Beyond Tyson

The latest trending news in vegan world is regarding the meat processing company Tyson Food’s investment in the popular vegan startup Beyond Meat.

Here is an interesting article by Tobias Leenaert regarding the same: Beyond Meat and Tyson: Sleeping with the enemy? This article prompted me to write down my thoughts as well, bringing some unique perspectives onto the table. Have a look and share your comments!

What could be Tyson Foods’ true intention?

Of course every investment by companies like Tyson Foods would be for profit. But the question is - exactly how this profit is going to come by? That’s where the debate lies. Let’s ponder upon what could be Tyson Food’s true intention behind this investment.

A) To somehow kill Beyond Meat by (illegally and unethically) using the newly gained influence of 5% shareholding

B) To halt the growth of Beyond Meat (at least temporarily) until it can ramp down it’s own business interest in meat production/processing

C) To just let Beyond Meat be and grow on it’s own, and maybe try to buy more shares if and when it grows further

D) To actively assist & promote the growth of Beyond Meat, and also acquire more stake as time progresses and as they grow

*** My guess of reality is somewhere between C & D, more towards C

With 5% stake, what does growth of Beyond Meat mean to Tyson Foods?

First things first, the basic math - let’s say Tyson Foods has an overall 5% market share in meat industry. Now, every extra dollar revenue that Beyond Meat makes (i.e. every dollar that it snatches away from meat industry), Tyson Foods will lose 5 cents (assuming all meat companies takes hit equally). But that loss will get compensated by it’s shareholding in Beyond Meat! Brilliant!

If Tyson Foods has more than 5% market share in meat industry, then it would be logical to say that they wouldn’t want Beyond Meat to grow too fast, not yet. And if their share in meat industry is less than 5%, then they might enthusiastically promote Beyond Meat.

This is too simplistic, but do you see how this kind of data point is important even to hypothesize what their true intent might be? I hope Beyond Meat folks have looked into this aspect and thought through well.

Acquisition at lowest possible cost

Let’s say that Tyson Foods does believe that plant based food is the future, and intends to buy more stake in Beyond Meat “if” it grows well without being outperformed by other plant based food ventures. That’s fine, but will it try to keep Beyond Meat’s share artificially low until it can acquire more stake? It might be unethical and illegal too, but it is not uncommon to see this happen in greedy business world.

Remember, in this hypothesis, I am still saying that Tyson Foods believes that plant based food is the future (any business with common sense will agree!), and when things start becoming more favorable for themselves, they will start promoting it with full force, and of all you know, with the vast experience they have gained, they might do it much better than current vegan startup companies. So, overall is this good or bad for the cause of animals? Hmm...

Further points to ponder upon:

1. With 5% stake, to what extent Tyson Foods can influence strategies & operations of Beyond Meat? Or does the contract expect them to be silent partners?

Of course, if 95% shareholders are more vigilant, Tyson Foods might not be able to take undue advantage of its influence in any way, but… big corporations are equipped with everything to ensure they have maximum influence with minimum stake.

2. Similarly, as a 5% shareholder, what kind of business intelligence Tyson Foods will gain from Beyond Meat?

What if Tyson Foods use the critical data and spin off a competing product line of their own at the right time (perhaps after staging a fallout with Beyond Meat)? Or are they just entitled to limited information and/or bound by strict contracts that prevent them from taking advantage of such data?

3. The money that was invested by Tyson Foods - was it significant money for them, or was it just a silly-small transaction for the giant? Just curious to get a better perspective of the transaction.

4. From a futuristic perspective, can companies like Tyson Foods easily transform their infrastructure to produce/process/store plant based food instead of meat? What does the transition truly mean for them in terms of cost, timelines etc.?

5. Last but not least, what is the reason why Beyond Meat needed investments? Was it for survival, or was it for growth? And how much they needed (and still need)? Did they try getting it from vegan sources at all and failed/disillusioned? Or did they always think (or now started thinking) that collaborations like this is a great idea for greater overall impact?

Overall, it all depends on the 2 factors

(a) Exactly what is more profitable for Tyson Foods - quick growth of Beyond Meat, or slow growth, or no growth at all, or even decline, and how actively-effectively-ruthlessly they will take actions

(b) Exactly how shrewd are vegan shareholders in Beyond Meat, and how they can utilize Tyson Foods’ investment to grow Beyond Meat to the maximum and create maximum impact as well