Here's how Beyond Meat can 'hit the jackpot' after Costco meatball rollout

Get ready to buy meatless meatballs — in bulk!

Beyond Meat’s (BYND) Beyond Meatballs, which rolled into select grocery stores this fall, are now available in select Costco (COST) locations in the U.S., including New Jersey, New York, Arizona, and Texas.

It’s the company’s third product rollout in 2020 following the Beyond Breakfast Sausage and the Cookout Classic burger — and the latest expansion in a space that CFRA analyst Arun Sundaram says still has more room to run.

“[Fake meat] is here to stay because it’s not just Beyond Meat and Impossible Foods. There are other packaged food companies entering this space, like Tyson (TSN), Nestlé (NSRGY), Kellogg’s (K), and more,” Sundaram said. Independent food chains are also adopting and adding more plant-based products with consumers “fully embracing” the trend, he said.

Beyond Meatballs to hit select Costco stores as plant-based meat boom continues (Courtesy: Beyond Meat)

Beyond Meat has been aggressively expanding its portfolio to satisfy the rise in consumer demand.

During the early months of the pandemic, sales of plant-based meat surged 264%, according to The Wall Street Journal, citing Nielsen numbers. In response, Beyond Meat launched a direct-to-consumer online store, in addition to several key partnerships including a historic collaboration with Pizza Hut (YUM).

The power duo’s Beyond Italian Sausage Pizza and the Great Beyond Pizza, which both debuted last month, represent the first plant-based meat offerings for a national pizza company.

But how does a business as big as Beyond Meat or Impossible Foods maintain the momentum?

Pizza Hut has partnered with Beyond Meat to become the first national pizza company to bring a plant-based meat pizza to the masses (Courtesy: Pizza Hut)

It all comes down to innovations in taste, nutrition and price parity, according to Sundaram.

“Having a competitive edge in [research and development] is how these companies can differentiate and grow,” he said — reiterating that if Beyond Meat puts in the time, energy and resources to consistently improve the taste, quality and nutritional value of its products, while also lowering the price, it’d “hit the jackpot.”

But the company still has hurdles to overcome with restaurants and quick service spots struggling to survive the coronavirus pandemic — a channel that Beyond Meat heavily relies on.

“Beyond Meat is exposed to a lot of these smaller, independent restaurants [and] the food-service industry is where most first-time consumers trial these products [before purchasing at the store] — that’s been more difficult to do amid the pandemic,” Sundaram said.

Still, Beyond Meat has been working its way into the offerings of mainstay fast-food giants.

McDonald’s (MCD) recently announced it would be creating its own in-house plant-based burger appropriately titled the McPlant — with a little help from Beyond Meat. The McPlant will rival Burger King’s Impossible Whopper, along with Starbucks' (SBUX) Impossible Sausage Breakfast Sandwich.

McDonald’s announced it would be creating its own in-house plant-based burger titled the McPlant (Courtesy: McDonald's)

The McPlant announcement was first met with confusion as McDonald’s did not confirm whether or not Beyond Meat would 100% supply the patty, despite the fact that it had previously produced a meatless burger for a McDonald’s test run in Ontario.

The fake meat producer later confirmed that it will be involved in the project — although the extent of its role is still unclear.

“The big downside with the McPlant is the fact that McDonald’s does not want to use the Beyond Meat brand name,” Sundaram said, referencing how Impossible Food’s branding in Burger King’s Impossible Whopper (QSR) largely helps the company maintain recognition and awareness.

“It’s a big negative for Beyond Meat,” he said.

Currently, Beyond Meat products are available at approximately 122,000 retail and food-service outlets in over 80 countries, including 28,000 retail outlets in the U.S.

In addition to Costco, Beyond Meat’s Beyond Burger club store distribution includes Sam’s Club and BJ’s Wholesale.

Alexandra is a Producer & Entertainment Correspondent at Yahoo Finance. Follow her on Twitter @alliecanal8193

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