Beyond Meat shares fall on report that some grocery stores aren't sure it belongs in the meat aisle

Reuters

A shopper looks at items inside a Fresh & Easy store in Burbank, California October 19, 2012.

• Shares of Beyond Meat fell in early trading Thursday after Reuters reported that grocery stores aren't sure where to place its burgers.
• The company wants stores to place its products with real meat, but some grocers place it in the vegan or vegetarian aisle.
• In its initial IPO filings, Beyond said retail placement could harm growth.
• Watch Beyond Meat trade live.

Shares of Beyond Meat fell by more than 1% in early trading Thursday after Reuters reported that there is some confusion in grocery stores over where the product should be placed. The company has requested that its product be housed with real meat, not in the vegan or vegetarian aisle.

According to Reuters, grocery stores are split on the issue.

The stakes are high as plant-based protein is gaining popularity in the US. Both grocery stores and fast-food chains now offer alternative meat to consumers. The $14 billion market could balloon to roughly $140 billion over the next decade, according to a report by Barclays.

The company also stands to benefit from strategic partnerships. If Beyond strikes a deal with McDonald's, the stock price could see a 30% boost, Jefferies analysts said in a recent note.

Since its May IPO, Beyond shares have soared more than 300% on the brand's potential.

In its IPO filings, Beyond said that retail placement was a main risk that could hamper growth. Because the company is geared towards consumers who want to reduce their meat consumption - not only vegans or vegetarians - it wants to be placed next to its biggest competitor: real meat.

Placement in the vegan or vegetarian aisle could mean that it becomes harder to attract new customers. Ultimately, grocery stores decide where the product lives within each store. Some place it in the freezer with other veggie burgers or put it in the dairy section, Reuters reported.

Competition is also heating up. Shares of Beyond sank as much as 7% Monday on the news that Nestle, a major competitor, would release its own veggie burger in the US.

Beyond Meat is being watched closely before it reports earnings after the bell Thursday.

Markets Insider