Impossible Foods wins Walmart deal, Beyond Meat tumbles

By: Jayson Derrick
Jayson Derrick
Jayson lives in Montreal with his wife and daughter, loves watching hockey, and is on a lifelong quest to… read more.
on Jul 30, 2020
  • Impossible Foods said it will start selling its plant-based food at Walmart stores.
  • Exposure to more than 2,000 Walmart stores poses a competitive challenge to Beyond Meat.
  • Beyond Meat's stock was down more than 2% on the news.

Shares of plant-based food maker Beyond Meat Inc (NASDAQ: BYND) came under selling pressure on Thursday after rival Impossible Foods announced a new mega-deal with retail behemoth Walmart Inc (NYSE: WMT)

Impossible Foods at more than 2,000 stores

Impossible Foods said in a Thursday press release it’s plant-based “Impossible Burger” can be purchased at nearly 2,100 Walmart stores across the U.S. The faux-hamburger will sell in 12-ounce packages and can be bought in stores or online for pickup and delivery.

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Naturally, Beyond Meat investors took this news to be a negative catalyst for what many consider to be the premier player in the fast-growing plant-based food category. In fact, Impossible Foods noted the new Walmart deal brings its total exposure to more than 8,000 grocery stores.

This represents an increase of more than 50-fold since Impossible Foods started to heavily target the retail category in March 2020.

Available side by side with Beyond Meat

Beyond Meat’s products already sell in Walmart stores and will now compete with a formidable rival. Beyond Meat announced in early June a strategy of offering value packs at Walmart and other retailers.

At the time, investors applauded the move as it seemed like the right strategy to sacrifice some margins to win over new and curious customers. But the addition of Impossible Foods could result in a fierce price war and Beyond Meat may need to become even more promotional.

In fact, this was a concern expressed by some Wall Street analysts in late 2019. Perhaps the cautious stance was a bit premature but this is a thesis that many will now scramble to revisit.

For now, Beyond Meat investors aren’t that worried with the stock down around 2% for the day but still up more than two-fold from its March lows.

Beyond’s dominance can’t last forever

Beyond Meat investors were made aware of Impossible Foods’ desire to compete in the retail category for some time. The company made its grocery store debut in September 2019 and was an immediate hit with consumers.

In Impossible Foods’ press release, the company appears to have double-downed on its retail expansion footprint.

Impossible Foods CEO and Founder Dr. Patrick Brown said in the press release the company’s goal to “make the global food system sustainable” requires a physical presence so it is “available everywhere.” The natural choice to fulfill this vision is an agreement with the world’s largest retailer and dominant grocery store.

“More Americans buy meat for their families at Walmart than anywhere else,” the CEO said. “We’re confident that once Walmart customers try Impossible, they’ll become enthusiastic advocates for our products and our mission.”

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