Monday Sep.09, 2019

IncogMEATo vs. Beyond Meat

_When you can't come up with another name for plant-based anything_

Markets finished their 2nd-straight positive week — that's courtesy of August's jobs report (unemployment stayed at a nearly 50-year low 3.7%) and signs that US/China trade chats are back on for October (relationships just take 1 phone call).

High

Who's up...

Vinyasa flows are for the boys... Lululemon already recognized that it needs to get its pants on the other half of the population, so earlier this year it made a bold goal: Double its men's line over the next 5 years. Investors rewarded the athleisure pioneer as its quarterly sales of guys clothes surged 35%, popping shares up 8% last week.

Game of Deal Thrones... and JPMorgan's got a dragonglass sword. Over the weekend we learned that America's largest financial firm is close to winning the biggest IPO in history: Saudi Arabian oil giant Saudi Aramco (that's Earth's most profitable company). Advising the deal as the lead investment bank is a lucrative bragging rights victory.

Lows

...and who's down

Jealous... Tinder-owner Match crumbled 5% as soon as Facebook unveiled its new look: Facebook Dating just hit the US (it's exactly what it sounds like). Match shareholders have known for months Zuck was getting into the swipe-game with a feature to connect singles based on interests. But the surprise was how much Facebook integrated Instagram into playing matchmaker — that cuts straight through Tinder's soul.

Bralettes > Pushups... 2 numbers explain it all: American Eagle's sales fell 1% — but sales for its lingerie brand Aerie surged 16%. The Millennial-toned bralette legend is snagging market share from Victoria's Secret. So while American Eagle stock dropped on overall weakness, it's rewarding Aerie with 40 more of its own stores.

That whole destroy email thing?... That'll cost more than expected. Slack unveiled its 1st earnings report since going public — and shares fell 14% after it only added 5K new clients. Looks like the office instant-messager's 1st 10M clients (startups, scaleups, VCs) were a lot easier than its next 10M (law firms, financial institutions, corporate America) will be.

Protein

The competition has arrived: Beyond Meat drops as Big Food goes plant-based

The cavalry has arrived on stalks of celery... We unofficially hit peak plant-based meat last week as established food icons jumped on the bandwagon (don't worry — it's a Prius). You can decide whether the market — looks/tastes/bleeds like animal meat, but smaller environmental impact — is bigger or smaller than its cousin industry, plant-based milk.

The iMEATation game... Here are major new brands/partnership announced just this month. The primary theme is aggressive creativity around the names:

Kellogg's plant-based burger: "Incogmeato"
Hormel's plant-based beef: "Happy Little Plants"
Kroger's plant-based deli meats: "Simple Truth"
Tyson's plant-based shrimp: "New Wave" (it invested in the company). It also unveiled its own plant-based option "Raised & Rooted" in August.
Nestle's plant-based "Awesome Burger" is already testing with McDonald's in Germany.

One of Beyond Meat's advantages is gone... The only publicly traded company that's 100% plant-based meat had a tailgate-worthy IPO (rival Impossible Foods is big, but private). Beyond's stock though has fallen 35% since July, and a hefty portion of that is from increased competition. Here's how its 2 divisions are doing:

Grocery Stores = 50% of sales: Weak first-mover advantage 🌾. Beyond's brand is better known than the rest, but it could become a price war in the confusing aisle getting packed with more not-called-veggie veggie burgers,
Fast Food Partnerships = 50% of sales: Strong first-mover advantage 💪. Beyond has partnered with Dunkin, KFC, Subway, and more. Those chains aren't likely to switch just because there's competition. And as McDonald's looks for a plant-based partner, it'll probably want one with a vegan track record.

What else we’re Snackin’

Work: 9 CEOs on how to prevent burnout
Life: 10 go-to Gmail tricks (we're into the last one: "Never break the chain")
Money: What Dividend Yield is and why you should pay attention to it
Venture: The virtue of startup patience (VC Fred Wilson's Duolingo case study)
Crypto: Apple exec: 'We're watching cryptocurrency'

This Week

Monday: Earnings from Wanda Sports
Tuesday: Apple's big product reveal presentation (iPhone 11?). Earnings from Restoration Hardware, Dave & Buster's
Wednesday: We remember the Sept 11th attacks from 18 years ago. Earnings from Aurora Cannabis
Thursday: SmileDirectClub's IPO, Earnings from Kroger, Oracle
Friday: Cloudflare's IPO

Disclosure: Authors of this Snacks own shares of Amazon and Beyond Meat

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