People are able to do extensive research on problems after recognizing that there is an issue. Success of any of Beyond Meats competitors could also further threaten future profit growth for Beyond Meat. In the first quarter of 2019, Beyond Meat's first as a public company, its gross profit was just 26.8% of net revenue. The superior scale of Beyond Meats peers will also challenge what the firm believes to be a critical competitive advantage its innovation. We visited . Beyond Meats success comes partially from the fact that it has been able to evolve alongside or prior to consumer demand. Figure 10: Implied Acquisition Prices for Value-Neutral Deal. Even in the most optimistic of scenarios, Beyond Meat is worth less than its current share price. The company launched the Impossible Burger in 2016. This allows consumers to make their own informed decision. Beyond Meat has been working with them since February 2019. Theres no actual blood,instead beet juice isused but it does the trick. Valuation: I made $757 million of adjustments with a net effect of decreasing shareholder value by $513 million. Figure 7: Current Valuation Implies Drastic Profit Growth. How Beyond Meat's Marketing Strategy Set it Apart . Therefore, they have a lot of time and competitive advantage before others to create the most well-known category before all other competitors. Beyond Meat stated that its mission is to push boundaries and disrupt. Along with continued marketing investment, the plant-based company strikes partnerships with McDonald's and Yum! Beyond Meat, therefore, accomplished something huge: its name is enough to make people reassured about the quality and taste. The larger the firm gets, the more difficult it becomes to achieve large year-over-year (YoY) growth rates. Each implied price is based on a goal ROIC assuming different levels of revenue growth. By shifting from animal to plant-based meat, we can positively affect the planet, the environment, the climate and even ourselves. And now the ravenous race for market share begins, with Beyond Meat and Impossible Foods (which has raised nearly $500 million in debt and equity) in prime position to . All rights reserved. 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. Instead, they persevered. Read the full post on my retail trends blog by clicking here. 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. Increased U.S. foodservice and international channel net revenues were more than offset by reduced U.S. retail channel net revenues, which decreased 19.5% compared to the year-ago period. See the math behind this reverse DCF scenario. 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. Links: https://zaap.bio/lillytalavera. Asit Sharma has no position in any of the stocks mentioned. This created a need for plant-based foods to replace the broken system of meats. However, the poultry producer exited earlier this year . As of 2020, the Beyond Meat company sells: Cookout Classic (10 plant-based burgers). However, some investors have growing concerns about the companys ability to maintain these results. Its stock value gained 163% on the day of its stock introduction. (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. After tying up with Dunkin soon after its IPO, Beyond Meat entered China in 2020. See Figure 8 for details. Attracted by Beyond Meats impressive growth rates and soaring market value, multiple competitors are entering the alternative meat industry. The ideal candidate must have substantial knowledge and experience in counseling on marketing and advertising matters for food and/or beverage companies, including review of packaging, labeling, and promotional . However, the fundamentals reveal this stock is more style than substance. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Over 2Q20, Beyond Meat removed $1.5 million (1% of revenue) in other expenses when calculating adjusted EBITDA. The main difference is that Impossible Foods takes its proteins from soy whereas Beyond Meat extracts it from peas. 2 Reasons to Avoid a Roth 401(k) for Your Retirement Savings, Warren Buffett's Latest $2.9 Billion Buy Brings His Total Investment in This Stock to $66 Billion in 4 Years, Want $1 Million in Retirement? Continue reading your article witha WSJ subscription, Already a member? But what if youre looking for a more balanced portfolio instead? KFC, Beyond Meat ready nationwide plant-based chicken rollout Moral of the story? Instead Beyond Meat fought for placement within the meat section of grocery stores. When grocery stores resisted this in the beginning Beyond Meat declined to place its product in those stores and decided to wait until a grocery store embraced its vision. Beyond is working to streamline its operations and reverse declining sales. While consumer interest in protecting the environment or having a healthier lifestyle continues to grow it doesnt always mean consumption follows. Information Search- Consumers using this new information to do their own research on the history of slaughter houses and the conditions in which animals are being tortured and killed to create meat. 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. Full Year 2020 Financial Highlights1. Beyond Meat: No more mystery for the plant-meat brand - BMB If you do subscribe to our retail trends newsletter to get the latest retail insights & trends delivered to your inbox. Plant-based foods are more than a fad, they are a huge economic trend. However, one of the biggest deal breakers for potential. For example, Kelloggs delayed the launch of its first round of Incogmeato products due to the COVID-19 pandemic. Many undercover operations are conducted to get footage and investigate what is really going on inside the slaughter houses. Beyond Meat Reports Fourth Quarter and Full Year 2020 Financial Youre reading a free article with opinions that may differ from The Motley Fools Premium Investing Services. Between 2013-2016, Beyond Meat was funded by the likes of Tyson Foods, Bill Gates, and the Humane Society and by 2018, theyd raised $72 million in venture financing. Sustainable Competitive Advantage- Beyond Meats formula for the perfect flavoring to taste just like a real burger. 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. Figure 9: BYND Has Large Downside Risk: DCF Valuation Scenario. For comparison, this scenario implies Beyond Meat would generate more sales than incumbent competitors such as Pilgrims Pride (PPC), ConAgra Foods (CAG), and Hormel Foods (HRL) in their last fiscal years. To justify its current price of $135/share, Beyond Meat must immediately improve its NOPAT margin to 5% (same as Tyson and more than double its current margin of 2%). 3. This wasn't a cheap decision -- Beyond Meat incurred a charge of nearly $6 million to repack and reroute this inventory in response to consumer demand. Michelle Amador - Sr. Director, Global Strategic Partnerships - Beyond The bottom line is that even if Beyond Meat can grow revenue by 51% compounded annually for five years at an 8% NOPAT margin, the firm is worth much less than $135/share. Beyond Meat was one of the most successful IPOs (Initial Public Offerings) of 2019. Letting go of your vision and plans is hard, but if its the right thing to do, you have to be willing to pivot. [1]My firms core earnings are a superior measure of profits, as demonstrated inCore Earnings: New Data & Evidencea paper by professors at Harvard Business School (HBS) & MIT Sloan. I believe this drive will continue and not stop. However, Beyond Meat staunchly defended itself and its food safety protocols, turning the tables on Don Lee and saying: We simply couldnt get Don Lee Farms to meet our standards. Even in 2021, the dispute is still going on, though both sides seem to have claimed victory. 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. Remember the man-ish look of the burger boxes, the focus on the amounts of protein? In any case, I view recent moves as encouraging as Beyond makes moves to improve its footing to grow as a . In order to get ahead of the competition, never stop innovating. Beyond Meat entered into a partnership with PepsiCo. Things Are Only Getting Worse for Beyond Meat Stock. Therefore, restaurant owners tend to put the Beyond Meat logo on the menu when featuring their products. Many people do not know that eating meat is not only eating meat, but eating the history in which the meat came from. However, Kelloggs appears it is ready to launch Incogmeato and recently partnered with Postmates to deliver free Incogmeato samples to residents of Denver and Dallas. 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. Beyond Meat stock has staged a dramatic recovery in January, rising by more than 50% since the end of last year. KFC and Beyond Meat are partnering with YouTube star and influencer Liza Koshy to help reveal the debut. Eat What You Love Figures 10 and 11 show what I think Kraft Heinz should pay for Beyond Meat to ensure it does not destroy shareholder value. Purchase Decision- When consumers are informed of the evaluation of options, information is readily available, and they have recognized a problem, it is so easy for consumers to make a newly informed decision. Despite less transparency, I know that Beyond Meats executive compensation plan consists of a cash bonus, option grants, and restricted share units (RSUs). Before the advent of the COVID-19 pandemic, Beyond Meat's "go-to-market" strategy -- its plan for marketing and promoting its brand, coupled with its framework for product distribution -- relied heavily on foodservice penetration. With a sound marketing strategy, Beyond Meat may be able to make its product cool again. They only get anxious when they realize that they havent eaten something theyve come to believe they need., Beyond Meat believes that protein is protein and consumers shouldnt care if it comes from a plant or an animal. Over the TTM period, FCF is -$164 million. This would be unreadable! Jurgens brings over 20 years of experience with a proven record of growing sales and profit through strategy, branding, marketing, operational excellence and innovative approaches. Eating meat is associated with strength and power while a plant based diet is not, at least not for now. This does not boil down to just knowledge on slaughter houses, animal conditions, bacteria etc. Beyond Meats case also shows that a marketing strategy is not fixed: it has to evolve along with the companys positioning. Whos to say that its red meat? If Beyond Meat can improve its NOPAT margin to 5% (equal to Tysons TTM margin) and grow revenue at 61% in 2020, 55% in 2021, and 47% in 2022 (consensus estimates) and by 20% compounded annually thereafter, the stock has significant downside risk. Founder and Tech Inventor at Princess Technologies. 8 Facts About Pelotons Marketing Strategy You Need to Know, Dirty Lemons Marketing & Growth Strategy, How it Became a Success, Crocs Marketing Strategy. Beyond Meat went from very dark and meat-like packagings to a fresher and smoother look. If, however, McDonalds chooses to not continue on with the PLT or finds another supplier for its plant-based protein items, BYND could fall even further. They entered the restaurant market, and are currently sold to plant-based and mainstream restaurants. See allTrefis Featured AnalysesandDownloadTrefis Datahere. illustration, packages of Beyond Meat "The Beyond Burger" sit in a refrigerator, June 13, 2019 in the Brooklyn borough of New York City. The company has a culture of accountability among its employees: they are all responsible for driving up performances by making suggestions, pointing out what is not working. 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. Such high spending is not only unsustainable, but it also means Beyond Meats product must be more expensive than competitors products for the firm to turn a profit. It began trading at $25/share on the Nasdaq stock exchange and ended the day at $65.75. 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. 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. word of mouth. And this failure didnt break them for a few reasons most importantly, because they already had new products in the works. Before the advent of the COVID-19 pandemic, Beyond Meat's "go-to-market" strategy -- its plan for marketing and promoting its brand, coupled with its framework for product distribution -- relied . Though their first product received positive reviews from some celebrities and PETA named Beyond Meat their 2013 Company of the Year, journalists who actually tasted the chicken reported that the "likeness to real chicken was tolerable, at best". Furthermore, Don Lee alleged significant concerns about food safety protocols concerning the raw materials that Beyond Meat sent. Beyond Meat Announces New Executive Leadership Appointments to Consensus estimates expect revenue will grow 61% YoY in 2020, and just 17% YoY by 2025, per Figure 1. Catalyst: Others Success Could Come at Beyond Meats Expense. Therefore, the future will be bright, but they need to continuously gain market share by introducing new products and innovation within the plant-based space. 2019: A Change In the Branding Strategy With the Arrival of Stun. CEO and founder Ethan Brown understood that the target audience was not only vegetarians and vegans, but also flexitarians, or meat-eaters who occasionally want a healthier, high-quality option. Beyond Meat, a producer of plant-based meat substitutes, was founded in 2009 in Los Angeles, California. How Beyond Meat's Marketing Strategy Set it Apart - LinkedIn According to the Partners In Leadership Happiness at Work survey, when employees are happier at work, 85% take more initiative. BYND entered into a partnership with Alibaba Group, whereby its products will be available in Freshippo stores (Alibabas supermarkets) in Shanghai. January 2021. Many people can not even tell the difference between real meat and Beyond Meat. While I chose Kraft Heinz, analysts can use just about any company to do the same analysis. There are several lessons to be learned from Beyond Meats story. In2016 Whole Foods decided to give the company a chance by placing Beyond Meat in its meat section. Beyond Meat: Focus List: Short Winner That Will Fall Further Problem Recognition- Consumers did not know about the conditions of the animals that are actively being slaughtered to create meat. Here's how KFC is marketing its updated Beyond Meat faux - Ad Age Digital Marketing @ Beyond Meat | Award-Winning Author | Driving Success Through Tech, Creativity, & Strategy Pittsburgh, Pennsylvania, United States 631 followers 500+ connections I would prefer Beyond Meat align executives interests with shareholders interests and link executive compensation with improving ROIC, which isdirectly correlated with creating shareholder value. A staff member at Business Insider that cooked and reviewed a Beyond Meat burger at homesaidthis about it: overall, it was tasty and juicy, unlike most veggie burgers which can often taste closer to cardboard than beef. Marketing is always easier when you have a great product because you dont have to try quite as hard to get people to try it as consumption spreads more organically over time via. Invest better with The Motley Fool. But beneath these numbers, the dynamics of Beyond Meat's business model have been radically altered by its response to the COVID-19 pandemic. This additional expense, one that is much lower for many competitors (as they already have profitable business lines to offset any marketing of new products), makes it even more difficult for Beyond Meat to improve its profitability in such a competitive market. Learn More. From the Beyond Burger to Beyond Sausage, and their latest Beyond Meatballs this brand is really on a roll. 2023 Latana GmbH. Previously, people were limited to information they see on television which is in the best interests of companies that can afford those ad campaigns. 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. The coronavirus pandemic put a halt to the companys fast-growing revenues as shutting down of restaurants due to the lockdown significantly affected the companys restaurant and foodservice business, which was the fastest growing segment for BYND until 2019. Though the stock is likely to remain volatile in the near term, the strong growth outlook will help it once again reach the $200 level once the current crisis abates. Stage of Market Lifestyle- The stage of the market lifestyle will influence the company on a few different categories. Plants come directly from the sun and reap the energy created from the sun. Without significant increases over the margins and revenue growth assumed in this scenario, an acquisition of Beyond Meat at its current price destroys significant shareholder value. Beyond Meats profitability ranks at the bottom of this peer group. Beyond Meat Is On Its Path To Irrelevance - SeekingAlpha For example, evaluating the conditions of the animals before death, the process in which the meat is processed, the drugs and antibiotics that the animals were treated with before getting slaughtered. It doesnt matter what industry your brand is in theres always a chance consumers wont take to your product or service. Finally, innovation is another key element of success for Beyond Meat: if they are the leaders, lets not forget that it is also because their products are great, packed with plant-based proteins. Distribution and use of this material are governed by 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. Creating effective ad campaigns is every marketers struggle but thats where customer data comes in. In any case, I view recent moves as encouraging as Beyond makes moves to improve its footing to grow as a . Impossible Foods, Beyond Meat battle to achieve price parity - CNBC Beyond Meat is seeking a marketing, advertising, regulatory, and trademark attorney with 10-12 years of experience. In 2021 Beyond Meat's revenue increased by 14.2% to reach $464.7 million. 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. Recent Improvement in Profitability Was Short-Lived. Shares have fallen 10% since news onJune 25, 2020that McDonalds was discontinuing testing of a plant-based burger it dubbed the PLT made with a Beyond Meat patty in several Canadian markets. DOI: 10.2991/assehr.k.211209.003. Meditation apps have seen a boom in popularity over the past few years in the US but does their growth extend to Europe? Figure 9 compares the firms implied future NOPAT in this scenario to its historical NOPAT. Per Figure 6, Beyond Meats TTM adjusted EBITDA of $45 million is well above core earnings of $4 million. Beyond Meat would rather investors focus onflawed non-GAAP metricssuch as adjusted EBITDA, which allow management to remove real costs of the business and to paint a rosier view of profits. Join the Team | Beyond Meat Careers | Beyond Meat . Like Comment Share . Considering our revenue projections of roughly $1.1 billion and 6% margins, almost $66 million in net income is possible by 2023. Impossible Foods sells slightly different products: Impossible Burger, Impossible Pork, Impossible Sausage. Production Supervisor - 2nd Shift. Competitive Advantage- Because Beyond Meat was one of the first to actually create a meat patty from plant proteins, they were able to turn it into the now known Beyond Burger. A year later, Beyond Meat developed its first beef product made from plant proteins, which later morphed into its now-famous Beyond Burger in 2016. This is introducing the category and it was picked up by Burger King. They both rearrange proteins to create their plant-based products. You can find Beyond Meat in many places from small restaurants to national chains but what really accelerated its growth in the beginning was its partnership with Whole Foods. Stun is a creative branding agency. Beyond Meat Has Completely Altered Its Go-to-Market Strategy 2 1 Comment. Opinions expressed by Forbes Contributors are their own. A new marketing strategy will play up the health and sustainability benefits of Beyond Meat, Brown said. But how they handled it is what makes them a successful brand. The first six months of 2020 have visibly transformed Beyond Meat's(BYND 5.83%) approach to marketing its plant-based, meat substitute products. The future is one where the meat case is going to be called the protein case and consumers will be able to buy plant-based and animal-based protein side by side,saidEthan Brown, founder and CEO of Beyond Meat. 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.. 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. This vision can be found throughout Beyond Meats marketing collateral. Then, followed by J.J. Redick, Maya Moore, April Ross, Eric Bledsoe, Maggie Vessey, and Tia Blanco. Beyond Meat Inc stock (NASDAQ: BYND), a leading-edge food company that produces meat directly from plants an innovation that provides taste and texture of animal-based meat products along with nutritional benefits of plant-based products has seen its stock rise by over 160% from the lows seen in March 2020. And if this happens, you need to have others you can roll out. To make the world smarter, happier, and richer. 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. What kind of external factors/changes do you think may have inspired the birth of Beyond Meat? In 2020, they even signed a deal to open another production facility in Shanghai! This makes a lot of sense since only2.7%of packaged meat sales in the United States are plant based. They knew that vegans and vegetarians would use and love the product regardless if they targetted them because the products were so superior to what they were used to. Apart fromtotal debtwhich includes the operating leases noted above, the most notable adjustment to shareholder value was $572 million inoutstanding employee stock options. Nowadays, certain celebrities do more than advertise for the brand, some have become ambassadors for Beyond Meat, such as Byrie Irving, from the Boston Celtics. As we touched on earlier, not everything was easy for Beyond Meat they made their fair share of mistakes along the way. They began targeting not only vegetarians and vegans, but also and mainly meat-eaters; flexitarians. https://www.wsj.com/articles/beyond-meat-hires-marketing-executive-revamps-retail-strategy-11675379688.