Tyson, the largest meat processor in the U.S., invests in fake meat

Beyond Meat burgers – plant-based patties made to resemble, sizzle and even bleed like meat – have the potential to wean wavering carnivores from animal-based proteins.

Encouraging such a trend would seem to pose a serious financial threat to Tyson Foods, the largest U.S. meat processor.

Except Tyson has a stake in Beyond Meat and could someday buy the California-based company. Another Tyson investment is Memphis Meats, a Silicon Valley lab-grown meat startup. Consumers aren’t likely to see slaughter-free chicken or steak in the grocery store anytime soon, but Tyson is preparing for that possibility.

In the near future, alternative proteins won’t take much of a bite out of Tyson’s core business of beef, chicken, pork and prepared foods, which brought in more than $38 billion in revenue last year. But as more consumers shift toward foods they consider to be healthier and more sustainably sourced, Tyson’s Chicago-based venture capital arm – a team of three men – wants to meet them there. Other food companies like Campbell Soup, General Mills and Kraft Heinz also have venture capital funds, a relatively new and growing trend in the traditionally stodgy processed food industry.

“If we are not aware of it and participating in our own disruption, we basically deserve what we get,” said Tom Mastrobuoni, chief financial officer for Tyson Ventures.

“Shame on us,” said Reese Schroeder, the venture fund’s managing director.

Tyson, like other giant food corporations, is using venture capital investments to partner with emerging food startups focused on sustainability and technology. Launched in 2016 with $150 million, Tyson Ventures now has stakes in four companies. The amounts of the investments are undisclosed, but it owns less than 20 percent of each startup. While Tyson could acquire these companies outright, other outcomes are also possible, including early exits and joint ventures.

Justin Whitmore, the boss and third member of the Tyson Ventures team, emphasized that Tyson’s many farmers and ranchers will still be key to the company’s global future. But he also acknowledged a shift in the company’s mission since CEO Tom Hayes took over last year. Under Hayes, Tyson’s striving to be a protein company, not just a meat company, Whitmore said.

“I can’t express enough that we do see a world where there will be multiple types of protein products available. That could include (plant)-based protein next to pork, next to maybe even lab-grown protein and consumers will have a choice,” said Whitmore, Tyson’s chief sustainability officer.

Only 1 in 6 American consumers eat meat alternatives at least once a week, according to the global market research firm Mintel. But that number is likely to grow, as reflected by an increasing number of fake-meat options on restaurant menus, said Billy Roberts, senior food and drink analyst at Mintel.

The latest example: Last week, White Castle announced its Impossible Burger sliders, another plant-based burger, an unlikely pairing that reflects the changing times.

Tyson’s venture capital investments are “a really good way of diversifying in case interest in meat alternatives continues to take off,” Roberts said.

Some Beyond Meat consumers won’t appreciate that the plant-based burger company is partially owned by a huge meat conglomerate – a potentially tricky marketing challenge for both companies, said Zain Akbari, a Morningstar analyst that covers Tyson. But in general, the venture capital investments represent a low-risk way of “dipping a toe” in emerging protein and technology trends, Akbari said.

Memphis Meats could end up having the most upside of Tyson’s investments, Akbari said. Still in its infancy as an industry, lab-grown meat has to navigate numerous challenges, including figuring out how to make a product that people can afford and clearing regulatory hurdles. But such a product could appeal to many consumers concerned about the environmental impact of meat production.

“If it does come together, it’s a game-changer,” Akbari said.