Meatless meat can taste just like the real thing, and investors are salivating over what some predict could become a $35 billion alternative meat market. After a successful test run in Burger King, Impossible Foods is going nationwide at the fast food giant later this year with its meatless Whopper. Competitor Beyond Meat had the most successful IPO so far this year, its stock price soaring 163% in mere weeks. Gone are the days when vegan meat was derided as tasteless — a sacrifice vegetarians made in service of a greater environmental cause. Today's meatless meats taste just like the real thing, can satisfy the most blood-thirsty of carnivores, and are here to stay. After testing its plant-based whopper in a Burger King location in April, plant-based food company Impossible Foods is going nationwide with the fast food chain in more than 7,000 locations. When competitor plant-based substitute company Beyond Meat went public in early May, its stock price soared 163% in a day. The money-losing company is now valued at about $4 billion, making it the most successful IPO thus far this year. Investors, celebrities and consumers are all taking notice. Impossible Foods announced Monday that it raised $300 million in its latest round of private funding, the largest ever haul for a plant-based meat company, according to the Good Food Institute. The Silicon Valley start-up has raised about $750 million since its founding in 2011. It also has a slew of health-conscious and environmentally-minded celebrity investors, including Alexis Ohanian, Jaden Smith, Jay-Z, Katy Perry, Serena Williams and Zedd. While Lee said Impossible Foods does not pay for promotions, some celebrities have gone out of their way to give the food company a shout-out, like Katy Perry, who changed into an Impossible Burger costume at the Met Gala this year. Despite Beyond Meat's success going public, Impossible Foods CFO David Lee insisted Wednesday to CBS News the company has no plans to announce an IPO and is focusing instead on trying to meet the surge of demand on the heels of its Burger King expansion. "Frankly, we're not in a rush to go public. We're very, very focused on serving our meat eaters well and increasing our supply," Lee said. The company is planning to hire 50 new employees to its Oakland, California, facility, which already employs 70 full-time workers, to help meet the increase in demand. Meatless meat a sizzling hot industry Investor interest in meatless alternative companies like Beyond Meat and Impossible Foods mirror the surge in interest in plant-based alternatives in the U.S. Of the $16 billion invested into U.S. plant-based meat, egg, and dairy companies in the past decade, $13 billion flowed in 2017 and 2018 alone, according to the Good Food Institute. "Investors and entrepreneurs are capitalizing on a global shift in the way meat is produced. The market opportunity here is massive," Bruce Friedrich, executive director at the Good Food Institute, said in a statement. Alternative meat companies hope to replicate the success of the non-dairy milk industry, which has grown to about 13% of the milk market by positioning itself as the healthier alternative. Beyond Meat said in its filings that the vegan meat market can similarly grow to about $35 billion of the $250 billion domestic meat industry. That means that Impossible Foods and Beyond Meat may become leaders in a fast-growing and highly competitive space. For example, poultry giant Tyson has made investments int Jerusalem-based Future Meat Technologies and lab-grown meat producer Memphis Meats. "There will be multiple winners," Lee predicted. Environmentally-conscious, but is it good to eat? Part of Impossible Foods' and Beyond Meat's success comes from marketing their product to meat lovers, as opposed to vegans, who make up just 5% of Americans, according to Beyond Meat in its SEC filings. Both companies have gone to considerable lengths and spent hefty capital to ensure their beef patties mimic the real thing in taste and texture. Beyond Meat, which makes pea protein the base of its products, also uses beet juice to help achieve the look of meat. Meanwhile, Impossible Foods isolated an iron-rich molecule called "heme" from soy plants to achieve the beefy, meaty taste of meat, famously making its veggie patties "bleed." However, some health experts criticize processed alternative burger products for not being all that health-conscious. While Impossible Foods CFO Lee said the vegan patties are environmentally friendly and use less land, less water, and produce less greenhouse gases than animal products, some nutritionists say they're not necessarily healthy for consumers. For diners who may be looking to make the switch to plant-based for health reasons, like lowering their salt or fat intake, the Impossible Burger is not notably healthier. It has zero cholesterol and about the same saturated fat as a traditional beef patty, but more than four times the amount of sodium. "If you want a plant-based option that has that burger taste, the Impossible Burger is your option — but it does come with similar amounts of fat and calories," Connie Diekman, director of university nutrition at Washington University, said in a statement when the patty was tested in St. Louis Burger King locations in April. "But if you are trying to to increase the amount of plant protein in your diet, this should just be one part of a bigger portfolio of options," she continued. Diekman said bean burgers are typically a healthier option with more fiber, nutrients and less fat.<doc-sep>Text size Impossible Foods raised $300 million in a round of financing Monday, outstripping the $241 million that its main competitor, Beyond Meat, took home from its recent initial public offering. It is clear that things are heating up in the market for vegetable-based faux meat, the two companies’ main product, yet that doesn’t have to mean someone will get burned. Impossible Foods says the money is intended to “accelerate the company’s rapid scaleup.” The latest $300 million, in a so-called Series E financing, brings the total amount raised by Impossible to $750 million. (E is the fifth letter of the alphabet, so the latest funding round is Impossible Foods’ fifth.) A securities filing by Beyond Meat says that from its inception through Dec. 31, it had raised $199.5 million by selling convertible stock. That means that with the $241 million from its May 1 IPO, it has issued about $440 million in equity, assuming nothing was raised in the early months of the year. (The company didn’t immediately respond to a request for comment.) The fact that Impossible Foods has raised more than double what Beyond Meat (ticker: BYND) has brought in doesn’t make Beyond a bad investment. Both companies can succeed and both would likely be content to become the Coca-Cola (KO) and PepsiCo (PEP) of the alternative-meat category. The startups have a lot in common. Both, of course, have alternative-meat burgers, designed to look and taste like beef, selling in fast-food chains. Impossible Burgers are sold in Red Robin franchises and select Burger King restaurants. Burger King plans to roll out the Impossible Whopper nationwide later in 2019, according to Impossible Foods. Editor's Choice Beyond Meat’s Beyond Burger is available in A&W franchises, as well as retail stores. Impossible Foods plans to launch its burger in retail outlets soon. There is competition for celebrity endorsements, too. The Impossible Series E round included individual investors such as rap mogul JAY-Z, comedian Trevor Noah, pop star Katy Perry, and tennis legend Serena Williams, among others. It is an impressive list. Not to be outdone, Beyond Meat counters with brand ambassador Leonardo DiCaprio. The company has also partnered with Snoop Dogg and NBA star Kyrie Irving, among others. Both products are made from similar ingredients. “We have cracked the molecular code for meat and built an industry-leading intellectual property portfolio and brand,” said David Lee, chief financial officer for Impossible Foods. “Our global financial partners are supporting a technology powerhouse that will transform the global food system.” Beyond Meat is probably equally optimistic. The top five ingredients for the Beyond Burger are water, pea protein isolate, expeller-pressed canola oil, refined coconut oil and rice protein. Impossible lists water, soy protein concentrate, coconut oil, sunflower oil, and natural flavors as the top five ingredients for its burger. And both burgers have similar nutritional details. An Impossible Burger patty has 270 calories, 17 grams of fat, and 20 grams of protein. The Beyond Burger weighs in at 290 calories, 20 grams of fat, and 20 grams of protein. Both sell more than burgers. Impossible lists pizza, meatballs and empanadas on its website. Beyond is selling sausages and a ground- beef alternative for meals as tacos. Impossible Foods’ sales and valuation are a mystery. It is very likely that it’s a unicorn—a privately held company with a valuation north of $1 billion—just as Beyond Meat was before its listing. Beyond Meat’s market value is more than $4 billion today. It reported $88 million in sales last year. Pepsi and Coke are mature products now, cranking out steady, if unspectacular returns as consumers’ tastes shift toward more healthful foods and drinks. Coke stock has returned 7% a year on average for the last five years, while Pepsi shares have averaged 11%, so both have lagged behind the Dow Jones Industrial Average, with an average return of 11.45%. Newsletter Sign-up Review & Preview Every weekday evening we highlight the consequential market news of the day and explain what's likely to matter tomorrow. PREVIEW Yet a big hit with consumers can be huge for shareholders. Coke stock returned 30% a year for a decade after the launch of Diet Coke in 1982. Investors seem to be hoping for a similar story with Beyond Meat. Anyone who bought Beyond Meat stock at the opening price on May 1 would have been sitting on a 60% gain based on recent levels. So who could be the Dr Pepper to Beyond Meat’s and Impossible Foods’ Coke and Pepsi? International Agribusiness Group consultant Mark Feight points out to Barron’s that Aleph Farms Ltd.—a company that grows meat in a lab—disclosed Tuesday it raised $12 million in Series A investments. Cargill, one of the largest protein companies in the world, participated in the financing. Write to Al Root at allen.root@dowjones.com<doc-sep>Impossible Foods said Monday it has raised $300 million in its latest funding round. The company's announcement follows the initial public offering of Beyond Meat. Its rival's stock has surged 173% since its debut May 2. Impossible Foods has raised more than $750 million, with help from investors like Bill Gates, Google Ventures and Serena Williams. Sales of plant-based products grew by more than 17% last year, according to Nielsen, while other grocery products only grew by 2%. While the FDA only approved its key ingredient to sell its uncooked Impossible Burgers on grocery shelves this year, it has been in restaurants since 2016. Recently, Restaurant Brands International announced plans to take its Impossible Whopper — Burger King's signature sandwich made with the bleeding vegan patty — nationwide after testing it in April. Burger King's biggest competitor, McDonald's, does not offer a veggie burger in its U.S. stores, although its German locations started serving Nestle's plant-based option last month. "We'll tell them to take a number and ... you know we're not going to blow off customers. First things first, we have to deliver for our existing customers," Impossible Foods CEO Pat Brown said when asked what will happen if McDonald's comes knocking.<doc-sep>
(Reuters) - Impossible Foods, which makes a meatless plant-based burger and is backed by celebrities like Serena Williams and Katy Perry, said on Monday it has raised $300 million in the latest round of funding ahead of a possible initial public offering. The fundraising underscores the growing appeal in plant-based food that tries to taste like meat with fewer environmental or health risks. Shares of competitor Beyond Meat Inc, which debuted on Nasdaq on May 2, have more than tripled. The latest round for Impossible Foods brings the Silicon Valley-based startup’s total raised to more than $750 million. Despite encouraging signs from investors, it is not in a hurry to go public, Chief Financial Officer David Lee told Reuters. “We believe in self-reliance. Being ready to go public is a priority for the company because we need to be operating at the highest level of rigor,” Lee said. “But we are not in a rush, nor are we announcing an IPO filing.” Celebrities have jumped on the investor bandwagon, including Jay-Z, Will.i.am, Jaden Smith and Katy Perry, who recently wore a vegan burger outfit to New York’s annual Met Gala, making reference to Impossible Foods. Star athletes including Serena Williams, National Football League quarterback Kirk Cousins and National Basketball Association star Paul George have also opened their wallets. Institutional investors include Khosla Ventures, Microsoft Corp co-founder Bill Gates, Google Ventures, Horizons Ventures, UBS, Viking Global Investors, Temasek, Sailing Capital, and Open Philanthropy Project. The fifth equity funding round since its launch in 2011 values Impossible Foods at $2 billion, according to sources familiar with the matter. By comparison, Beyond Meat had a market capitalization of just under $1.5 billion in its IPO but now tops $4 billion. Lee said Beyond Meat’s successful IPO did not change Impossible plans or timing to go public but was a “validation.” FILE PHOTO: The completed plant-based hamburger is displayed during a media tour of Impossible Foods labs and processing plant in Redwood City, California, U.S. October 6, 2016. Picture taken October 6, 2016. REUTERS/Beck Diefenbach “I think their (Beyond Meat) IPO indicates that retail investors along with retail consumers are ready for something better than the meat they’ve been eating for decades,” Lee said. Impossible launched its first faux meat patty over two years ago. A genetically modified yeast creates the key ingredient, called heme, which makes the patties appear to be bloody and juicy and taste like real meat unlike conventional veggie burgers. Ingredients include wheat, soy and potato proteins. Fast-food chain Burger King has said it will launch “Impossible Whopper,” which uses Impossible Foods’ plant-based patties, nationwide after a successful trial at limited locations. Impossible Burger is sold at more than 7,000 restaurants worldwide including White Castle, Qdoba and Red Robin and at Disney theme parks. ‘CRAVEABLE’ Impossible plans to launch its products in retail outlets in the second half of this year. Lee declined to give a more specific timetable or identify those partners but said the company is actively talking with “top grocery chains in the nation.” Beyond Meat’s products are already sold at Whole Foods and Safeway stores. As consumer appetites grow, competition is heating up in the global meat-substitute market, which is projected to reach $5.81 billion by 2022, according to a 2018 study by Grand View Research. Tyson Foods, the largest meat processor in the United States, will roll out meatless protein products in the coming months while McDonald’s Corp began selling vegan burgers in Germany. “We don’t lead with the source of guilt that meat eaters have globally. We lead with what they want positively which is craveability with better options for the environment and their health,” Lee said. “It’s the craveability that makes meat eaters find their own reason to come back for Impossible Burger.”