But at this stage of Beyond Meat's growth, converting new customers remains the utmost priority. 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. This created a need for plant-based foods to replace the broken system of meats. However, we can define the general key aspects: Targeting meat-eaters as well, not only vegans/vegetarians, Identifying the collective reputation of plant-based products, and changing it, Relying on its reputation to appear on restaurant menus and get cheap advertising. Further, consensus estimates for Beyond Meats 2020 earnings are now $0.07/share. 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. Figure 7 compares the firms implied future NOPAT in this scenario to its historical NOPAT. Now, information and videos are easily assessable to people of all ages to make a truly informed decision on healthy options such as plan-based meat. 2019: A Change In the Branding Strategy With the Arrival of Stun. But how they handled it is what makes them a successful brand. 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. Beyond Meat had originally been sold in retail shops across the USA, then worldwide. And if this happens, you need to have others you can roll out. While Beyond Meat could continue to rally, it faces four challenges that. Our goal is to give you the key to understanding Beyond Meats rapid success, to show you the hidden reasons for their success. This is, in fact, after BYND partnered with Starbucks, Yum Brands, and Sinodis. Especially when competitors will try to introduce products that may be better than the original. Ads like this are created to convert the masses instead of targeting a niche market. Heres a quick summary for noise traders when analyzing BYND: Executive Compensation Adds Additional Risk. 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. 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. While comprising only 5% of its total revenue, Tyson outspent Beyond Meats SG&A by 20 times over the TTM. Production Supervisor - 2nd Shift. If you are wondering how Beyond Meat has been able to make strides where others havent consider these four elements of its marketing strategy. This allows consumers to make their own informed decision. The mattress. For non-personal use or to order multiple copies, please contact Rising beef prices, coupled with the overwhelming at-home food consumption trend, present an unforeseen opportunity for the company to entice new customers by doubling down on grocery sales. This all ended with Beyond Meats new look. 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 . 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. How Beyond Meat's Marketing Strategy Set it Apart - LinkedIn 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. (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. Beyond Meats massive revenue growth cannot last forever. Each implied price is based on a goal ROIC assuming different levels of revenue growth. Competitors, Serious Uphill Battle for Beyond Meat to Improve Profitability. This would make growth in Beyond Meats stock price a real possibility in the next two years, taking its stock price to $200. Beyond Meat was one of the most successful IPOs (Initial Public Offerings) of 2019. After tying up with Dunkin soon after its IPO, Beyond Meat entered China in 2020. Placing its hamburgers and breakfast proteins in major quick-service restaurant chains was a logical approach to igniting brand awareness. Beyond Meat burgerseven have grill marks further convincing consumers that maybe it really is like meat. There have been many stories of grocery story employees getting told by their bosses to take the expired meat and mix it with regular meat and put it back out there on the shelf. 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. It provided Beyond Meat with one of the best forms of advertising, credibility. This vision can be found throughout Beyond Meats marketing collateral. Beyond Meat Reports Fourth Quarter and Full Year 2020 Financial 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. No more comparison with animal meat products: Beyond Meat has nothing more to prove, its products are famous, recognized as good for the palate and for our health. Lets take a look at data from Germany. The paper empirically shows that my firms data is superior to Operating Income After Depreciation and Income Before Special Items from Compustat, owned by S&P Global (SPGI). Well, when Beyond Meat chose to switch suppliers, they allegedly shared details of Don Lees manufacturing process which Don Lee saw as a breach of contract. Create a great product. Per Figure 6, Beyond Meats TTM adjusted EBITDA of $45 million is well above core earnings of $4 million. 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. They have sharply improved from -93.3% in 2016 to -4.2% in 2019. Additionally, when their Chicken-Free Strips were finally taken off the market in 2019, they did so quietly. Briana Chen - Digital Marketing Intern - Beyond Meat | LinkedIn 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. 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. Disclosure: David Trainer, Kyle Guske II, and Matt Shuler receive no compensation to write about any specific stock, sector, style, or theme. 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.. 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. 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 has been working with them since February 2019. Fiduciaries should avoid Beyond Meat Inc. (BYND). Considering our revenue projections of roughly $1.1 billion and 6% margins, almost $66 million in net income is possible by 2023. As of December 31, 2020, Beyond Meat had products available at approximately 122,000 retail and foodservice outlets in over 80 countries worldwide. One of the most notable adjustments was $11 million inoperating leases. Weve tried to run straight at the question: is a plant-based meat sufficient for humans to be vital and robust,saysBrown. Beyond Meat Is On Its Path To Irrelevance - SeekingAlpha This indicates an extremely successful uptake by consumers. Without having that partnership in the beginning Beyond Meat may have floundered for many years trying to build a customer base on its own. Plant based meats are not filled with dead animals which include bacteria growth and can contain other substances such as feces. Time to Buy? 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. Research on Beyond Meat's Profitability Problems and Strategies What can you learn from this? Get the latest information and insights into the world of brand. 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. However, some investors have growing concerns about the companys ability to maintain these results. It may even get heavier as more people understand healthy food from non-healthy food. From the Beyond Burger to Beyond Sausage, and their latest Beyond Meatballs this brand is really on a roll. Mission | Beyond Meat Many undercover operations are conducted to get footage and investigate what is really going on inside the slaughter houses. January 2021. When the Chicken-Free Strips failed, it wasnt only about the taste something was just off. 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. How? Brown. 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? Stage of Market Lifestyle- The stage of the market lifestyle will influence the company on a few different categories. This adjustment represents 7% of Beyond Meats market cap. Beyond Meat Announces New Executive Leadership Appointments to Brands. As of 2020, the Beyond Meat company sells: Cookout Classic (10 plant-based burgers). It sounds crazy, we know but its one of the reasons Beyond Meat's plant-based burgers have been so widely successful: they emulate real meat right down to the irresistible juiciness. To make the world smarter, happier, and richer. People tend to associate meat with strength, with muscles. Over 2Q20, Beyond Meat removed $1.5 million (1% of revenue) in other expenses when calculating adjusted EBITDA. See the math behind this reverse DCF scenario. Still, disputes aside, Beyond Meat has been doing very well these past few years. Beyond Meat vs. Impossible Foods: The fight for market share in meat Total revenue jumped by 69% against the prior-year quarter to $113.3 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. With these headwinds Beyond Meat had to convince meat lovers that its products passed the test. For instance, over the TTM, ConAgra spent 15 times more on SG&A than Beyond Meat. The QSR is looking to get the lion's share of the meat substitute market with Beyond Meat. Theres no actual blood,instead beet juice isused but it does the trick. Published May 20, 2021. One of the most important pieces of furniture we own. Beyond Meat Is Down 93% From Its High. It began trading at $25/share on the Nasdaq stock exchange and ended the day at $65.75. These features also convince consumers that Beyond Meat burgers are not your average veggie burgers which were never popular with mainstream consumers. Beyond Meat: Changing Consumers' Meat Preference | Harvard Business And this failure didnt break them for a few reasons most importantly, because they already had new products in the works. There are several lessons to be learned from Beyond Meats story. 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. 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). 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. Plant based burgers are not new but Beyond Meat has been able to capture more of the mainstream market. Eat What You Love The organizational goals have to be settled and explained. Lots of small companies have also emerged and targeted the same audience, such as Purple Carrot or Sunfed Meats. Beyond Meat Reports Fourth Quarter and Full Year 2021 Financial These sales represent 5% of shares outstanding. 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%. https://www.wsj.com/articles/beyond-meat-hires-marketing-executive-revamps-retail-strategy-11675379688. Eating meat has long been associated with masculinity. By Tricia McKinnon. Low margins in an increasingly competitive industry leave Beyond Meat with less flexibility to compete on price or invest in marketing and R&D. Why? Insider Trading and Short Interest Indicate Market Skepticism. 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. Links: https://zaap.bio/lillytalavera. According to the Partners In Leadership Happiness at Work survey, when employees are happier at work, 85% take more initiative. Instead, they persevered. See Figure 8 for details. Figure 11 shows the implied values for Beyond Meat assuming Kraft Heinz wants to achieve an ROIC on the acquisition that equals 6%. 5 Lessons for Food Startups From Beyond Meat's Stunning Success Some of the largest retailers in the world including Zara and H&M are in the fast fashion business which is not environmentally friendly. 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 Announces New Executive Leadership Appointments to Accelerate and Support the Company's Vision for Strategic Growth. But keep in mind to do this, youll need data on how consumers are responding to your competitors. this also includes knowledge of every product that comes in contact with your body on a daily basis. Beyond Meat might be the pioneer in this segment, but now it faces fierce competition. This new knowledge of healthy vs. unhealthy created a new market drive for healthy products. Despite less transparency, I know that Beyond Meats executive compensation plan consists of a cash bonus, option grants, and restricted share units (RSUs). This is a major strength: a high speed-to-market. 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. Figure 8: Current Valuation Implies Massive Revenue Growth, Significant Downside in a More Realistic Scenario. Its stock value gained 163% on the day of its stock introduction. We visited . 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. 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. The number of shares sold short has increased by 10% since last month. Beyond Meat Continues to Strengthen its Global Innovation Capabilities on July 4th, eating a hot dog with your family. In2016 Whole Foods decided to give the company a chance by placing Beyond Meat in its meat section. . June 4, 2021 . 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. Clearly, vegan meat alternatives were no longer a fad. For example, Tyson Food, one of the biggest and earliest investors in Beyond Meat, which had a 5% stake in 2016 exited in 2019. Beyond Meat's Competitive Advantage, Market Driver, and The - Medium illustration, packages of Beyond Meat "The Beyond Burger" sit in a refrigerator, June 13, 2019 in the Brooklyn borough of New York City. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Weve previously shown how linking executive compensation to faulty metrics such asadjusted EBITDAcan lead to the destruction of shareholder value. 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. The mission of the company is focused on plant-based meat alternatives, using pea and other plant protein isolates. Plus, they created a new category by being one of the first to do it and do it right. Data by YCharts Kellogg ( K ) and Conagra ( CAG ) are already big established brands, that . Its difficult to imagine the product or service that got your brand on the map might not be the one that helps you achieve further growth. 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. Figure 5: Beyond Meats Revenue & Core Earnings Since 2017. Beyond Meat's marketing strategy is to convert carnivores into occasional vegans. Additionally, the companys new partnerships will also drive impressive top line growth. Since going public in early May, Beyond Meat's stock has soared more than 450 percent and its market value is over $8 billion. The alternative meat producer is reportedly focusing its retail . 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. As in all markets, there are leaders. Plant-based meats look like an attractive bet to play the future of food. 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. 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. Michelle Amador - Sr. Director, Global Strategic Partnerships - Beyond This adjustment represented 3% of reported net assets. Continue reading your article witha WSJ subscription, Already a member? Learn More. Extensive background in CPG . These days, fewer investors pay attention to fundamentals and the red flags buried in financial filings. 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. Some of the largest consumer food brands have followed suit. 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. 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. Nestl, JBS, and Tyson have all recently launched plant-based burgers. Digital Marketing @ Beyond Meat | Award-Winning Author | Driving Success Through Tech, Creativity, & Strategy Pittsburgh, Pennsylvania, United States 631 followers 500+ connections Over the TTM period, FCF is -$164 million. 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. 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. 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. According to the company, this package of 10 plant-based patties reduces the price of its burgers from nearly twice that of conventional burgers to a 20% premium. Nope, its just Beyond Meat. Organic growth along with benefits from the recent partnerships are expected to support continued healthy growth in retail as well as the restaurant segments of Beyond Meat, potentially taking the companys revenues to almost $1.1 billion by 2023. 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. Problem Recognition- Consumers did not know about the conditions of the animals that are actively being slaughtered to create meat. This is the market drive for Beyond Meat. Leverage partners with larger platforms to expand reach. The Double Distribution Canal: A Major Strength. They did not service the vegan and vegetarian markets as traditional players did. Beyond Meats successes have inspired the giants to create new categories. Additionally, Beyond Meat is introducing its plant-based meatballs in Coles, the second largest supermarket chain in Australia with over 2,500 stores. 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. There was also a long standing view which only recently has begun to change that veganism or vegetarianism will only be embraced by a narrow part of society. What are your predictions for the future of this company? Plant-based meat alternatives are on the rise and not just with vegans. Sounds too good to be true, right? word of mouth. Conference: 2021 3rd International Conference on Economic Management and Cultural . 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. The company's vision is for consumers to enjoy a meat-like taste and texture in their favourite dishes while avoiding the many chemicals used in processed meat and reducing the number of animals killed every year. Distribution and use of this material are governed by the stock is worth just $30/share today - a 57% . Moral of the story? When vegan meat alternatives first started to appear on the market, many people saw them as a fad. Beyond Meat Lab Where It Develops Plant-Based "Meat" - Business Insider Marketing for meat is just showing the happy times with your family eating meat. 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. 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. Competition Will Eat Beyond Meat Alive - Forbes Changes that have inspired the birth of Beyond Meat is the increased demand on plant-based products. How Beyond Meat's Marketing Strategy Set it Apart - Indigo9 Digital Inc. About 70% of the global population is cutting down its meat consumption. A vegan burger that bleeds. 2023 Latana GmbH.