October 16, 2021

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Beyond Meat surges on Pepsi snack, drink deal but Wall Street sees ‘limited upside’ [Video]

PepsiCo (PEP) and Beyond Meat (BYND) on Tuesday unveiled a new joint venture to broaden the alternative food trend, introducing new plant-based snacks and beverages to shelves that sent the latter’s stock on a tear.

The companies didn’t reveal much about the new initiative, dubbed the PLANeT Partnership, but said in a press release that it would “leverage Beyond Meat’s leading technology in plant-based protein development and PepsiCo’s world-class marketing and commercial capabilities to create and scale new snack and beverage options.”

And it may be a while before consumers are able to enjoy the fruits of the partnership, with a BeyondMeat spokesperson telling Yahoo Finance the products are “still in development. Together, we will increase accessibility to products that will inspire positive choices for both people and the planet.”

‘Limited upside’

KATWIJK, NETHERLANDS - NOVEMBER 19: Packages of Beyond Meat Inc.'s plant based meat products, Beyond Burger and Beyond Sausage, are displayed at a supermarket on November 19, 2020 in Katwijk, Netherlands (Photo by Yuriko Nakao/Getty Images)
KATWIJK, NETHERLANDS – NOVEMBER 19: Packages of Beyond Meat Inc.’s plant based meat products, Beyond Burger and Beyond Sausage, are displayed at a supermarket on November 19, 2020 in Katwijk, Netherlands (Photo by Yuriko Nakao/Getty Images)

Financial terms were not disclosed, but Beyond Meat’s stock rallied in early trading, with investors piling into the healthy food trade that’s gotten a boost from COVID-19 lockdowns. The shares jumped as high as 39% on the day — which is the biggest intraday gain since June 2019 — but Pepsi’s stock was largely flat.

While Wall Street firm Oppenheimer cited the deal as “another attractive longer-term driver for Beyond Meat to capture more share in the expanding plant-based food ecosystem,” others were more sanguine about what the partnership would ultimately mean.

JPMorgan analyst Ken Golman wrote that Tuesday’s rally in BYND “overshoots” the actual financial opportunity. He also said the gain would have made more sense had the deal involved supplying a company like McDonald’s, adding that Pepsi’s involvement “probably has limited upside.”

In recent years, the soda giant has jumped on the alternative food trend, steadily creating and buying health and wellness-related products.

This includes LAY’S oven baked chips, Sabra Snack Cups, Alvalle ready-to-drink gazpacho, Quaker Breakfast flats and Gatorade Juiced. The company also acquired companies in the space like Bare Snacks BFY Brands, maker of PopCorners snacks, and SodaStream, which it acquired back in 2018 for $3.2 billion. In the company’s third-quarter earnings results, CEO Ramon Laguarta cited a demand for this product as an “environmentally friendly, convenient, at-home beverage system.”

Brooke DiPalma is a producer and reporter for Yahoo Finance. Follow her on Twitter at @BrookeDiPalma.

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