A lot of that clothing ends up in landfills which proves that the product often matters more than the social cause a customer is interested in. For non-personal use or to order multiple copies, please contact Per Figure 6, Beyond Meat's TTM adjusted EBITDA of $45 million is well above core earnings of $4 million. This has come from the increased consumer-knowledge on healthy products, plant-based diets, and understanding what goes into the food we as consumers eat. More and more meat-eaters and flexitarians are looking to plant-based products to offset their carbon footprints and help them live a more sustainable lifestyle. Extensive background in CPG . Investors should note that maximizing customer acquisition through the retail channel will probably crimp the company's admirable growth rate, as future promotions and new iterations of discounted value packs will reduce the amount of recorded sales (net revenue), as we've discussed above. Figure 7 compares the firms implied future NOPAT in this scenario to its historical NOPAT. In 2019, they partnered up with Dunkin Donuts to supply their Meatless Sausage for the breakfast chains sandwiches nationwide. This adjustment represented 3% of reported net assets. To do so, employees need to very clearly understand the companys priority: is it safety, profits, brand fidelity? But instead of doubling down and spending millions of dollars more to try and fix a product receiving a lukewarm response at best Beyond Meat chose to pivot. Critical Details Found in Financial Filings by My Firms Robo-Analyst Technology. Theres no actual blood,instead beet juice isused but it does the trick. Considering these competitors are already supplying plant-based protein products, Beyond Meat faces an increasingly uphill battle to reach the size it needs to match the cost efficiencies of larger competitors like these two established firms. Instead Beyond Meat fought for placement within the meat section of grocery stores. Beyond Meat had originally been sold in retail shops across the USA, then worldwide. Figure 10: Implied Acquisition Prices for Value-Neutral Deal. Success of any of Beyond Meats competitors could also further threaten future profit growth for Beyond Meat. While the market hasnt liked this news, both the CEOs of Beyond Meat and McDonalds have stated that there isno changein the relationship between the two companies. One of Beyond Meat's biggest and earliest investors was Tyson Foods, which had a 5 percent stake in 2016, later raised to 6.52 percent. However, one of the biggest deal breakers for potential. Engineered plant-based burger patties from food, company Beyond Meat are visible on shelves among other meat alternatives at a grocery store in San Ramon, California, August 28, 2019. For example, without any existing shelf space, and only recently announcing an e-commerce platform, Beyond Meat must spend more on not only convincing consumers to try their products, but also on retailers to display their products. Over the TTM, Beyond Meat removed $23.7 million (6% of revenue) in share-based compensation and $7.5 million in restructuring expenses (2% of revenue) when calculating adjusted EBITDA. Expired Meat: https://youtu.be/ZxCT_D6HBd8, https://www.forbes.com/sites/greatspeculations/2020/09/14/competition-will-eat-beyond-meat-alive/#9d646992946b, https://www.cnbc.com/2019/08/21/whole-foods-ceo-john-mackey-plant-based-meat-not-good-for-your-health.html, https://www.cnbc.com/2020/09/14/beyond-meat-is-launching-meat-free-meatballs-in-grocery-stores.html, Female Entrepreneur. One of the most notable adjustments was $11 million inoperating leases. This is one of the biggest first-day pop-ups in recent history. In this scenario, Beyond Meat would earn ~$12.5 billion (slightly more thanMarketsandMarkets2019 estimated global plant-based meat market size of $12.1 billion) in revenue in 2031, compared to $401 million TTM. This would be unreadable! These expenses, and the need to maintain them to support Beyond Meats already declining growth, illustrate that the firm is not approaching economies of scale anytime soon. With a market cap of over $9.6 billion, the stock now trades a little over 17x projected 2021 revenues, despite the fact that 2020 was the toughest year for the company due to the pandemic and it also missed analysts expectations for Q1 2021. Net revenues decreased 1.2% to $100.7 million in the fourth quarter of 2021, compared to $101.9 million in the year-ago period. See the math behind this reverse DCF scenario. To show that Beyond Meats protein is just good as alternative protein on the market the brand has partnered with NBA players like Kyrie Irving and Chris Paul who are not only brand ambassadors but are also investors in the company. (Photo Illustration by Drew Angerer/Getty Images). Beyond Meat Announces Global Strategic Partnership with Yum! Brands to This is a major strength: a high speed-to-market. Should Kellogg continue to push the marketing of Incogmeato and swiftly gain customers, investors may kiss the ultra-high expectations baked into BYND goodbye. Beyond Meat just IPOd last year, it is very interesting to me to see that it is a 9.30B company as of today. Beyond Meat entered into a partnership with PepsiCo. Brown. This is not by accident but instead by design. With the high expectations of consumers and the competition they were about to create, knowing that they got in during the right time when consumers would take it as a positive and embrace this new way to eating meat, or meat substitute.. Invest better with The Motley Fool. Beyond is working to streamline its operations and reverse declining sales. Learn how you can use Latana to improve your brand marketing and grow faster. Beyond Meat was one of the most successful IPOs (Initial Public Offerings) of 2019. For reference, Beyond Meats invested capital has increased by an average of $84 million (28% of 2019 revenue) over the past two years. Beyond Meat stated that its mission is to push boundaries and disrupt. This is rather than Beyond Meat actually creating a meat brand that is real meat. Beyond Meat founder, Ethan Brown, understood the place of meat in the collective perception very early on. Although its products are plant based Beyond Meats marketing does not explicitly call that out. Plant based burgers are not new but Beyond Meat has been able to capture more of the . January 2021. Eating plants is the best thing you can do for your diet. And if youre looking to follow in this impressive brands footsteps, keep our above tips in mind and consider adding brand tracking software to your lineup because, without insight into how consumers feel about your brand, you wont know where to grow next. So, what can you learn from Beyond Meat's marketing strategy? If you want to stay up-to-date on the latest news in the plant-based market, to learn about the most recent innovations as they come out, do not hesitate tofollow us. Beyond Meat, Inc. (NASDAQ: BYND) is one of the fastest growing publicly-traded food companies in the United States, offering a portfolio of revolutionary plant-based proteins made from simple ingredients without GMOs, bioengineered ingredients, hormones, antibiotics or cholesterol. But thats what BYNDs investors are betting will not happen! Beyond Meat ( NASDAQ: BYND) is streamlining its sales strategy, according to internal documents reviewed by the Wall Street Journal. Finally, in 2021, Beyond Meat began supplying Taco Bell with plant-based meat products and partnered with PepsiCo to develop and market plant-based drinks and snacks. Some of the largest consumer food brands have followed suit. Big brands have started plant-based meats and substances that are more healthy in order to show that Beyond Meat is not the only plant-based guys in town and gain some market share. Not knowing what is in the hot dog, not knowing where the hot dog came from, the conditions of the animals at the house in which the meat was slaughtered. The mission of the company is focused on plant-based meat alternatives, using pea and other plant protein isolates. Founded in 1993 by brothers Tom and David Gardner, The Motley Fool helps millions of people attain financial freedom through our website, podcasts, books, newspaper column, radio show, and premium investing services. Furthermore, many of the firms in Figure 2 have other key advantages multi-year relationships and existing distribution networks with grocery stores and quick-serve restaurants such asTyson, or in the case of Kroger, direct control of distribution and the end-consumer relationship. The first campaign, The Future of Protein, was launched in 2015. One of the ways it did this was by creating burgers that look like meat burgers down to the meat actually bleeding. Even in the most optimistic of scenarios, Beyond Meat is worth less than its current share price. 3. Competitors, Serious Uphill Battle for Beyond Meat to Improve Profitability. The redistribution of cash flow to its investors is a challenge. Insider Trading and Short Interest Indicate Market Skepticism. Combine revenue growth with the fact that Beyond Meats net income margins (net income, or profits after all expenses and taxes, calculated as a percent of revenues) are on an improving trajectory. The California-based company is orienting its retail business around Kroger Co., Walmart Inc., Publix Super Markets Inc., Costco Wholesale Corp. and Whole Foods Market, according to internal company presentations and documents. Beyond Meat was originally founded in 2009 by Ethan Brown, who worked with two University of Missouri professors, Fu-hung Hsieh and Harold Huff, to develop meatless, plant-based protein. What can you learn from this? Total revenue jumped by 69% against the prior-year quarter to $113.3 million. A new marketing strategy will play up the health and sustainability benefits of Beyond Meat, Brown said. With such high expectations, nearly any negative news could place Beyond Meats future earnings in doubt and cause shares to fall. But at this stage of Beyond Meat's growth, converting new customers remains the utmost priority. (Photo by Smith Collection/Gado/Getty Images), BYND Operating Expense As Of Revenue Beyond Meat, BYND Current Valuation Implies Massive Revenue, BYND Implied Acquisition Prices For Value Neutral, BYND Implied Acquisition Prices For Value, See the math behind this reverse DCF scenario, directly correlated with creating shareholder value, The lack of competitive advantages that nearly all competitors possess, Doing the math: stock price implies huge increase in revenue/profits, Incogmeato by Morningstar Farms, owned by Kellogg Co. (K), Simply Plant-Based Meatless Burger, a SYSCO Corp. (SYY) exclusive product, Simple Truth plant-based meat, owned by The Kroger Co. (KR), Sweet Earth Brand, owned by Nestle (NSRGY), Happy Little Plants, owned by Hormel (HRL), Lightlife Foods, owned by Maple Leaf Foods, Shelf space large amounts of space, which can be very difficult to acquire, especially from firms like Kroger who directly control shelf space allocation, Marketing and advertising capacity existing businesses generate lots of cash flow that enables these firms to spend much more on marketing and advertising than Beyond Meat, Strong brand decades-long relationships with consumers across multiple brands that engender the trust that enables quicker adoption of newer products, Valuation implies massive improvement in profitability with sustained revenue growth rates, Domini Sustainable Solutions Fund (LIFEX) 3.4% allocation and unattractive rating. With insiders quick to sell their shares and a large and growing short interest forming, it seems that others in the market are also unwilling to bet on the future hurdles Beyond Meat must clear. Continue reading your article witha WSJ subscription, Already a member? Opinions expressed by Forbes Contributors are their own. Beyond Meat will face difficulty maintaining an innovative edge over its peers, who already spend much more on research and development (R&D). Balance Sheet: I made $290 million of adjustments to calculate invested capital with a net decrease of $228 million. It began trading at $25/share on the Nasdaq stock exchange and ended the day at $65.75. A year ago, the consumer discretionary upstart's top line reflected the depth of its marketing and supply chain investment in the restaurant business: These sales were nearly identical to their retail counterpart: Source: Beyond Meat. The Motley Fool owns shares of and recommends Beyond Meat, Inc. Despite less transparency, I know that Beyond Meats executive compensation plan consists of a cash bonus, option grants, and restricted share units (RSUs). The Motley Fool has a disclosure policy. Below is a short list of some of Beyond Meats alternative meat competitors: This list is not exhaustive and doesnt include any of the traditional meat products that continue to garner a large share of consumer dollars. With sharp growth in revenues, margins have increased from -89% in 2017 to -9.4% over the last twelve months. Dow Jones Reprints at 1-800-843-0008 or visit www.djreprints.com. And this failure didnt break them for a few reasons most importantly, because they already had new products in the works. They did not service the vegan and vegetarian markets as traditional players did. Beyond Meat stock has staged a dramatic recovery in January, rising by more than 50% since the end of last year. Case in point, revenue grew 239% YoY in 2019, 141% YoY in 1Q20, and 69% YoY in 2Q20. Changes that have inspired the birth of Beyond Meat is the increased demand on plant-based products. They clearly prioritize innovation. In the second quarter, U.S. retail sales (mostly through grocery channels) almost tripled to $90 million, while foodservice sales in the U.S. plunged by 61% to $6.5 million. Economic earnings, which account for the unusual items on the income statement and changes to the balance sheet, are negative $6 million and declining over the TTM, even as adjusted EBITDA is positive and rising. Beyond Meat and the Competitive Landscape | Toptal Additionally, when their Chicken-Free Strips were finally taken off the market in 2019, they did so quietly. Without having that partnership in the beginning Beyond Meat may have floundered for many years trying to build a customer base on its own. Beyond Meats R&D in 2019 was just $21 million compared to $56 million for ConAgra and $97 million for Tyson over the same time. Though BYNDs margins remained negative at close to -13% in 2020 (due to the impact of the pandemic), the companys operations are expected to improve and turn profitable in 2022, with projected margins of 3%. This created the need for healthy products. Evaluation of Options- Evaluating the options of Beyond Meat vs. regular meat. Furthermore, Don Lee alleged significant concerns about food safety protocols concerning the raw materials that Beyond Meat sent. The mattress. Beyond Meat also has big contracts with fast-food chains, as mentioned before, which is a distribution canal bringing lots of cash flow. However, it hasnt always been smooth sailing for Beyond Meat in March 2019, Don Lee Farms filed a civil suit against its former business partner. Plant-Based Food Companies Face Critics: Environmental Advocates Michelle Amador - Sr. Director, Global Strategic Partnerships - Beyond Word of . If Beyond Meat created the healthiest plant based products that dont taste very good then it wouldnt be in business very long. Beyond Meats success comes partially from the fact that it has been able to evolve alongside or prior to consumer demand. Beyond Meat was originally founded in 2009 by Ethan Brown, who worked with two University of Missouri professors, Fu-hung Hsieh and Harold Huff, to develop meatless, plant-based protein The professors had been working on perfecting their formula for years, and the first Beyond Meat product launched in 2012 was their "Chicken-Free Strips". Nonetheless, Beyond Meat's earnings press release observed that the value packs, which hit grocery stores only in the last two weeks of the quarter, were responsible for 16 percentage points of volume growth for the entire period. For example, Kelloggs delayed the launch of its first round of Incogmeato products due to the COVID-19 pandemic. After adjusting for this liability, I can model multiple purchase price scenarios. If revenues expand 2.7x over the next few years, instead of the P/S shrinking from around 17x presently to less than 10x, a scenario where the P/S metric falls more modestly, perhaps to about 13x looks more likely, considering the fact that profitability is also projected to see sharp improvement. This copy is for your personal, non-commercial use only. Beyond Meat (NASDAQ: BYND) was founded in 2009 by Ethan Brown, a Californian entrepreneur with an interest in environmental topics, who is also a vegan. Beyond Meat Stock: A Competitive Analysis | Nasdaq Whos to say that its red meat? For instance, over the TTM, ConAgra spent 15 times more on SG&A than Beyond Meat. How it Turned an Ugly Shoe into a Hot Commodity, 10 Ways of Marketing Outside of Facebook & Instagram for Retailers, 10 Inexpensive Marketing Ideas for Retailers, Learn more about me at: www.triciamckinnon.com, Customer Experience, eCommerce, Strategy & Growth, tried to get funding to expand his company. Our goal is to give you the key to understanding Beyond Meats rapid success, to show you the hidden reasons for their success. Competitors. Beyond Meat strategy Beyond Meat: The Keys To Disrupting An Enormous Market - Forbes Beyond Meat, the company that is making eating plant-based protein mainstream continues to grow at a fast pace. One of the most important pieces of furniture we own. After all, the positive choices we make every day - no matter how small - can have a great impact on our world. By constantly innovating, pivoting when necessary, and having a real eye for detail, in just under 10 years, Beyond Meat has become one of the biggest names in a previously unheard-of industry. This report helps investors of all types see just how extreme the risk in BYND is based on: Growth Will Slow Down, but Competitors Wont. After all, nothing could replace a real burger, could it? People are able to do extensive research on problems after recognizing that there is an issue. With a sound marketing strategy, Beyond Meat may be able to make its product cool again. In order to increase its manufacturing capacity, in June 2018, Beyond Meat opened a second production facility in Columbia, Missouri and a third in El Segundo, California. Recent Improvement in Profitability Was Short-Lived. The difference with other plant-based patties is that their name is a synonym of quality for their clients. If you are wondering how Beyond Meat has been able to make strides where others havent consider these four elements of its marketing strategy. Creating effective ad campaigns is every marketers struggle but thats where customer data comes in. After much anticipation, Beyond Meat announced a three-year partnership with McDonalds in February 2021, under which BYND will be McDonalds preferred supplier for the patty in the McPlant, a new plant-based burger being tested in select McDonalds markets globally. Moral of the story? Before joining Beyond Meat, Mr. Oghoghomeh served as Senior Vice President, Brand Marketing at Red Bull from 2021 to February 2023. While Beyond Meat could continue to rally, it faces four challenges that. Then, followed by J.J. Redick, Maya Moore, April Ross, Eric Bledsoe, Maggie Vessey, and Tia Blanco. Does this make the stock expensive considering the recent volatility in the stock price? This is one of the biggest first-day pop-ups in recent history. From the beginning Beyond Meat has viewed itself as a company that could take a typical meat eater and get them to consider a tasty alternative. Since its high-flying IPO at $46, this stock has soared to $135. Expand the definition of your target market. strategy uncovers and shares the "bold vision, . While I think a plethora of competitors have already developed a competing product, its plausible that a competitor could decide to buy Beyond Meat rather than continue building its own plant-based protein brand. Often the largest risk to any bear thesis is what I call stupid money risk, which means an acquirer comes in and buys Beyond Meat at the current, or higher, share price despite the stock being overvalued. We believe Beyond Meat Revenues have the potential to rise close to 2.7x from the level of $407 million in 2020 to $1.1 billion by 2023, representing a growth rate of roughly 40% per year (for context, the compounded annual growth rate was a very healthy at 164% between 2016 and 2019). Placing its hamburgers and breakfast proteins in major quick-service restaurant chains was a logical approach to igniting brand awareness. Market Drivers- Market drives come from the availability of knowledge on healthy products vs. mass marketing for bad products. We are providing energy for the body and we can pull it from a lot of different places. It represents what we feel is the first product that mainstream omnivores are willing to seek out and put at the center of their plate.. Dollar figures in millions. Impossible Foods, Beyond Meat battle to achieve price parity - CNBC In any case, I view recent moves as encouraging as Beyond makes moves to improve its footing to grow as a . By 2015, even Walmart was selling Beyond Meats plant-based products! After tying up with Dunkin soon after its IPO, Beyond Meat entered China in 2020. Nope, its just Beyond Meat. Further, consensus estimates for Beyond Meats 2020 earnings are now $0.07/share. There are countless advertisements with men barbequing burgers or hanging out with their friends as they bond over their favourite protein, read meat. + Follow. Beyond Meat Inc. is revamping its retail sales strategy to center on five major grocers and hiring a new marketing executive as part of .css-1h1us5y-StyledLink{color:var(--interactive-text-color);-webkit-text-decoration:underline;text-decoration:underline;}.css-1h1us5y-StyledLink:hover{-webkit-text-decoration:none;text-decoration:none;}an effort to reinvigorate the plant-based food makers business. By shifting from animal-based meat to plant-based meat, we can positively impact four growing global issues: human health, climate change, constraints on natural resources and animal welfare. Investors are beginning to worry whether or not Beyond Meat will be able to sustain the $4 billion valuation in stock it currently has. What can you learn from this? Fourth Quarter 2021. But what has allowed them to be so successful despite their setbacks? 2023 Latana GmbH. This vision can be found throughout Beyond Meats marketing collateral. While Beyond Meats SG&A (which includes marketing and advertising expenses) represents a large percentage of the firms TTM revenue, the firms total dollars spent on SG&A pales in comparison to larger competitors. Making the world smarter, happier, and richer. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Eating meat has long been associated with masculinity. Beyond Meat Narrows Its Losses. It provided Beyond Meat with one of the best forms of advertising, credibility. This created a need for plant-based foods to replace the broken system of meats. In 2020, they even signed a deal to open another production facility in Shanghai! When vegan meat alternatives first started to appear on the market, many people saw them as a fad. First, investors need to know that Beyond Meat has a large liability that makes it more expensive than the accounting numbers would initially suggest. Gross profit was $122.3 million, or gross margin of 30.1% of net revenues; Adjusted gross profit was $133.7 million, or Adjusted gross margin of 32.9% of net revenues, reflecting exclusion of expenses attributable to COVID-19. DOI: 10.2991/assehr.k.211209.003. on July 4th, eating a hot dog with your family. Dont be afraid to really study the competition and pay attention to all the little details that have made them successful. For this analysis, I choseKraft Heinz as a potential acquirer of Beyond Meat since it doesnt have a pea-protein based product like Beyond Meats and has a history of acquisitions. If youre always innovating and looking towards the future, youll rarely be caught off guard. Beyond Meat and Impossible Foods have many common points. 4. Their products are now sold in 17,000 grocery stores and 12,000 eateries. Entrepreneur, retail expert, strategy consultant and author. Beyond Meat: Changing Consumers' Meat Preference | Harvard Business Consensus estimates expect revenue will grow 61% YoY in 2020, and just 17% YoY by 2025, per Figure 1. In this scenario, Beyond Meat grows revenue by 37% compounded annually (which results in NOPAT growing 42% compounded annually) for the next 12 years. BYND entered into a partnership with Alibaba Group, whereby its products will be available in Freshippo stores (Alibabas supermarkets) in Shanghai. Plant based burgers are not new but Beyond Meat has been able to capture more of the mainstream market. Their main rival is the company Impossible Foods. Time to Buy? However, the lack of fervor for their first product did nothing to stop Beyond Meat from trudging forward. While there are numerous brands that have popped up over the years whove thrown their metaphorical hats into the meat alternatives ring such as Impossible Foods and Quorn Beyond Meat is still one of the most successful and well-known.