PepsiCo Inc and Beyond Meat Inc said on Tuesday they would form a joint venture to develop and sell snacks and beverages made from plant-based protein.
Shares of Beyond jumped more than 31% in morning trading on the news, while Pepsi’s stock rose about 1%. The run in Beyond Meat may have been helped by hedge funds rushing to cover their bets against the stock, a trend unfolding in may heavily-shorted names this year. More than 38% of the Beyond Meat shares available for trading are sold short, according to FactSet.
Plant-based meat alternatives, such as burger patties and sausages from Beyond Meat, have gained in popularity in recent years as curious health-conscious consumers look to broaden or shift from chicken, pork and beef-based diets ,Beyond Meat suffered a surprise loss in its last reported quarter as demand for its products at restaurants and grocery stores tapered after an initial surge at the start of the COVID-19 pandemic.
The partnership gives Beyond, a relative newcomer to the food world, a chance to leverage Pepsi’s production and marketing expertise for new products. For its part, Pepsi can deepen its investment in plant-based categories, which are growing increasingly crowded, while working with one of the top creators of meat substitutes.