With Pepsi, Beyond Meat – which already makes vegetable alternatives to beef and pork – will have access to global distribution and marketing power. This means that Beyond Meat will be able to enter more categories and bring new products to market faster, according to an Beyond Meat spokesman. The joint venture in the United States may include future expansion in China and the United Kingdom, the spokesman added. The companies did not disclose the financial terms of the deal.
The news generated an increase in Beyond meat (BYND) stock. The stock closed up 18% on Tuesday.
Pepsi’s marketing prowess can also get more people to try Beyond Meat’s product.
“Historically, [Beyond’s] marketing spending has been nominal (mostly social media), “wrote UBS research analyst Erika Jackson in a note on Tuesday. Pepsi could help take this marketing to a new level and attract more customers to the group .
For PepsiCo (PEP), the partnership is a way to win a piece of the plant-based protein pie.
“Consumer demand for herbal products is big enough to have an impact on sales as the alternative herbal industry continues to grow,” said Ramsey Baghdadi, consumer analyst at data and analytics company GlobalData, in a statement Tuesday. “PepsiCo’s decision to expand its existing selection of plant-based snacks will be a game changer in the long run, as more consumers naturally gravitate towards the trend.”
Other packaged consumer goods companies entered the market with acquisitions and new lines. Nestlé (NSRGY) sells vegetable meat through Sweet Earth, a vegetarian food company that it acquired in 2017. And Kellogg (K) sells meat of vegetable origin through its brand Incogmeato.
PepsiCo often establishes partnerships to help establish itself in attractive segments, noted Jackson of UBS. For example, PepsiCo and Starbucks (SBUX) they have been partners for ready-to-drink coffee-based drinks for years.