(Updated May 13, 2020) Jim Cramer, host of CNBC’s “Mad Money” and a former hedge fund manager, says that investors should not ignore the rising popularity of plant-based meat.
In two recent episodes of CNBC’s business show “Squawk on the Street,” Cramer discussed Los Angeles-based vegan meat brand Beyond Meat. He stated that the company—which uses pea protein to make “bleeding” meat-like burgers and realistic sausages—has the potential to grow as big as Amazon or Facebook.
While many restaurants have closed across the United States, retail demand for Beyond Meat’s products is “strong,” said Cramer. The company’s stock has risen nearly 60 percent so far in 2020.
Cramer said last Thursday: “It’s all going Beyond Meat’s way. And what is Beyond Meat doing? They’re cutting prices.”
“So the price of meat is going to go up for the regular meat, and the protein that skips the whole meat chapter is going to do well,” he continued. “Beyond Meat is one of the most dangerous shorts in this market.”
Sales of Plant-Based Meat Rise
On May 5, Beyond Meat revealed its first-quarter revenue had soared by 141 percent to $97.1 million. It reported a net income of $1.8 million. The same time last year, it reported a net loss of $6.6 million.
CEO Ethan Brown said in a statement: “I am proud of our first-quarter financial results, which exceeded our expectations despite an increasingly challenging operating environment due to the COVID-19 health crisis.”
Beyond Meat isn’t the only plant-based brand witnessing rising sales amid the pandemic.
According to Forbes, fresh meat alternative sales outpaced the growth of meat sales in the last week of March. The former increased 255 percent compared with 2019 and the latter increased 53 percent.
Vegan meat brand Tofurky, popular for its turkey-style roasts, reported last week that sales had increased by 40 percent in the previous 12 weeks.
Gardein—which makes a variety of plant-based meat products, including vegan breakfast sausage patties and Szechuan beefless strips—reported a sales increase of 65 percent from March 13 to April 19, compared with the same period last year. Thirty-eight percent of its buyers were new to the brand.
Reaching a ‘Tipping Point’
While plant-based meat sales rise, the meat industry is experiencing major issues due to the coronavirus pandemic.
Many processing plants have been forced to shut or run at limited capacity due to significant outbreaks among workers. This has resulted in meat shortages on supermarket shelves, but a back-up of animals on farms. A number of farmers have been forced to dump milk, break eggs, and euthanize their own animals.
On last Wednesday’s episode of “Mad Money,” Brown told Cramer: “We’ve reached the point where there’s so many livestock on the earth’s surface that we’re running into challenges with keeping that system working. That supply chain, as many people in the industry themselves have said, is under enormous pressure.”
“I think we are reaching a tipping point,” he added.
Cramer noted that Beyond Meat’s products effectively mimic the real taste and texture of meat. He said that he may even go vegan himself.
“I think there are people who are getting appalled by what’s happened at the meat packers,” he said on last Wednesday’s “Squawk on the Street.” “I think these stories make you become not necessarily vegetarian but to think twice about beef. If you think twice about beef and then you try Beyond, you kind of realize it’s very, very similar.”
Matt Ball, a senior communications specialist at the Good Food Institute, agrees with Cramer. He told Forbes that the reports surrounding the meat industry and coronavirus are pushing consumers towards plant-based products.
“There’s a greater concern for food safety,” he said. “There’s been a lot more attention to how meat is produced in the media.”
He continued: “people are trying to figure out safer ways to find out what they’re looking for, and plant-based meat provides not only a great increase in food safety, but also in environmental sustainability.”