Investors have a big appetite for fake meat.

The shares of Beyond Meat, the purveyor of plant-based burgers and sausages, more than doubled on Thursday in its Nasdaq debut. It's the first pure-play maker of vegan "meat" to go public, according to Renaissance Capital, which researches and tracks initial public offerings.

Beyond Meat raised about US$240 million ($363m) selling 9.6 million shares at $25 each. Those shares rose 163 per cent to close at $65.75.

The 10-year-old company has attracted celebrity investors like Microsoft co-founder Bill Gates and actor Leonardo DiCaprio and buzz for placing its products in burger joints like Carl's Jr. It sells to 30,000 grocery stores, restaurants and schools in the US, Canada, Italy, the United Kingdom and Israel.

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Beyond Meat CEO Ethan Brown said the IPO timing is right because the company wants to expand overseas. He also wants consumers to be able to buy shares since they have fueled the company's growth.

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"It really is a wonderful feeling to be able to welcome people in who have helped this brand," Brown told The Associated Press.

Still, Beyond Meat has never made an annual profit, losing $30m last year. It is also facing serious competition from other "new meat" companies like Impossible Foods and traditional players like American multinational Tyson Foods. Tyson recently sold a stake in Beyond Meat because it plans to develop its own alternative meat.

The IPO comes amid growing consumer interest in plant-based foods for their presumed health and environmental benefits. US sales of plant-based meats jumped 42 per cent between March 2016 and March 2019 to a total of $888m, according to Nielsen. Traditional meat sales rose 1 per cent to $85b in that same time frame.

The trend is a global one. UK sales of meat alternatives jumped 18 per cent over the last year, while sales of traditional meat and poultry slid 2 per cent.

Meat substitutes go mainstream

Demand is expected to continue to grow. Euromonitor, a consulting firm, predicts worldwide sales of meat substitutes will grow 22 per cent by 2023 to a total of $22.9b.

Even Burger King has recognised the appeal. Earlier this week, the fast-food chain announced that it would start testing the Impossible Whopper, made with a plant-based burger from Impossible Foods. Meanwhile, Ikea says it's working on developing a plant-based Swedish meatball, which it plans to test with customers next year.

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Burger Fuel has also put a plant-based beef burger on its menu in New Zealand. The NZX-listed company has teamed up with Beyond Meat to create a vegan cheeseburger called 'Beyond Beleaf', which will be rolled out to 56 stores throughout the country this week.

Burger Fuel says the launch coincides with 'Meatless May' and will be available in its stores for a limited time.

Beyond Meat's ingredient list — it only uses natural ingredients that haven't been genetically modified and doesn't use soy — sets it apart from competitors. Its products are made from pea protein, canola oil, potato starch and other plant-based ingredients. Its burgers "bleed" with beet juice; its sausages are coloured with fruit juice.

Burger Fuel has teamed up with Beyond Meat to create the 'Beyond Beleaf' cheese burger. Photo / Supplied
Burger Fuel has teamed up with Beyond Meat to create the 'Beyond Beleaf' cheese burger. Photo / Supplied

Unlike competitors, Beyond Meat products have also been sold in the meat section of groceries since 2016. That has broadened their appeal beyond vegetarians. Beyond Meat says a 26-week study last spring showed that 93 per cent of Kroger customers who bought its burgers also bought animal meat during the same period.

In a 2016 taste test, Consumer Reports said the texture of the Beyond Burger was similar to ground beef, but it didn't match up in flavour. The magazine's conclusion: It might not be the best burger you've ever tried, but it's pretty tasty on a bun with lots of toppings.

As for health benefits, the results are mixed. A four-ounce 92 per cent lean burger from Laura's Lean Beef has higher fat and cholesterol than a Beyond Meat burger, but Beyond Meat's burger has higher sodium and carbohydrates and slightly less protein. The lean beef burger is 160 calories; a Beyond Meat burger is 270 calories.

Brown says Beyond Meat is working on reducing sodium, which is a natural byproduct of its manufacturing process. But he also points out that red meat and processed meat have been classified as possible carcinogens by the World Health Organization.

Brown said Beyond Meat has a five-year goal of getting at least one product — most likely beef — to cost less than the animal version. He expects the supply chain will grow as sales expand, which will lower the cost of raw ingredients like peas. But Beyond Meat touts environmental benefits as well. The company says a plant-based burger takes 99 per cent less water and 93 per cent less land to produce than a beef burger, and generates 90 per cent fewer greenhouse gas emissions.

Beyond Meat CEO Ethan Brown. Photo / Getty Images
Beyond Meat CEO Ethan Brown. Photo / Getty Images

Beyond Meat was founded in 2009 by Brown, a former clean energy executive. Brown's family part-owned a Maryland dairy farm, so as a child, Brown spent weekends and summers on the farm. As he grew older, he began to question whether people really needed animals to produce meat.

Brown teamed up with two professors from the University of Missouri, Fu-hung Hsieh and Harold Huff, who had been developing soy-based chicken since the 1980s. By 2013, Beyond Meat was selling plant-based chicken strips nationwide at Whole Foods. (The company discontinued chicken earlier this year but says it's working on a better recipe.)

For investors, the stock is not without risk. Amid its annual losses, Beyond Meat must also continue to spend heavily on research and development. The El Segundo, California-based company employs 63 scientists, engineers, researchers, technicians and chefs at its 30,000-square-foot lab. It also has manufacturing facilities in Columbia, Missouri.

Renaissance Capital, which has researched the company, says investors will likely tolerate the losses because the business is growing so quickly. Beyond Meat's net revenue was $87.9m last year, 170 per cent higher than 2017.

In documents filed with the US Securities and Exchange Commission, Beyond Meat says it will invest $40m to $50m in current and new manufacturing facilities and spend $50m to $60m on product development and sales. The rest will be used to pay down debt and fund operations.

- Associated Press. Additional reporting NZ Herald.