Opinions expressed by Forbes Contributors are their own. Beyond Meat stated that its mission is to push boundaries and disrupt. Heres a high-quality portfolio to beat the market, with over 100% return since 2016, versus 55% for the S&P 500. Firstly, the gradual lifting of lockdowns in recent months will help the restaurant segment register strong growth along with sales from retail chains. Plants come directly from the sun and reap the energy created from the sun. Although its products are plant based Beyond Meats marketing does not explicitly call that out. For non-personal use or to order multiple copies, please contact 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. Part of Beyond Meats strategy is to redefine what the best source of protein is. Beyond Meat Inc. is revamping its retail sales strategy to center on five major grocers and hiring a new marketing executive as part of an effort to reinvigorate the plant-based food. Insider Trading and Short Interest Indicate Market Skepticism. Figure 3 shows Beyond Meat spends 37% of its revenue on operating expenses (SG&A, R&D, and restructuring costs), which is well above peers. Brands. Net revenues were $406.8 million, an increase of 36.6% year-over-year. Fourth Quarter 2021. 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. Among the items Beyond Meat excludes when calculating its adjusted EBITDA are equity-based compensation, restructuring expenses, and a vague line item labeled other. These days, fewer investors pay attention to fundamentals and the red flags buried in financial filings. And while their Chicken-Free Strips were sold at big-name stores like Whole Foods all across the US, they were later discontinued in 2019. About 70% of the global population is cutting down its meat consumption. 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 scenario represents the minimum level of performance required not to destroy value. Why? While Beyond Meats stock performance is attractive to many momentum traders, investors with fiduciary responsibilities should consider the deteriorating fundamentals, weak prospects to compete at the scale of its competition, and the unrealistic increase in profits implied by the current valuation. First, consumers expectations for new products and innovation will rise over time. Since its high-flying IPO at $46, this stock has soared to $135. Of course, this is wrong, and our body adapts to whatever we give it. For reference, Beyond Meats TTM NOPAT margin is 2% and the TTM NOPAT margin of one of the largest food producers in the world, Tyson Foods, is 5%. 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. Things Are Only Getting Worse for Beyond Meat Stock. Beyond Meat Narrows Its Losses. Even though the firm doesnt necessarily hold logistical or technological advantages over its competitors, I think it helps to quantify what, if any, acquisition hopes are priced into the stock. Now, lets proudly assume what they are: a plant-based burger, extracting plant proteins to make a tasty and healthy burger. If Beyond Meat created the healthiest plant based products that dont taste very good then it wouldnt be in business very long. The key variables are the weighted average cost of capital (WACC) and ROIC for assessing different hurdle rates for a deal to create value. Beyond Meat, a producer of plant-based meat substitutes, was founded in 2009 in Los Angeles, California. Beyond Meat had originally been sold in retail shops across the USA, then worldwide. *Average returns of all recommendations since inception. Its worth noting that any deal that only achieves a 4.4% ROIC would not be accretive to shareholder value, as the return on the deal would equal Kraft Heinzs WACC. Digital Marketing @ Beyond Meat | Award-Winning Author | Driving Success Through Tech, Creativity, & Strategy Pittsburgh, Pennsylvania, United States 631 followers 500+ connections Plant-based meat alternatives are on the rise and not just with vegans. This is a major strength: a high speed-to-market. Many people do not know that eating meat is not only eating meat, but eating the history in which the meat came from. Beyond Meat, which went public in the spring of 2019 and whose shares have fallen 16 percent this year, said it had completed a comprehensive greenhouse gas analysis that would be released in. Dow Jones Reprints at 1-800-843-0008 or visit www.djreprints.com. When vegan meat alternatives first started to appear on the market, many people saw them as a fad. Previously, people were limited to information they see on television which is in the best interests of companies that can afford those ad campaigns. 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. Its stock value gained 163% on the day of its stock introduction. 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. Plant based meats are not filled with dead animals which include bacteria growth and can contain other substances such as feces. If you think about the first time you heard about Beyond Meat it very well many have been when the product launched at a large fast food chain. Marketing News & Strategy Here's how KFC is marketing its updated Beyond Meat faux chicken in two markets Beyond Fried Chicken could go national if strong results are seen in Charlotte and. The following fund receives an unattractive rating and allocates significantly to BYND. Instead of drawing attention to a product that consumers didnt love, they simply discontinued it and slowly fazed it out of supermarkets. 8 Facts About Pelotons Marketing Strategy You Need to Know, Dirty Lemons Marketing & Growth Strategy, How it Became a Success, Crocs Marketing Strategy. Production Supervisor - 2nd Shift. 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. At its TTM FCF burn rate, the firm has enough cash to operate for just over 16 months before needing additional capital. 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. 2023 Latana GmbH. In the first scenario, the estimated revenue growth rate is 61% in year one, 55% in year two, and 47% in year three, or equal to consensus. But consumers shop there because the low price points allow them to have a constant rotation of outfits. By Christopher Lombardo. You can see all the adjustments made to Beyond Meats balance sheethere. To do so, employees need to very clearly understand the companys priority: is it safety, profits, brand fidelity? Beyond Meat Is Down 93% From Its High. 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. Since going public, four of its six quarters have shown improvement from. Figure 5: Beyond Meats Revenue & Core Earnings Since 2017. This new knowledge of healthy vs. unhealthy created a new market drive for healthy products. Strategic Windows- Beyond Meat knew that because of the health craze in the world and the expansion of knowledge surrounding healthy food has widened, that they have a short window to get in and get it done right when it comes to plant-based foods. Along with continued marketing investment, the plant-based company strikes partnerships with McDonald's and Yum! Per Figure 6, Beyond Meat's TTM adjusted EBITDA of $45 million is well above core earnings of $4 million. They exploit their established brand engagement to build more brand equity, at a low cost, because they dont pay a cent for restaurants to make this kind of indirect advertising for them. The larger the firm gets, the more difficult it becomes to achieve large year-over-year (YoY) growth rates. Even in the most optimistic of scenarios, Beyond Meat is worth less than its current share price. Figure 3: Operating Expense as % of Revenue: Beyond Meat vs. As Kroger invests further in its Simple Truth brand, wed expect the firm to allocate more shelf space to its own in-house brands, rather than a competitor such as Beyond Meat. But for a young organization that wants to leapfrog rivals in gaining plant-based mindshare, the shift isn't illogical, and it may result in a durable competitive advantage. One of the ways it did this was by creating burgers that look like meat burgers down to the meat actually bleeding. Total revenue jumped by 69% against the prior-year quarter to $113.3 million. There are several lessons to be learned from Beyond Meats story. Instead, they persevered. But thats what BYNDs investors are betting will not happen! The superior scale of Beyond Meats peers will also challenge what the firm believes to be a critical competitive advantage its innovation. Beyond Meat might be the pioneer in this segment, but now it faces fierce competition. Beyond Meats successes have inspired the giants to create new categories. BYND revenues saw a rise of 36.6% y-o-y in 2020, which was sharply lower than historical growth rates. What kind of external factors/changes do you think may have inspired the birth of Beyond Meat? Having the largest natural and organic food retailer in the United States take a chance on this relatively unknown brand gave other grocery retailers an incentive to try the same product placement in their stores. After tying up with Dunkin soon after its IPO, Beyond Meat entered China in 2020. The first six months of 2020 have visibly transformed Beyond Meat's(BYND 5.83%) approach to marketing its plant-based, meat substitute products. It's unfortunately difficult for investors to gauge the impact of this promotion on profits, since Beyond Meat books the discount as a reduction in sales to arrive at net revenue, rather than a reduction in gross profit margin. Catalyst: Others Success Could Come at Beyond Meats Expense. It began trading at $25/share on the Nasdaq stock exchange and ended the day at $65.75. Furthermore, Don Lee alleged significant concerns about food safety protocols concerning the raw materials that Beyond Meat sent. 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. The original packaging did not display vegetables, and the words meat and best in the products names were not chosen randomly. From the beginning Beyond Meat had a vision for its business that was much broader than any of its predecessors. 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 is working to streamline its operations and reverse declining sales. Find out how 3 brands use customer data to find success! However, given the low margins and overvalued stock price, I think it would be unwise for a larger firm to acquire Beyond Meat at current levels. Though the firms revenue has improved from $298 million in 2019 to $401 million over the trailing-twelve-months, Beyond Meatscore earnings[1]have fallen from $6 million to $4 million over the same time. Another key marketing vehicle for the company is its partnerships with big brands likeMcDonalds, KFCand Pizza Hut. 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. 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. 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. Beyond Meat, the company that is making eating plant-based protein mainstream continues to grow at a fast pace. Figure 4: Expenses as % of Revenue: Beyond Meat 2Q19 vs. 2Q20, BYND Operating Expense As Of Revenue 2Q19 Vs. 2Q20. After all, nothing could replace a real burger, could it? We can spot changes in the design since their arrival. By 2015, even Walmart was selling Beyond Meats plant-based products! 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 . While Beyond Meat could continue to rally, it faces four challenges that. This adjustment represents 7% of Beyond Meats market cap. In 2021 Beyond Meat's revenue increased by 14.2% to reach $464.7 million. 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.