Patties from Beyond Meat Inc.'s plant-based burger Beyond Burger are cooked on a pan.
Yuriko Nakao | Getty Images
Beyond Meat and PepsiCo announced Tuesday that they had formed a joint venture to create, manufacture, and market snacks and beverages with plant-based substitutes.
Beyond's shares rose more than 31% in premarket trading on the news, while Pepsi stock rose about 1%.
The partnership gives Beyond, a relative newcomer to the food world, the opportunity to leverage Pepsi's manufacturing and marketing expertise for new products. For its part, Pepsi can deepen its investments in increasingly dense plant-based categories while partnering with a leading manufacturer of meat substitutes.
Beyond Meat controls about 13% of the meat alternatives category in the US, according to Jefferies' estimates.
"PepsiCo is the ideal partner for us in this exciting endeavor of global scope and importance," said Ethan Brown, CEO of Beyond Meat, in a statement.
Operations are managed through a limited liability company called The PLANeT Partnership. Financial details were not disclosed.
The partnership also helps Pepsi work towards its sustainability goals. Last year the company signed a pledge from the United Nations to set scientifically sound emission reduction targets. A 2019 United Nations report found that the food system is responsible for 37% of greenhouse gas emissions. In recent years, Pepsi has also tried to reduce the amount of sugar in its products and add healthier snacks and drinks to its portfolio.
"Plant-based proteins represent an exciting growth opportunity for us, a new frontier in our efforts to build a more sustainable food system, be a positive force for people and the planet, while driving consumer demand for an expanded portfolio of more nutritious products to satisfy." Ram Krishnan, Pepsi's global chief commercial officer, said in a statement.
PepsiCo's shares were roughly unchanged over the past year, which translates to a market value of $ 196 billion. The food and beverage giant saw higher sales during the pandemic thanks to consumer stockpiling and less exposure to off-home opportunities than its rival, Coca-Cola.
As of Monday's close of trading, Beyond's stock was up more than 32% last year, despite the coronavirus pandemic affecting their business and affecting sales to restaurants. The company has a market value of $ 9.95 billion.