Beyond Meat Inc. raised $241 million in its initial public offering after pricing its shares at the top end of an elevated price range.

In California, Beyond Meat priced its IPO at $25 per share and raised an estimated $241 million, disclosing in an SEC filing that it expects to sell 9.63 million shares at the top end of its projected $23-$25 range.

The company opens trading on NASDAQ with a $1.46 billion market valuation, based on known shares outstanding.

The Beyond Meat Business

In its IPO filing the company described itself:

“Beyond Meat is one of the fastest growing food companies in the United States, offering a portfolio of revolutionary plant-based meats. We build meat directly from plants, an innovation that enables consumers to experience the taste, texture and other sensory attributes of popular animal-based meat products while enjoying the nutritional benefits of eating our plant-based meat products. Our brand commitment, “Eat What You Love,” represents our strong belief that by eating our plant-based meats, consumers can enjoy more, not less, of their favorite meals, and by doing so, help address concerns related to human health, climate change, resource conservation and animal welfare.”

170 percent growth rate

The company achieved $87.9 million in sales in 2018, a 170% increase over the $32.6 million recorded in 2017, and grew a compounded 133 percent since 2016 when it generated $16.2 million in sales.

Losses have been heavy — the company recorded net losses in  2016, 2017 and 2018 of $25.1 million, $30.4 million and $29.9 million, respectively, “as we invested in innovation and growth of our business.”

Clearly, markets were looking at the stratospheric revenue growth and not the growth stage losses in evaluating the company and valuing the IPO. The company’s products are now carried by approximately 12,000 restaurant and foodservice outlets across the United States and Canada.

A new $35 billion sector

The market, as the company observes, “is comprised of fresh and packaged animal-based meats for human consumption. According to data from Fitch Solutions Macro Research, the meat industry is the largest category in food and in 2017 generated estimated sales across retail and foodservice channels of approximately $270 billion in the United States and approximately $1.4 trillion globally.

A surge in demand for alternatives

The company writes of the analogous success of plant-based dairy products, and notes:

“According to the Mintel Report, the non-dairy milk category in the United States was estimated to be approximately $2 billion in 2017. The success of the plant-based dairy industry was based on a strategy of creating plant-based dairy products that tasted better than previous non-dairy substitutes, packaged and merchandised adjacent to their dairy equivalents. We believe that by applying the same strategy to the plant-based meat category, it can grow to be at least the same proportion of the approximately $270 billion meat category in the United States, which over time would represent a category size of $35 billion in the United States alone. As a market leader in the plant-based meats category, we believe we are well-positioned to capture and drive a significant amount of this category growth. We also believe there is a significant international market opportunity for our products.”

The product platforms

The company wrote:

“To capture this broad market opportunity, we have developed three core plant-based product platforms that align with the largest meat categories globally: beef, pork and poultry. We create our plant-based products using proprietary scientific processes that determine the architecture of the animal-based meat we are seeking to replicate and then we assemble it using plant-derived amino acids, lipids, trace minerals and water. We are focused on continually improving our products so that they are, to the human sensory system, indistinguishable from their animal-based counterparts.

“Our flagship product is The Beyond Burger, the world’s first 100% plant-based burger merchandised in the meat case of grocery stores. The Beyond Burger is designed to look, cook and taste like traditional ground beef. Our products are currently available in approximately 30,000 points of distribution primarily in the United States as well as several other countries, across mainstream grocery, mass merchandiser and natural retailer channels, and various food-away-from-home channels, including restaurants, foodservice outlets and schools. We enjoy a strong base of well-known retail and foodservice customers that continues to grow.”

Manufacturing investment

The company said i“In 2018, we commenced production at a new state-of-the-art manufacturing facility and entered into relationships with several co-manufacturers to significantly increase our production capacity. In the first quarter of 2019, our monthly production capacity was triple our monthly capacity at the end of the second quarter of 2018.”

Innovation and improvement going forward

The company disclosed:

“Research, development and innovation are core elements of our business strategy, and we believe they represent a critical competitive advantage for us. Through our Rapid and Relentless Innovation Program, our team of scientists and engineers focuses on making continuous improvements to our existing product formulations and developing new products across our plant-based beef, pork and poultry platforms. Our state-of-the-art Manhattan Beach Project Innovation Center in El Segundo, California brings together leading scientists from chemistry, biology, material science, food science and biophysics disciplines who work together with process engineers and culinary specialists to pursue our vision of perfectly building plant-based meat.”

The Competitive Edge

The company said:

Product. We employ a revolutionary and unique approach to create our products, with a goal of delivering the same satisfying taste, texture and aroma as the animal-based meats we seek to replicate. In our Manhattan Beach Project Innovation Center, our scientists and engineers continuously improve our products to replicate the sensory experience of animal-based meat. Through our investment in innovation, we have pioneered products like The Beyond Burger and Beyond Sausage, which we believe closely replicate the sensory experience of meat—from the look of the package and raw product, to the sizzle on the grill, to the juicy and protein-packed satisfaction of biting into a “meaty” burger or sausage.

Market. Our breakthrough product innovations have enabled a paradigm shift in both marketing and target audience—tapping into the curious and enthusiastic pull from mainstream consumers for delicious and satisfying yet better-for-you plant-based meats. At one of the nation’s largest conventional grocers, Kroger, 93% of Beyond Burger buyers over the 26-week period ended June 30, 2018 also purchased animal protein during the same period, which evidences Beyond Meat’s appeal to meat-loving consumers.

Beyond vegans and vegetarians: The Halo Effect

The company avowedly avoids centering its brand around the growing vegetarian and vegan market. They write:

Instead of marketing and merchandising The Beyond Burger to vegans and vegetarians (who represent less than 5% of the U.S. population), we request that the product be sold in the meat case at grocery retailers, where meat-loving consumers are accustomed to shopping for center-of-plate proteins. We believe merchandising in the meat case in the retail channel has helped drive greater brand awareness with our end consumers. The Beyond Burger is now carried by approximately 15,000 of our 17,000 grocery store customers across the United States.

Reflecting the strength and value of the Beyond Meat brand to its partners, many of our restaurant, hotel and other foodservice customers choose to prominently feature our brand name on their menu and within item descriptions, in addition to displaying Beyond Meat branded signage throughout their venue. We believe that we have established our brand as one with “halo” benefits to our partners, as evidenced by the speed of adoption by key partners.

The Growth Strategy

The company said it will expand dramatically, and noted:

• Retail: We have a significant opportunity to grow our sales within U.S. retail by focusing on increasing sales at our existing points of distribution, as well as increasing sales of new products. We also expect to grow our U.S. retail distribution by establishing commercial relationships with new customers.

• Restaurant and Foodservice: Our products are currently being served in approximately 12,000 restaurant and foodservice outlets in the United States and Canada. As a result of our recent partnership with Carl’s Jr., The Beyond Burger is currently being sold at more than 1,100 Carl’s Jr. locations nationwide. We plan to continue to aggressively expand our network of restaurant and foodservice partners.

• International: We believe there is significant demand for our products across the globe in retail and restaurant and foodservice channels. We launched in Europe in August 2018 through contracts with three major distributors. We are increasing production for sales in Canada and Europe and have established and seek to establish additional relationships with distributors in other geographies for future expansion.

The Bottom Line

Impossible Foods is out there, and others as well, and if the sector is anything like $35 billion, there’s going to be a lot more relationships, actors, technologies and IPOs. This is the first through the gate, but a monster first, and there’s nothing like a $1.5 billion valuation at IPO to remind the world of the power of the advanced bioeconomy.