Shares of Beyond Meat (BYND) are higher on Tuesday after the CEO of Starbucks (SBUX) said in a public letter that the company wants to add more plant-based options and move "toward a more environmentally-friendly menu."
STARBUCKS PLANS TO BE 'RESOURCE-POSITIVE': Kevin Johnson, the chief executive officer of Starbucks, announced on Tuesday in a public letter the company's "multi-decade commitment to be a resource-positive company, aspiring to give more than it takes from the planet." The letter included included science-based preliminary targets for the reduction of carbon emissions, water use and waste by 2030, and outlined five strategies the company has identified to move toward them. One strategy for the company is a commitment to expanding plant-based options as part of Starbucks' effort to create a more environmentally-friendly menu.
"Our aspiration is to become resource positive -- storing more carbon than we emit, eliminating waste, and providing more clean freshwater than we use," Johnson wrote. The company also plans to shift to reusable packaging, invest in innovative agricultural practices and forest conservation efforts, better manage waste and create more eco-friendly stores. Preliminary targets for 2030 are to cut carbon emissions by half in both the company's operations and supply chain, halve water usage for operations and coffee production, and halve the amount of waste sent to landfills.
WHAT'S NOTABLE: Last week, Beyond Meat announced a multi-year pea protein supply agreement with Roquette. The supply agreement significantly increases the amount of pea protein to be supplied by Roquette to Beyond Meat over the next three years as compared to the amount supplied in 2019.
Meanwhile, Beyond Meat's Executive Chairman Seth Goldman told China news agency Xinhua that the company hopes to enter the Chinese mainland market this year. "We haven't announced anything, but we are expected to do something this year," Goldman said Monday on the sidelines of Retail's Big Show 2020, according to Xinhua. Beyond Meat has launched its plant-based burgers and sausages in Canada and European countries, and is looking to build production facilities in other countries and source locally, Goldman added.
Additionally, McDonald's (MCD) announced earlier this month that it is expanding the global test of its plant-based burger to include 52 restaurants in Southwestern Ontario, Canada starting January 14, for 12 weeks. The P.LT., or Plant. Lettuce. Tomato., is made with a Beyond Meat plant-based patty that has been crafted exclusively by McDonald's, the company said in a statement. The global P.LT. test first launched last September in 28 restaurants in London, Ontario and the surrounding areas.
RECENT ANALYST COMMENTARY: In a research note to investors this month, BTIG analyst Peter Saleh said he wonders if Beyond Meat could supply enough product should McDonald's want to expand its plant-based patty test throughout the U.S. While the analyst believes Beyond could produce enough product in the near-to-medium term to supply McDonald's restaurants in Canada, Saleh is less convinced about the company's potential to support McDonald's U.S. system, especially if demand grows.
Credit Suisse analyst Robert Moskow said last week that Beyond Meat's 45% gain to start 2020 reflects positive investor reaction to news that McDonald's expanded the number of test locations in Canada for its P.L.T. burger and the company's strengthened relationship with Dunkin' Brands (DNKN).
PRICE ACTION: In morning trading, shares of Beyond Meat jumped over 8% to $118.05. Meanwhile, Starbucks shares fell fractionally to $93.22.
