though you might not like it as much as you like a beef burger. But now in hindsight, you're like, maybe you shouldn't be telling everyone that your product isn't great.

8:54This gets to something I think has long been the issue with some of these meat replacements or protein replacements, I guess. And that is, who are you selling to? Are you selling to people who are trying to avoid meat? Are you selling to people who are put off by the taste or texture of meat? Are you selling to people who want to make a change and they want to wean themselves off of meat? Who's the buyer here? How would you answer that question? Well, I'll tell you who I think the buyer is. And this might not be who Beyond Meat wants the buyer to be. Beyond Meat wants the buyer to be meat eaters, non-meat eaters, anyone.

9:30But especially they really wanted those meat eaters. And I think for a while, meat eaters were trying Beyond or Impossible Burgers out of a lot of curiosity. And sometimes they like them and sometimes they bought them more than once. But what it turns out is that the real like committed buyers of these products tend to be people that don't eat meat. And they also they're only a slice of that population because some people who don't eat meat don't want anything that resembles meat. Some people don't eat meat, really like meat. They just have chosen for a variety of reasons not to eat it. But a lot of people, they don't they don't want something that replicates meat.

10:12they made a decision not to eat that. And so it's tough. It's tough to figure out who exactly the consumer is. I think very often who the consumer turns out to be is a vegetarian or non-meat eater at a restaurant. And this is the only thing on the menu that they can eat. It's tough for the company, at least on two levels. One is, what is it that you're selling to investors. And the other is, what is the marketing message that you're putting out there? If I were marketing it, I wouldn't come head on with beef. I'd say, look, you know, burgers are boring and try something different. This stuff tastes good.

10:54How did both companies approach this in terms of their marketing? What were they telling people they were selling them? So for Beyond, Beyond really leaned into the health messaging. We are selling you something that is healthier than your burger. If you're trying to get healthy and strong, eat Beyond Meat products. I mean, they used a lot of athletes as spokespeople and ambassadors. Health, health, health was really their message. Impossible really didn't lean so much into that. They were much more focused on climate change because beef is a massive contributor to climate change. So that marketing was directed that way.

11:34You know, what ended up happening for Beyond was that as a lot of people were like, oh, well, I am trying to get healthier. So I will try this. And they might say, oh, you know, I don't love it as much as I love a beef burger, but I am trying to get healthier. So I'll do this, even though it's more expensive and even though it doesn't taste as good. But then it started sort of becoming clear that these are not healthy products in the way that we tend to think about healthy. You might be able to say, depending on the product and what you're comparing it to, that it's maybe a little healthier than a fast food beef burger.

12:12But if you're putting like the mayo and the cheese and the sauces and the bun and all of that, like every layer of that, like the margin gets thinner. It's like a salad, isn't it? Right, I'm eating healthier. And then you get all this dressing and stuff on there. And the truth is, is that for a lot of people, if you love burgers and you're trying to get healthier, you might be better off just eating chicken because chicken is healthy. You know, it costs less than a beef burger. A Beyond Meat burger costs more. And for a lot of people, they might find that they enjoy the chicken more than they enjoy the Beyond Meat burger.

12:48Now, this is like super personal for every individual about what their preferences are. But what became clear was that Beyond Meat and Impossible are what we now are very familiar with as ultra processed foods, meaning that they have a lot of ingredients in them that are really sub ingredients, meaning it's not corn. it's like a derivative of corn. Something unpronounceable. Emulsifiers and preservatives. Right. Exactly. Now, Beyond has gone really far in trying to clean up its ingredient list and to try to reduce certain kinds of fat levels, reduce sodium, and do all of these things, try to replace this oil with that oil to meet different kinds of health metrics.

13:30Right. I don't know that it's going to work in terms of changing what's in the minds of consumers. That's what you think the bottom line is. It was just something that was okay, but people were okay doing without it, and they didn't return. Yes. I mean, listen, there's also been tremendous execution problems for this company where they were offering customers products that they had not yet figured out how to make at mass scale. And so when it became time to make them at mass scale, they just couldn't do it in a reliable way. This was not a company that was really holding up its end of the bargain in terms of meeting deliverables, deadlines and just making everything happen.

14:14Hey, it's time for a break. My guest is Dina Shanker, reporter for Bloomberg Businessweek. When we come back, we'll talk more about Beyond's financial crisis and whether they'll make it through next year. Stay with us.

14:38hey welcome back to business wars my guest is dina shanker she's a reporter with bloomberg where she covered beyond meat for several years dina when did wall street start taking notice and really worrying about the future of this segment if you look at their stock chart it's pretty crazy to see the roller coaster from 2019 to 2022. In 2019, the stock price reaches a high of$239.71. But then starting in 2021, it starts going down, down, down, down, down. And by 2022, there's like a small tick up. But at this point, we're still under$50. And remember I said that high was almost$240. Yeah, right.

15:23When I checked the stock price around 2 o 'clock today, it was$1.06. But there was a weird period there. It was in October, and Beyond Stock had been tumbling for some time. All of a sudden, seemed like out of the blue, Beyond Stock rocketed something like more than 1 ,300 % or something over the course of a week. What was going on? So that was when Beyond had its moment as a meme stock. And a meme stock is a stock that is not being traded based on its financial fundamentals, but almost kind of like an internet joke, that there's a lot of people that are deciding that they're going to buy the shares to drive up the price.

16:10It's a super shorted stock, so that can make it a good target for meme stockers. and it briefly went up and then it just came back down. You say it's a joke. I know a lot of people who saw this stock rising probably thought, well, it's no joke to me. They bought in and they lost a lot of money. What was your take on the forces behind this meme stock thing? I'm definitely not an expert in sort of like the meme stockification of Wall Street. But what I can say is that these are not decisions based, like I said, on the financial fundamentals of a company. It wasn't like Beyond Meat just got a big deal with McDonald's.

16:53And now we want to all buy this because that means it's going to be selling burgers, you know, in 14 ,000 restaurants. So I was hearing from some people that either are in the industry or used to be in the industry. It was like watching this like funny thing happen and knowing it was pretty much irrelevant to the future of the company. The company has to make products that people want to buy. Yeah. That was true in 2020. It was true in 2022. And it remains true today in 2025. There have been rumors that Beyond Meat may not make it to 2027. What are the numbers showing? Well, this company has been dodging bankruptcy rumors for a long time.

17:40They had a tremendous amount of debt that was really looming over them. They were able to convert that debt. They diluted their shares. So I think they've bought themselves some time. They are doing a lot of cutbacks to try to lower their operating expenses. That seems to be going well. Well, at the same time, they're still having trouble with the basics, like increasing their revenue. So in August, they actually tweeted. And this is, I think, really highly unusual of a consumer facing brand to put out a tweet like this. They said recent media stories suggesting that Beyond Meat filed for bankruptcy are unequivocally false.

18:24We have not filed, nor are we planning to file for bankruptcy. Go beyond. That was at night, too. I mean, 10, 16 p.m., but that's on the East Coast and they're a West Coast company. So but I mean, like, clearly the stories were out there and they felt the need to address them. I think Ethan is really committed to his company. I think he would do anything he possibly could to keep it operating. And we'll just have to wait and see what the what the future is for this company. Let's shift gears to impossible now. Impossible remains private. Smart move. Why, by the way, especially when there was a bit of buzz around this segment, why remain private?

19:10And I wonder what you make of that decision. I can't say why they remain private. I can say that in the eyes of investors, one thing that we used to see a lot was that investors saw Beyond and Impossible as like proxies for each other because the companies are so similar, even though, of course, the companies would say they're very different. But like if there was good news for Impossible, Beyond Meat stock would often rise, which is funny, right? Because they're competitors and you might expect the opposite to happen. But because it was seen as more of like a proof of concept rather than proof of a particular company's success, we would see them rise.

19:53You know, you look at what's going on with Beyond Meat stock and you wonder if that maybe makes it a bad time for Impossible to go public. I guess that by the same token, it's difficult to know whether they're really in better shape than Beyond. Are there any signals or do you have any sense of it at all? So it is hard to tell because they are private and they don't have to disclose their earnings and their revenue and any of that. But I will say one thing that we've seen from Beyond Meat that we have not seen in the same way for Impossible is that Beyond Meat has lost a lot of its big restaurant partner customers.

20:26Carl's Jr. was one of the first big fast food chains to start offering Beyond Meat products. And it was a really big deal because I don't know if you remember those commercials with like - Oh, I remember. They were really into beef. So the fact that they were putting Beyond Meat on their menu was like this huge endorsement. And Carl's Jr. dropped Beyond, Del Taco dropped Beyond, you know, McDonald's trialed Beyond in the United States, their burgers. It didn't go very far. They do still sell actually Beyond Meat chicken nuggets in Germany. And I think that's like a real big win for Beyond. But here in the U.S., they're still on some menus, but they've been dropped from a lot of menus.

21:11If you look at Impossible, it's not the same situation. So Impossible is still available as an Impossible Whopper at Burger King. Starbucks still sells Impossible Sausage. I was looking at Cracker Barrel because when Cracker Barrel added Impossible Sausage, they got a lot of backlash. It was bizarre. People were very upset that they were adding something to the menu. The menu was tainted by it or something. Yeah, exactly. And like they weren't taking pork sausage off the menu. They were just adding something and people just lost their minds. And so the fact that Impossible is still on so many menus to me says that they must be selling enough that it's worth it for these restaurant companies to keep them on the menu.

22:01And for what it's worth, when I go into Starbucks, I always ask, does anybody buy the Impossible sausage? And they always say, oh yeah, people buy it. Huh. You know, it's interesting how the two companies have taken different directions when it comes to genetically modified ingredients. Impossible, they use genetically modified ingredients. Beyond doesn't. Is that a good play long-term? So Impossible's, you know, magic ingredient, as they call it, it's called heme. And heme is a molecule that's in plants and animals. It's what gives meat its taste. Impossible has always said. And so they make their own heme using a genetically modified yeast.

22:42And so they basically were like, the key to our product involves genetic modification. So that is what it is. We are not going to try to run away from that. And then they were like, well, the rest of the product is it's a soy based product. So we'll just use GMO soy because it's much more widely available. It's much less expensive than going non-GMO soy. And they're already GMO because of their hemes. So that made a lot of sense for them. And I think it was a smart move. Interestingly, Beyond chose pea protein, but there's a reason soy is a popular ingredient for meat imitation products. It's because it doesn't have any of its own taste.

23:28It's very easy to manipulate taste-wise. But Beyond was using pea protein, which has a much earthier taste. I've tried plain pea protein, as it turns out. And the like the yucky pea protein is really yucky. and so I think beyond sort of box itself into a corner by deciding to go non-gmo because it was trying to appeal to people that weren't looking for gmos but the problem with that is that a lot of the time the same people that are looking for a non-gmo product are also the same people that are looking for a non-ultra processed food product and so what do you end up with you end up with a a more expensive product because it's non-GMO that isn't even appealing to the people looking to buy your product.

24:17So maybe all of this together has contributed to Impossible doing better than Beyond, but I honestly, it probably has more to do with taste and potentially other factors as well. The question on the table, no pun intended, is whether these two companies can survive long term. And I think, of course, since Beyond is public, that seems to be the one getting all the attention. I wonder if there's a bigger lesson here on running a food company like a tech startup. What do you think? Yeah, I think it's really important that when you are developing your vision for a company, that you are honest with yourself and realistic about what is achievable.

25:03because if you're not honest with yourself, you're gonna end up selling something to investors that you can't deliver on. And I think that the aspirations that Ethan Brown sold to investors and many of the statements that he made, you know, about their health and all this stuff, they could not deliver on those. And by the time now where they're saying, oh, we have this really clean ingredient panel and the numbers on our nutrition facts panel are so much better than they used to be. My concern for the company would be that that ship has sailed and that you already tried to convince people that you had a healthy product.

25:45People kind of said, hold on, I just took a closer look or I spoke to my doctor about it. That's something I've certainly heard from people and they're telling me it's not healthy. And so I think that Ethan Brown absolutely over-promised and under-delivered. From my reporting, I know that's what he did with the fast food chains. And I think he did that on a broader level just to the general public, including investors. To me, Dina, this is so fascinating because I would think that you would be the kind of person that beyond and impossible would have hoped they could win over. And I guess the question, it's almost an existential question.

26:27Why do these companies exist? I mean, they've had trouble finding an audience. They've fallen out of favor. And yet, here you are, Dina, and it seems like you are the kind of person that they would want to have won over a long time ago. You know, I think that there is these are niche products and there's a market for them. I just think it's much smaller than anybody was saying back in 2019. Even myself, I don't regularly eat these products, but I got to tell you. So I work at Bloomberg and Bloomberg takes great care of its employees. So a couple of weeks ago, they actually had egg and cheese biscuits and they had some with like a regular meat sausage.