Beyond Meat accused of unfair competition because of misleading claims in new lawsuit

Dive Brief:

• Plant-based meat maker Don Lee Farms sued Beyond Meat and its CEO Ethan Brown in federal court, accusing the company of unfair competition due to false advertising under the federal Lanham Act and violating California state laws governing false advertising and unfair competition.
• In the lawsuit, Don Lee Farms says Beyond Meat’s “misleading claims” about the ingredients and nutrition value of its products harm consumers, competitors and fair competition. Don Lee states it is bringing the lawsuit to “restore competitive equilibrium,” stopping Beyond Meat from further building its brand on what Don Lee says is deception, and recovering damages from “false advertising” and “ill-gotten profits.” 
• The two companies have a long history of bad blood. Don Lee was once a co-manufacturer for Beyond Meat, and sued the plant-based meat company in California Superior Court after its contract was terminated in 2017. The initial lawsuit includes accusations of breach of contract, unpaid money, fraud and taking advantage of Don Lee Farms, and is set to go to trial in September.

Dive Insight:

An ugly fight in the plant-based meat sector just got a lot uglier. The initial lawsuit filed in 2017 was full of serious accusations. As the case has wound its way through court, it’s been punctuated with declarations of small victories and bitterly worded press releases on both sides. And it bled into another lawsuit filed by Beyond Meat shareholders, though that was settled in April. 

All of the previous litigation, even though it was rather pointed, only concerned the contractual relationship between Don Lee Farms and Beyond Meat. This new case widens the dispute, essentially accusing Beyond Meat — and Brown personally — of being so misleading and disingenuous that the company had an unfair advantage over most competitors in the plant-based meat space. While the lawsuit only references ways Don Lee Farms says its sales and stake in the market were impacted by Beyond Meat’s business practices, the claims are extremely broad.

In a written statement sent by email, a Beyond Meat spokesperson said, “The allegations in the filing lack merit and we are prepared to vigorously fight this in court.”

The lawsuit opens by quoting the headline of an October Forbes story that spoke to an analyst who was concerned about Beyond Meat’s quarterly earnings: “Something is really wrong at Beyond Meat.”

“Beyond Meat’s problems are many, but they trace to one root cause: the company’s tendency to ‘over-promise and under-deliver,’ then scramble for excuses,” the lawsuit continues. “With the company reeling due to operational failures, CEO Ethan Brown has offered up ‘excuses’ described as ‘laughable’ and that industry insiders pan as ‘difficult to take . . . seriously’ and as flunking ‘the smell test.’ Others have noticed Brown’s habit of ‘point[ing] the finger’ at everyone but himself, describing Brown as having ‘an appetite for excuses.’ 

“But there are no excuses for the conduct revealed below,” the lawsuit continues. “The indisputable science now shows that Beyond Meat was built on and has grown because of deception and lies.”

The lawsuit accuses Beyond Meat of “grossly” overstating the amount of protein in its products by up to 30%. Don Lee Farms’ corporate parent Goodman Food Products sent several samples of Beyond Meat’s Beefy Crumbles and Burgers to third-party testing lab Element Materials Technology for a detailed analysis. Twenty-four pages of test results are filed with the lawsuit. 

The lawsuit points out that protein is the nutrient that Beyond Meat uses to set it apart from competitors, and often touts that its products have protein levels greater than or equal to animal-derived counterparts. Being unable to measure up to that standard means not only that Beyond Meat has misled customers, the lawsuit states, but that the company has also misrepresented itself on labeling federally mandated by the FDA.

Beyond Meat also often represents its products as made without synthetic ingredients. But, Don Lee’s lawsuit points out, Beyond Meat uses methylcellulose, a common ingredient used as an emulsifier and texture-builder in plant-based meat and other CPG products. The ingredient is made by chemically treating material in plant cells. While it has been approved by the FDA and nutritional experts affirm it is safe to consume, the ingredient has been called out in consumer-targeted advertisements and other plant-based meat campaigns as something unnatural. Beyond Meat and competitor Impossible Foods have both defended its use in their products.

Don Lee Farms does not use methylcellulose in its products. In the lawsuit, the company calls its Organic Plant-Based Burger “the first truly all-natural plant-based burger.” Don Lee says that Beyond Meat’s offerings crowded it out of the market because of “repeated false and misleading claims” of having natural burgers free of synthetic ingredients.

These accusations could bring much tighter scrutiny to plant-based product claims — both from regulators and consumers. If the nutrient analysis numbers submitted in the case are accurate, it could change the way FDA looks at plant-based products, which could have a negative impact on many products’ nutritional claims.

The case could also drive questions about whether plant-based meat products are worth eating. According to a 2020 consumer study by FMCG Gurus cited in Food & Beverage Insider, 73% of meat analog consumers say it is important that ingredients are all natural. Calling out Beyond Meat for an ingredient that does not appear in nature also sets up the entire segment for more scrutiny. And while some plant-based companies have worked hard to clean their labels, some consumers may decide it isn’t worth their while to do so much research and eat other products entirely.