PepsiCo and Beyond Meat are creating a joint venture to develop snacks and drinks made from plant-based proteins.
The companies didn't reveal what kinds of products they will make Tuesday, saying they're still in development.
But the collaboration sent Beyond Meat's shares to their largest single-day gain since they began trading in 2019, jumping by more than $62 each to $221. Pepsi's shares remained flat.
The joint venture gives Pepsi access to one of the leading plant-based meat companies at a time when consumers are increasingly cutting back on meat consumption and looking for healthier, more sustainable foods. Beyond Meat's burgers, sausages and chicken, which are made from pea protein, are sold worldwide.
Beyond Meat gets access to to Pepsi's distribution system and broad product line. Pepsi, in addition to drinks, makes Fritos, Cheetos and Tostitos, as well as Matador beef jerky.
It's a shot in the arm for El Segundo, California-based Beyond Meat, which had been struggling to convince investors of its growth opportunities as competition increased. Beyond Meat shares plummeted in November after retail sales slowed and McDonald's hinted that it might work with another supplier on a new plant-based burger for the U.S. market.
Food companies are increasingly jumping into the plant-based space. In 2019, Chobani introduced coconut milk-based yogurt and Nestlé brought out plant-based burgers and ground meat. Meat giant Tyson Foods, which used to own a stake in Beyond Meat, now has its own line of plant-based meats.
Consumers are eager to try those products. U.S. sales of plant-based meat jumped 45% in the 52 weeks ending Jan. 16; traditional meat sales rose 19% in the same period, according to data firm NielsenIQ. Total U.S. sales of plant-based proteins--including products like almond milk and plant-based eggs--jumped 19% over the last year, outpacing the 14% increase in all food sales.
"Plant-based proteins represent an exciting growth opportunity for us, a new frontier in our efforts to build more sustainable food system," said Ram Krishnan, PepsiCo's global chief commercial officer.
Financial terms of the deal weren't released. The joint venture will be managed through a new entity called The Planet Partnership.