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. In any case, I view recent moves as encouraging as Beyond makes moves to improve its footing to grow as a . Figure 7: Current Valuation Implies Drastic Profit Growth. In 2014 they developed their first simulated beef product and expanded their presence from 1,500 to 6,000 stores in the US. Figure 6: Beyond Meats Adjusted EBITDA Misleads on Profitability, BYND Adjusted EBITDA Misleads On Profitability, Doing the Math: Valuation Implies Significant Disruption of the Entire Meat Industry. 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. 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. The design softened. 1. So, when leaders take time and money to connect their employees sense of purpose to the firms organizational goals, it is the beginning of a virtuous circle, where employees tend to be happier and more productive, enabling better results for the company. Sustainable Competitive Advantage- Beyond Meats formula for the perfect flavoring to taste just like a real burger. 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 was one of the most successful IPOs (Initial Public Offerings) of 2019. This scenario represents the minimum level of performance required not to destroy value. 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. Beyond Meat Hires Marketing Executive, Revamps Retail Strategy But how they handled it is what makes them a successful brand. 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. Concentrating on the health market, they were able to target a broad range of people seeking a better meat option than real meat. Clearly, vegan meat alternatives were no longer a fad. 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. Inside Beyond Meat's lab, where the company transforms plants into faux meat with microscopic analysis and robot mouths. Join the Team | Beyond Meat Careers | Beyond Meat The company's second-quarter 2020. Success of any of Beyond Meats competitors could also further threaten future profit growth for Beyond Meat. Over the TTM period, FCF is -$164 million. 4. 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. In fact, it has been shown that heart disease, cancer, and diabetes, three of the top ten causes of death, are linked to eating too much meat. 8 Facts About Pelotons Marketing Strategy You Need to Know, Dirty Lemons Marketing & Growth Strategy, How it Became a Success, Crocs Marketing Strategy. Making the world smarter, happier, and richer. Full Year 2020 Financial Highlights1. 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. Beyond Meat uses a robot to imitate the process of chewing. First, consumers expectations for new products and innovation will rise over time. They began targeting not only vegetarians and vegans, but also and mainly meat-eaters; flexitarians. What kind of external factors/changes do you think may have inspired the birth of Beyond Meat? 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. Furthermore, Beyond Meat has a history of significant free cash flow (FCF) burn that is unlikely to change anytime soon. To make the world smarter, happier, and richer. Dont become so attached to a product that you arent willing to see when it no longer serves you. When Beyond Meat was met with the failure of their Chicken-Free Strips their first real product they didnt fold. 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. This is one of the biggest first-day pop-ups in recent history. Marketing for meat is just showing the happy times with your family eating meat. The redistribution of cash flow to its investors is a challenge. I assume revenue grows 47% in years four and five, the same as year three. Theres no actual blood,instead beet juice isused but it does the trick. And while there are a few ways to do this, brand monitoring software is your best bet, as it allows you to track your chosen brand KPIs for the target audiences that matter. One of the ways it did this was by creating burgers that look like meat burgers down to the meat actually bleeding. 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. the stock is worth just $30/share today - a 57% . You can see all the adjustments made to Beyond Meats income statementhere. 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. 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. 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. What can you learn from this? This does not boil down to just knowledge on slaughter houses, animal conditions, bacteria etc. 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. Find out how 3 brands use customer data to find success! But consumers shop there because the low price points allow them to have a constant rotation of outfits. Problem Recognition- Consumers did not know about the conditions of the animals that are actively being slaughtered to create meat. Prior to that Mr. Oghoghomeh served as Head of Recruitment Marketing - West Zone for Amazon, an eCommerce company from 2019 to 2021. Extensive background in CPG . Also, these meat products are offered by themselves at the grocery stores. By Tricia McKinnon. 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. Founder and Tech Inventor at Princess Technologies. 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. By shifting from animal to plant-based meat, we can positively affect the planet, the environment, the climate and even ourselves. Even though the number of vegans and vegetarians was increasing in 2013 when the company launched its first products, the market for plant-based burgers was small: only 0.5% growth in this category. Beyond Meat, therefore, accomplished something huge: its name is enough to make people reassured about the quality and taste. 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. People tend to associate meat with strength, with muscles. KFC, Beyond Meat ready nationwide plant-based chicken rollout Firstly, the gradual lifting of lockdowns in recent months will help the restaurant segment register strong growth along with sales from retail chains. Economic earnings, which account for the unusual items on the income statement and . Among the items Beyond Meat excludes when calculating its adjusted EBITDA are equity-based compensation, restructuring expenses, and a vague line item labeled other. Beyond Meat vs. Impossible Foods: The fight for market share in meat Plant based meats are not filled with dead animals which include bacteria growth and can contain other substances such as feces. As in all markets, there are leaders. 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). our Subscriber Agreement and by copyright law. Heres a high-quality portfolio to beat the market, with over 100% return since 2016, versus 55% for the S&P 500. These launches create a lot of buzz and put Beyond the Meat on the map. The emphasis on the grocery channel will now almost certainly evolve into a long-term focal point for Beyond Meat. Beyond Meat was the first company to sell plant-based burgers in grocery stores meat sections. Tyson Foods (TSN), the largest meat producer in the U.S., sold its stake in Beyond Meat in April 2019 and just a few months laterannouncedthe launch of its plant-based protein brand, Raised & Rooted. According to the Partners In Leadership Happiness at Work survey, when employees are happier at work, 85% take more initiative. Plants come directly from the sun and reap the energy created from the sun. 2. 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. Investors are beginning to worry whether or not Beyond Meat will be able to sustain the $4 billion valuation in stock it currently has. If yes (which is the most common case), you can sell them to way more people and have an even greater impact. And this failure didnt break them for a few reasons most importantly, because they already had new products in the works. When vegan meat alternatives first started to appear on the market, many people saw them as a fad. As of 2020, the Beyond Meat company sells: Cookout Classic (10 plant-based burgers). Another key marketing vehicle for the company is its partnerships with big brands likeMcDonalds, KFCand Pizza Hut. 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. 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. For example, Kelloggs delayed the launch of its first round of Incogmeato products due to the COVID-19 pandemic. 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 makes a lot of sense since only2.7%of packaged meat sales in the United States are plant based. Beyond Meat has earned a premium name thanks to its marketing strategies, but this premium is too much. 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. . 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. Plant-based foods are more than a fad, they are a huge economic trend. BYND revenues saw a rise of 36.6% y-o-y in 2020, which was sharply lower than historical growth rates. Dollar figures in millions. Now, if Beyond Meats revenues grow 2.7x, the P/S multiple will shrink by more than 60% from its current level, assuming the stock price stays the same, correct? Beyond Meat Is Down 93% From Its High. However, the improvement in Beyond Meat's margins has been eye-popping. For example, Tyson Food, one of the biggest and earliest investors in Beyond Meat, which had a 5% stake in 2016 exited in 2019. 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 . Case in point, revenue grew 239% YoY in 2019, 141% YoY in 1Q20, and 69% YoY in 2Q20. revenue grows at consensus rates in 2021, 2022, and 2023, and. Beyond Meat Is On Its Path To Irrelevance - SeekingAlpha 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. Devault, PA Operations - DEPA Production On-site. Links: https://zaap.bio/lillytalavera. Beyond Meat is seeking a marketing, advertising, regulatory, and trademark attorney with 10-12 years of experience. 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. Production Supervisor - 2nd Shift. revenue grows 24% a year from 2023-2027 (continuation of 2023 consensus), then. 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 will face difficulty maintaining an innovative edge over its peers, who already spend much more on research and development (R&D). 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. Moreover, the existing plant-based burgers had a disastrous reputation, they were ironically said to have as much flavor as the box they were in. Beyond Meat had to position itself as different from them as possible. However, by now its clear that plant-based meat alternatives are here to stay and theyre gaining traction every year. It is better to create a plant-based meat product, not only because of meat expiration issues, but bacterial issues with animals, mad cow disease, and so many other factors that clearly make eating plants natural to humans and such a better option. Invest better with The Motley Fool. Each of the above scenarios also assumes Beyond Meat is able to grow revenue, NOPAT, and FCF without increasing working capital or fixed assets. 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. https://www.wsj.com/articles/beyond-meat-hires-marketing-executive-revamps-retail-strategy-11675379688. Even in the most optimistic of scenarios, Beyond Meat is worth less than its current share price. Figure 1: Consensus Revenue Growth Estimates: 2020-2025, 2020-2025 revenue growth rates based on consensus estimates, Competition is Plentiful and Has Competitive Advantages. A lot of people are trading so I know a lot of people are interested in the future of this company. See the math behind this reverse DCF scenario. Beyond Meat Reports Fourth Quarter and Full Year 2020 Financial 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. Plant-based meats look like an attractive bet to play the future of food. From the beginning Beyond Meat had a vision for its business that was much broader than any of its predecessors. Dont be afraid to really study the competition and pay attention to all the little details that have made them successful. Plus, they created a new category by being one of the first to do it and do it right. And the organization continues to spill a slight amount of red ink, generating a loss of $10.2 million over the last three months versus a loss of $9.4 million in the second quarter of 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. Beyond Meat strategy The mattress. 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. It looks like meat, tastes like meat, and even feels like meatbut its made entirely of plants. And if this happens, you need to have others you can roll out. Plant based burgers are not new but Beyond Meat has been able to capture more of the . The Motley Fool owns shares of and recommends Beyond Meat, Inc. Beyond Meat founder, Ethan Brown, understood the place of meat in the collective perception very early on. 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. 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. However, the poultry producer exited earlier this year . 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. Eating meat has long been associated with masculinity. Beyond Meat Has Completely Altered Its Go-to-Market Strategy 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. The superior scale of Beyond Meats peers will also challenge what the firm believes to be a critical competitive advantage its innovation. This adjustment represented 3% of reported net assets. The founder, Ethan Brown, said in June that the companys objective is to make plant-based meat cheaper than animal protein. In the first quarter of 2019, Beyond Meat's first as a public company, its gross profit was just 26.8% of net revenue. 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. The difference with other plant-based patties is that their name is a synonym of quality for their clients. However, the lack of fervor for their first product did nothing to stop Beyond Meat from trudging forward. The first campaign, The Future of Protein, was launched in 2015. From the Beyond Burger to Beyond Sausage, and their latest Beyond Meatballs this brand is really on a roll. They clearly prioritize innovation. Even with that success, Brown continues to think big . However, this trend is expected to reverse in the short term and the company will once again get on its fast growth track and there are multiple trends that support this growth outlook. We're here to help brands make better marketing decisions by delivering world-class, scalable insights. Highlighted by Beyond Meat 's stunning public debutwhich recorded a jaw-dropping 163% gain in its first daythe vegetarian alternatives category of foodtech is blowing up. Beyond Meat: The Keys To Disrupting An Enormous Market - Forbes When it comes to social causes brands still need to remember if the product isnt good no social cause, no matter how important can save it. If you are wondering how Beyond Meat has been able to make strides where others havent consider these four elements of its marketing strategy. It doesnt matter what industry your brand is in theres always a chance consumers wont take to your product or service. *Average returns of all recommendations since inception. Impossible Foods sells slightly different products: Impossible Burger, Impossible Pork, Impossible Sausage. 4 Challenges That Could Hurt Beyond Meat Stock | The Motley Fool Competitors. This would make growth in Beyond Meats stock price a real possibility in the next two years, taking its stock price to $200. Brands. 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). 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. Total revenue jumped by 69% against the prior-year quarter to $113.3 million. By focusing on their fresh foods, like their Beyond Burger patties which many agreed pulled off the meatless meat trick more convincingly they were able to put their time and effort into a product that was going to make them more successful in the long run. Ads like this are created to convert the masses instead of targeting a niche market. 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. 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. Many people do not know that eating meat is not only eating meat, but eating the history in which the meat came from. The Motley Fool has a disclosure policy. 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. This is one of the biggest first-day pop-ups in recent history. Performance goals for cash bonuses could be determined by achievement of GAAP or non-GAAP financial measures and may be adjusted by the compensation committee for any reason. For reference, Beyond Meats invested capital has increased by an average of $84 million (28% of 2019 revenue) over the past two years. The main difference is that Impossible Foods takes its proteins from soy whereas Beyond Meat extracts it from peas. The alternative meat producer is reportedly focusing its retail . Heres a quick summary for noise traders when analyzing BYND: Executive Compensation Adds Additional Risk. 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. Beyond Meat positioned its products as similar to animal meat as they could. Over 2Q20, Beyond Meat removed $1.5 million (1% of revenue) in other expenses when calculating adjusted EBITDA. 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. 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". Beyond Meat's Branding Helped Take Plant-Based Mainstream 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. Time to Buy? Beyond Meats massive revenue growth cannot last forever. Create a great product. Back in 1988 when John Mackey, co-founder of Whole Foodstried to get funding to expand his companyhe was rejected by many venture capitalists. The Audacious (and Risky) Strategy That Made Beyond Meat a Billion Are they only for vegans? 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. Beyond Meats case also shows that a marketing strategy is not fixed: it has to evolve along with the companys positioning. Figure 4: Expenses as % of Revenue: Beyond Meat 2Q19 vs. 2Q20, BYND Operating Expense As Of Revenue 2Q19 Vs. 2Q20. The company launched the Impossible Burger in 2016. This is very rare: imagine if menus displayed all the product brands they use to cook the dishes you eat. Moral of the story? Fourth Quarter 2021. 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. But what if youre looking for a more balanced portfolio instead? Get the latest information and insights into the world of brand. 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. How? Tackle stereotypes about who your customers should be. Beyond Meatis one of them for the plant-based segment. This allows consumers to make their own informed decision. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. 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? First, investors need to know that Beyond Meat has a large liability that makes it more expensive than the accounting numbers would initially suggest. However, some investors have growing concerns about the companys ability to maintain these results. Beyond Meats profitability ranks at the bottom of this peer group. 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.