Tyson Chicken Recall Adds to Challenges Post-Beyond Meat

(Bloomberg) -- Beyond Meat Inc.'s history-making stock debut left investors salivating over the future of meatless alternatives, and showed how more traditional rivals -- particularly Tyson Foods Inc. -- need to up their game.

Shares in the El Segundo, California-based maker of plant-based protein products rose 163 percent from their initial public offering price on their first trading day Thursday. That was the best debut since at least the 2008 financial crisis among IPOs that raised $200 million or more. The stock nudged higher in its second session Friday.

In contrast, Tyson may have to address problems in some of its production lines.

The company is significantly expanding its recall of chicken strips to cover more than 11.8 million pounds of frozen, ready-to-eat chicken strip products, the U.S. Department of Agriculture said late Friday. When the recall was initially issued in March, about 69,000 pounds were affected.

Tyson said more consumers reported fragments of metal in a “small number of products.” Products being recalled are labeled with "use by" dates of Oct. 1, 2019 through March 7, 2020. The Food Safety and Inspection Service noted that three of six people who complained reported injuries to the mouth.

Tyson is already on the back foot. It missed out on the huge potential windfall from Beyond Meat's stunning IPO -- it sold its 6.5 percent stake in the startup shortly before the listing. Tensions between the companies rose after Tyson announced plans to develop its own meatless proteins, Axios reported days before the offering.

Bloomberg Intelligence analyst Jennifer Bartashus highlighted that the hot start would force competitors from Tyson to The Kraft Heinz Co. to boost spending on innovation to defend their market share.

"Meaningful long-term growth for Beyond Meat will hinge on the ability to generate broad appeal for its products and acquire new customers, particularly meat eaters," she said. "The challenge will be to support innovation while balancing top-line growth with cost control to improve profitability."

Read more: We'll Always Eat Meat. But More of It Will Be ‘Meat': QuickTake

Tyson remains committed to providing alternative protein, and plans to begin market testing a new product in the summer, a spokesman for Tyson Foods said in an emailed statement.

Beyond Meat isn't just off to the best start of 2019. It also ranks among the hottest debuts ever for a food stock. Sprouts Farmers Market Inc. jumped 122 percent in its first two days of trading after a July 2013 listing, while Annie's Inc. rose about 100 percent from its March 2012 IPO price in the same amount of time.

--With assistance from Alexa Abraham and Deena Shanker.

To contact the reporter on this story: Drew Singer in New York at dsinger28@bloomberg.net

To contact the editors responsible for this story: Brad Olesen at bolesen3@bloomberg.net, Morwenna Coniam, Scott Schnipper

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