Beyond Meat and PepsiCo form venture to manufacture herbal products

Beyond Meat and PepsiCo announced on Tuesday that they had formed a joint venture to create, produce and market snacks and drinks with vegetable substitutes.

Beyond shares jumped more than 27% in the pre-market with the news, while Pepsi shares rose about 1%.

The partnership gives Beyond, a relative newcomer to the food world, a chance to leverage Pepsi’s production and experience in marketing for new products. In turn, Pepsi can deepen its investments in plant-based categories, which are increasingly crowded, while working with one of the biggest creators of meat substitutes.

Beyond Meat controls about 13% of the meat alternative category in the U.S., according to Jefferies estimates.

“PepsiCo represents the ideal partner for us in this exciting venture, of global reach and importance,” said Ethan Brown, CEO of Beyond Meat, in a statement.

Operations will be managed through a limited liability company called The PLANeT Partnership. Financial terms were not disclosed.

The partnership also helps Pepsi to work towards its sustainability goals. Last year, the company signed the United Nations commitment, committing itself to setting emission reduction targets based on science. A 2019 UN report found that the food system contributes 37% of greenhouse gas emissions. In recent years, Pepsi has also tried to reduce the amount of sugar in its products and add healthier snacks and drinks to its portfolio.

PepsiCo’s shares have been virtually stable over the past year, giving it a market value of $ 196 billion. The food and beverage giant had higher sales during the pandemic, thanks to consumer stocks and less exposure to events outside the home than its rival Coca-Cola.

As of Monday’s closing, Beyond’s shares had risen more than 32% last year, despite the blow to its business by the coronavirus pandemic, which affected its sales to restaurants. The company has a market capitalization of $ 9.95 billion.