Beyond Meat has teamed up with PepsiCo to create a line of plant-based beverages and snacks. The joint venture between the two companies will be called the PLANeT Partnership, and it will be formed as a limited liability corporation.
Beyond Meat and PepsiCo announce joint venture
According to CNBC, the joint venture between Beyond Meat and PepsiCo will enable Beyond to leverage Pepsi's production and marketing expertise for new products. Beyond Meat is a relative newcomer to the market.
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"PepsiCo represents the ideal partner for us in this exciting endeavor, one of global reach and importance," Beyond Meat CEO Ethan Brown said in a statement.
By partnering with the company, Pepsi can boost its investment in plant-based categories, which have gotten crowded, while partnering with one of the leading meat substitute creators. Jefferies estimates that Beyond Meat holds approximately 13% of the meat alternatives category in the U.S.
The joint venture also enables PepsiCo to push forward its sustainability goals. The company signed the United Nations' pledge last year, agreeing to set targets to reduce emissions. A UN report released in 2019 found that the global food industry contributes to 37% of the world's greenhouse gas emissions. Pepsi has also been attempting to reduce the amount of sugar its products contain and start offering healthier beverages and snacks as part of its line-up.
Possible short squeeze
Shares of Beyond Meat surged more than 20% in early trading after the joint venture was announced. PepsiCo stock was up less than 1%. PepsiCo shares have been fairly flat over the past year; the company's market capitalization stands at around $196 billion.
According to CNBC, there may be a short squeeze in Beyond Meat right now as hedge funds could be scrambling to cover their bets against it. This trend has been occurring in many heavily shorted names this month. According to data from FactSet, over 38% of Beyond Meat's float are sold short.
As of the close of trading on Monday, Beyond Meat shares were up over 30% in the last 12 months, even though the pandemic has taken a bite out of the company's restaurant sales. Beyond Meat's market cap stands at around $9.95 billion.