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These launches create a lot of buzz and put Beyond the Meat on the map. Published May 20, 2021. People are perfectly happy eating vegan food as long as they dont know thats what theyre doing,saysCarol J. Adams, author ofThe Sexual Politics of Meat. However, one of the biggest deal breakers for potential. For instance, over the TTM, ConAgra spent 15 times more on SG&A than Beyond Meat. It has put them in a competitive sustainable advantage position because others will have to spend a lot of money on research and development to get their plant-based burger to taste like theirs. However, its reasonable to assume that as Beyond Meats business gains scale and the company expands aggressively, it can boost margins to the levels of Tyson Foods in the next few years, so we estimate roughly 6% margins by 2023. There are several lessons to be learned from Beyond Meats story. For example, Kelloggs delayed the launch of itsfirst roundof Incogmeato products due to the COVID-19 pandemic. See the math behind this reverse DCF scenario. 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. While I chose Kraft Heinz, analysts can use just about any company to do the same analysis. Among the items Beyond Meat excludes when calculating its adjusted EBITDA are equity-based compensation, restructuring expenses, and a vague line item labeled other. Part of Beyond Meats strategy is to redefine what the best source of protein is. https://www.wsj.com/articles/beyond-meat-hires-marketing-executive-revamps-retail-strategy-11675379688. 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. 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. Option grants and RSUs directly align executives interests with the price of the companys shares and not necessarily with creating shareholder value. 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. While vegans and vegetarians are less picky when it comes to whether or not meat substitutes really taste and feel like meat, regular meat-eaters are much more tricky to convince. In any case, I view recent moves as encouraging as Beyond makes moves to improve its footing to grow as a . This is one of the biggest first-day pop-ups in recent history. Given that most plant-based protein products are now aiming for the same goal imitating the taste and texture of meat it stands to reason that as the plant-based protein market matures, differentiation between products will diminish as all products begin to taste more and more like meat. This is the first time a vegan meat alternative has been merchandised in the meat department at Whole Foods Market.After that Beyond Meatstarted calling itself:the worldsfirst plant-based burger sold in the meat case of U.S. grocery stores.. Plant-based eaters now account for 8% of the global population. For non-personal use or to order multiple copies, please contact 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. This would make growth in Beyond Meats stock price a real possibility in the next two years, taking its stock price to $200. 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. Weve tried to run straight at the question: is a plant-based meat sufficient for humans to be vital and robust,saysBrown. Founder and Tech Inventor at Princess Technologies. 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. Meditation apps have seen a boom in popularity over the past few years in the US but does their growth extend to Europe? 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. Now, lets proudly assume what they are: a plant-based burger, extracting plant proteins to make a tasty and healthy burger. But what has allowed them to be so successful despite their setbacks? Eating plants is the best thing you can do for your diet. Whos to say that its red meat? 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. However, the poultry producer exited earlier this year . Dow Jones Reprints at 1-800-843-0008 or visit www.djreprints.com. Still, it's clear that Brown's idea has caught on: The 10-year old company went public earlier this month at a $1.5 billion valuation. About 70% of the global population is cutting down its meat consumption. However, the fundamentals reveal this stock is more style than substance. Asit Sharma has no position in any of the stocks mentioned. How did Beyond Meat become the leader it is today? Beyond Meats real breakthrough is not landing in the meat aisle or having celebrity endorsements but creating a plant based product people actually want to eat. In the first quarter of 2019, Beyond Meat's first as a public company, its gross profit was just 26.8% of net revenue. Balance Sheet: I made $290 million of adjustments to calculate invested capital with a net decrease of $228 million. The companys marketing strategy is multiple layers one and has evolved over time, to keep up with the market trend. 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. Since going public in early May, Beyond Meat's stock has soared more than 450 percent and its market value is over $8 billion. Measuring Brand Awareness As Told By Marketing Experts, journalists who actually tasted the chicken reported. The mattress. A new marketing strategy will play up the health and sustainability benefits of Beyond Meat, Brown said. 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. Vegans and vegetarians, on the contrary, are often perceived as struggling to get enough protein and iron daily, as unhealthy weaklings. Beyond Meat also has big contracts with fast-food chains, as mentioned before, which is a distribution canal bringing lots of cash flow. 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. Economic earnings, which account for the unusual items on the income statement and . This Beyond Meat Burger in particular cooks like a burger and looks like one,saidJoe Wood, who was the mid-Atlantic meat coordinator for Whole Foods Market at the time. 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. Eating meat is associated with strength and power while a plant based diet is not, at least not for now. Heres a quick summary for noise traders when analyzing BYND: Executive Compensation Adds Additional Risk. Why did it work for them? Beyond Meats case also shows that a marketing strategy is not fixed: it has to evolve along with the companys positioning. 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. Instead Beyond Meat fought for placement within the meat section of grocery stores. This year also saw Beyond Meat join forces with Mcdonalds to develop their McPlant option. Is It Time to Buy? . Beyond Meat, the company that is making eating plant-based protein mainstream continues to grow at a fast pace. Nestl, JBS, and Tyson have all recently launched plant-based burgers. Beyond Meat has been working with them since February 2019. Get the latest information and insights into the world of brand. Extensive background in CPG . Beyond Meat positioned its products as similar to animal meat as they could. (Photo Illustration by Drew Angerer/Getty Images). This makes a lot of sense since only2.7%of packaged meat sales in the United States are plant based. The superior scale of Beyond Meats peers will also challenge what the firm believes to be a critical competitive advantage its innovation. Going forward, Beyond Meat will find it even more difficult to grow revenue and profits as competitors flood the market. Like Comment Share . 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. Before joining Beyond Meat, Mr. Oghoghomeh served as Senior Vice President, Brand Marketing at Red Bull from 2021 to February 2023. 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. I conservatively assume that Kraft Heinz can grow Beyond Meats revenue and NOPAT without spending any working capital or fixed assets beyond the original purchase price. 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. For example, Tyson Food, one of the biggest and earliest investors in Beyond Meat, which had a 5% stake in 2016 exited in 2019. Lets have a look at their most serious competitor: Impossible Foods. This article will take a deep dive into Beyond Meats journey to success and provide some tips other brands can use to fuel their own growth stories. 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. See all adjustments to Beyond Meats valuationhere. 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. Part of this shift happened without much intervention by management, as consumption in restaurants and other institutional foodservice outlets has plummeted since the spring, while at-home consumption has soared. 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. January 2021. Lots of small companies have also emerged and targeted the same audience, such as Purple Carrot or Sunfed Meats. But keep in mind to do this, youll need data on how consumers are responding to your competitors. Its stock value gained 163% on the day of its stock introduction. Over 2Q20, Beyond Meat removed $1.5 million (1% of revenue) in other expenses when calculating adjusted EBITDA. See allTrefis Featured AnalysesandDownloadTrefis Datahere. *Average returns of all recommendations since inception. Figure 4: Expenses as % of Revenue: Beyond Meat 2Q19 vs. 2Q20, BYND Operating Expense As Of Revenue 2Q19 Vs. 2Q20. 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. With a sound marketing strategy, Beyond Meat may be able to make its product cool again. Knowing that the meat is expired and poses a hazard to eat it. Some of the largest consumer food brands have followed suit. Even more impressive is that Beyond Meat is, well, a food company (it develops plant-based meat products) and the sales for 2018 were only $87.9 million (and yes, the company has yet to post a . 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. By Christopher Lombardo. 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. Beyond Meats massive revenue growth cannot last forever. Plants come directly from the sun and reap the energy created from the sun. More than simply providing a case study of a successful plant-based start-up, this analysis can provide your plant-based business with a complete understanding of the market. Instead, due to theproliferation of noise traders, the focus tends toward technical trading tends while high-quality fundamental research is overlooked. Inside Beyond Meat's lab, where the company transforms plants into faux meat with microscopic analysis and robot mouths. Even in the most optimistic of scenarios, Beyond Meat is worth less than its current share price. Beyond Meat ( NASDAQ: BYND) is streamlining its sales strategy, according to internal documents reviewed by the Wall Street Journal. What kind of external factors/changes do you think may have inspired the birth of Beyond Meat? Additionally, when their Chicken-Free Strips were finally taken off the market in 2019, they did so quietly. 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. To make the world smarter, happier, and richer. Despite less transparency, I know that Beyond Meats executive compensation plan consists of a cash bonus, option grants, and restricted share units (RSUs). 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. Beyond Meat Inc. BYND, -7.36% 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 . Learn More. While consumer interest in protecting the environment or having a healthier lifestyle continues to grow it doesnt always mean consumption follows. People tend to associate meat with strength, with muscles. 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. 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. 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. What can you learn from this? In 2021 Beyond Meats revenue increased by14.2%to reach $464.7 million. News Corp is a global, diversified media and information services company focused on creating and distributing authoritative and engaging content and other products and services. Competitors. Beyond Meat's marketing strategy is to convert carnivores into occasional vegans. 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. Figure 1: Consensus Revenue Growth Estimates: 2020-2025, 2020-2025 revenue growth rates based on consensus estimates, Competition is Plentiful and Has Competitive Advantages. Word of . It began trading at $25/share on the Nasdaq stock exchange and ended the day at $65.75. 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. The first six months of 2020 have visibly transformed Beyond Meat's(BYND 5.83%) approach to marketing its plant-based, meat substitute products. 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. Sounds too good to be true, right? Furthermore, Beyond Meat has a history of significant free cash flow (FCF) burn that is unlikely to change anytime soon. Catalyst: Others Success Could Come at Beyond Meats Expense. revenue grows at consensus rates in 2021, 2022, and 2023, and. 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. 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. Research on Beyond Meat's Profitability Problems and Strategies. 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. 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. Landing in Whole Foods which takes the brands it allows in its doors seriously was a signal to both consumers and retail customers that Beyond Meat was a brand worth giving a chance. Marketing for meat is just showing the happy times with your family eating meat. + Follow. Some of the largest retailers in the world including Zara and H&M are in the fast fashion business which is not environmentally friendly. Over the TTM period, FCF is -$164 million. 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. Beyond Meat is seeking a marketing, advertising, regulatory, and trademark attorney with 10-12 years of experience. Insider Trading and Short Interest Indicate Market Skepticism. While many consumers are not willing to pay an average of $3 more a pound for a. The company's second-quarter 2020 earnings report, released Tuesday after the markets closed, revealed that it's still experiencing rampant growth. They began targeting not only vegetarians and vegans, but also and mainly meat-eaters; flexitarians. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services. While comprising only 5% of its total revenue, Tyson outspent Beyond Meats SG&A by 20 times over the TTM. 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. This is rather than Beyond Meat actually creating a meat brand that is real meat. Do you like this content? As investorsfocus moreon fundamental research, research automation technology is needed to analyze all the critical financialdetails in financial filingsas shown in the Harvard Business School and MIT Sloan paper,Core Earnings: New Data and Evidence. Figure 10: Implied Acquisition Prices for Value-Neutral Deal. 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. Investors are beginning to worry whether or not Beyond Meat will be able to sustain the $4 billion valuation in stock it currently has. Letting go of your vision and plans is hard, but if its the right thing to do, you have to be willing to pivot. To fight this incorrect belief, Ethan Brown launched a campaign featuring famous athletes. Conference: 2021 3rd International Conference on Economic Management and Cultural . There are limits on how much Kraft Heinz should pay for Beyond Meat to earn a proper return, given the NOPAT or free cash flows being acquired. Youre reading a free article with opinions that may differ from The Motley Fools Premium Investing Services. Changes that have inspired the birth of Beyond Meat is the increased demand on plant-based products. To do so, employees need to very clearly understand the companys priority: is it safety, profits, brand fidelity? 8 Facts About Pelotons Marketing Strategy You Need to Know, Dirty Lemons Marketing & Growth Strategy, How it Became a Success, Crocs Marketing Strategy. For example, Kelloggs delayed the launch of its first round of Incogmeato products due to the COVID-19 pandemic. Remember the man-ish look of the burger boxes, the focus on the amounts of protein? Beyond Meat, the company that is making eating plant-based protein mainstream continues to grow at a fast pace. These days, fewer investors pay attention to fundamentals and the red flags buried in financial filings. With sharp growth in revenues, margins have increased from -89% in 2017 to -9.4% over the last twelve months. She has also held senior leadership roles across PepsiCo's North America business during her more than 15-year career at the food . Also, seeing that a lot of slaughter houses will absolutely not let anyone come see the inside conditions that animals are facing. With these headwinds Beyond Meat had to convince meat lovers that its products passed the test. 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. They entered the restaurant market, and are currently sold to plant-based and mainstream restaurants. 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. 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. 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. 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.. 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.

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