Dive Brief:

• Plant-based burger maker Beyond Meat has completed the acquisition of its Pennsylvania co-packer for $14.5 million, according to a filing with the Securities and Exchange Commission.
• The acquisition will reduce costs and provide the company opportunities to test new processes and more quickly scale up new products, CEO Ethan Brown said on a Monday earnings call. As part of the acquisition, 180 employees will transfer to Beyond Meat.
• "I should note that we will continue to align ourselves with best-in-class co-packing partners here and abroad, and expect the acquisition of our new Pennsylvania facility to only strengthen these relationships, as we’ll be able to do important product scaling work in-house before transferring certain downstream activities to these partners," said Brown.

Dive Insight:

For the last two years, Beyond Meat's major concern has been producing enough product to meet demand, and the company has made big moves in 2020 to allay that concern.

Beyond Meat has co-packers in the U.S., Canada and the Netherlands. It acquired a manufacturing facility in the Netherlands in Q2 and expects to bring it online by the end of the year, and it has leased a facility in China, which will begin production in 2020 and reach full scale in 2021.

In addition to the Pennsylvania co-packer acquisition, which produces finished products, Beyond Meat operates two manufacturing plants in Columbia, Missouri, where the company extrudes the proteins for its burgers.

The supplier's sales have suffered somewhat during the pandemic with its restaurant customers, but Beyond Meat has not slowed efforts to add manufacturing capacity.

The plant-based meat producer has "the supply contracts in place as well as the capacity now. So that when the economy does recover from COVID, we're able to resume the higher levels of growth that we've seen in the past," Brown said. Beyond Meat incurred $6 million in repackaging fees in Q2 due to the shift in demand from food service to retail.

In addition to its grocery business, Beyond Meat sells plant-based burgers, sausage and chicken through Burger King, KFC, Carl's Junior, Dunkin' and Del Taco, and it said it is the supplier for McDonald's new McPlant line.

Now that Beyond Meat has a more robust global supply chain, optimization is starting to come into view.

Directly controlling more of its supply chain isn't simply an effort to keep up with growing demand but also to reduce unit costs. Beyond Meat planned from its inception to eventually price its product on par with conventional meat.

"The capability to produce a certain portion of our finished goods completely in-house is a key part of our longer-term strategy to reach price parity with that of animal protein," Brown said.