Moral of the story? Beyond Meat Announces New Executive Leadership Appointments to Accelerate and Support the Company's Vision for Strategic Growth. In 2021 Beyond Meat's revenue increased by 14.2% to reach $464.7 million. 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. 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. This created the need for healthy products. Not knowing what is in the hot dog, not knowing where the hot dog came from, the conditions of the animals at the house in which the meat was slaughtered. Beyond Meat was the first company to sell plant-based burgers in grocery stores meat sections. 2 1 Comment. + Follow. First, consumers expectations for new products and innovation will rise over time. Beyond Meats success comes partially from the fact that it has been able to evolve alongside or prior to consumer demand. Fiduciaries should avoid Beyond Meat Inc. (BYND). 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. 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. Per Figure 5, Beyond Meat saw significant improvement in profitability in 2018, but the improvement was short lived. The promises of Beyond Meats burgers: they produce 90% less greenhouse gas emissions and require 93% less land, 99% less water, and 46% less energy than a traditional beef patty. If youre always innovating and looking towards the future, youll rarely be caught off guard. Vegans and vegetarians, on the contrary, are often perceived as struggling to get enough protein and iron daily, as unhealthy weaklings. 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. Beyond Meat had originally been sold in retail shops across the USA, then worldwide. Each implied price is based on a goal ROIC assuming different levels of revenue growth. At its TTM FCF burn rate, the firm has enough cash to operate for just over 16 months before needing additional capital. Eat What You Love Furthermore, Don Lee alleged significant concerns about food safety protocols concerning the raw materials that Beyond Meat sent. Concentrating on the health market, they were able to target a broad range of people seeking a better meat option than real meat. Further, consensus estimates for Beyond Meats 2020 earnings are now $0.07/share. 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. In total, the global market for meat substitutes is set to grow to $23.4 billion by 2024, according to market research company Euromonitor. However, one of the biggest deal breakers for potential. 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. Changes that have inspired the birth of Beyond Meat is the increased demand on plant-based products. 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 this scenario, Beyond Meat grows NOPAT by 36% compounded annually over the next decade and the stock is worth just $44/share a 67% downside to the current price. Comprised of companies with strong revenue growth, healthy profits, lots of cash, and low risk, it has outperformed the broader market year after year, consistently. word of mouth. 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. 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. 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. Expand the definition of your target market. This makes a lot of sense since only2.7%of packaged meat sales in the United States are plant based. 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. 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 The professors had been working on perfecting their formula for years, and the first Beyond Meat product launched in 2012 was their "Chicken-Free Strips". Beyond Meat, a producer of plant-based meat substitutes, was founded in 2009 in Los Angeles, California. Success of any of Beyond Meats competitors could also further threaten future profit growth for Beyond Meat. By paying attention to all the details of a real burger the taste, texture, smell, feel, and consistency Beyond Meat has been able to break into a target audience that had yet to be cracked: mainstream consumers interested in healthier forms of meat. Buy These 2 Stocks in 2023 and Hold for the Next Decade, 2 Growth Stocks to Buy Before the Big Bull Rally, Join Over Half a Million Premium Members And Get More In-Depth Stock Guidance and Research, Copyright, Trademark and Patent Information. If you are wondering how Beyond Meat has been able to make strides where others havent consider these four elements of its marketing strategy. our Subscriber Agreement and by copyright law. Conference: 2021 3rd International Conference on Economic Management and Cultural . Its an era of growth for the still young start-up. Beyond Meatis one of them for the plant-based segment. Baseball player David Wright was the first celebrity to sign a contract with the brand. As an emerging growth company, Beyond Meat has opted to comply with the executive compensation disclosure rules applicable to smaller reporting companies, which require less stringent disclosures regarding compensation. 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. 4. 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. To do so, employees need to very clearly understand the companys priority: is it safety, profits, brand fidelity? Of course, this is wrong, and our body adapts to whatever we give it. 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. Continue reading your article witha WSJ subscription, Already a member? 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. One of the most important pieces of furniture we own. This vision can be found throughout Beyond Meats marketing collateral. Competitors, Serious Uphill Battle for Beyond Meat to Improve Profitability. Leverage partners with larger platforms to expand reach. 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. About 70% of the global population is cutting down its meat consumption. Asit Sharma has no position in any of the stocks mentioned. These sales represent 5% of shares outstanding. We hope this article helped you understand how crucial a good marketing strategy is for a companys success. 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. Resourceful, strategic, and self-directed leader with a proven record of achievement in global account management, business development and sales strategy leadership. While I chose Kraft Heinz, analysts can use just about any company to do the same analysis. Previously, people were limited to information they see on television which is in the best interests of companies that can afford those ad campaigns. Stage of Market Lifestyle- The stage of the market lifestyle will influence the company on a few different categories. Beyond Meats case also shows that a marketing strategy is not fixed: it has to evolve along with the companys positioning. The first campaign, The Future of Protein, was launched in 2015. Clearly, vegan meat alternatives were no longer a fad. Now, lets proudly assume what they are: a plant-based burger, extracting plant proteins to make a tasty and healthy burger. Each of the above scenarios also assumes Beyond Meat is able to grow revenue, NOPAT, and FCF without increasing working capital or fixed assets. Making the world smarter, happier, and richer. Learn More. Beyond Meat, the company that is making eating plant-based protein mainstream continues to grow at a fast pace. 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. There are currently 7 million shares sold short, which equates to 9% of shares outstanding and just over one day to cover. What is Beyond Meats marketing strategy? Competition- Beyond Meat has created competition by completing innovating meat and how meat is viewed. Eating plants is the best thing you can do for your diet. https://www.wsj.com/articles/beyond-meat-hires-marketing-executive-revamps-retail-strategy-11675379688. Disclosure: David Trainer, Kyle Guske II, and Matt Shuler receive no compensation to write about any specific stock, sector, style, or theme. Nope, its just Beyond Meat. 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. You can see all the adjustments made to Beyond Meats income statementhere. 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. 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. 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.. Beyond Meat uses a robot to imitate the process of chewing. 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. Prior to that Mr. Oghoghomeh served as Head of Recruitment Marketing - West Zone for Amazon, an eCommerce company from 2019 to 2021. 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. By July 2019, Beyond Meat could claim a market value of $11.7 billion which was a huge increase from its pre-IPO valuation of $3.8 billion. 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. 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. 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? Figure 7 compares the firms implied future NOPAT in this scenario to its historical NOPAT. The redistribution of cash flow to its investors is a challenge. 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. Published May 20, 2021. They clearly prioritize innovation. Beyond Meat also has big contracts with fast-food chains, as mentioned before, which is a distribution canal bringing lots of cash flow. 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. Consensus estimates expect revenue will grow 61% YoY in 2020, and just 17% YoY by 2025, per Figure 1. 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. The plant-based food market will grow bigger and bigger every year. With a sound marketing strategy, Beyond Meat may be able to make its product cool again. 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. Showing that meat is not necessary to enjoy the same flavors while reaping more plant-based benefits. This created a need for plant-based foods to replace the broken system of meats. Remember the man-ish look of the burger boxes, the focus on the amounts of protein? The Impossible Foods start-up was founded in 2011 in California by Patrick O. BYND entered into a partnership with Alibaba Group, whereby its products will be available in Freshippo stores (Alibabas supermarkets) in Shanghai. 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. 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. [1]My firms core earnings are a superior measure of profits, as demonstrated inCore Earnings: New Data & Evidencea paper by professors at Harvard Business School (HBS) & MIT Sloan. Attracted by Beyond Meats impressive growth rates and soaring market value, multiple competitors are entering the alternative meat industry. Additionally, the companys new partnerships will also drive impressive top line growth. As of 2020, the Beyond Meat company sells: Cookout Classic (10 plant-based burgers). Beyond Meat was one of the most successful IPOs (Initial Public Offerings) of 2019. 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. 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. 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. Lots of small companies have also emerged and targeted the same audience, such as Purple Carrot or Sunfed Meats. Fourth Quarter 2021. Beyond Meats profitability ranks at the bottom of this peer group. 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. Per Figure 2, Beyond Meats NOPAT margin and return on invested capital (ROIC) are below each of the competitors listed above, and well below the market-cap-weighted average of all the Food Processing firms under coverage. Brown. Nestl, JBS, and Tyson have all recently launched plant-based burgers. However, the improvement in Beyond Meat's margins has been eye-popping. Sounds too good to be true, right? 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%. 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. 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. Management's flexibility and willingness to alter the company's go-to-market strategy during the era of COVID-19 has the potential to pay off handsomely over a multiyear horizon. Invest better with The Motley Fool. 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.. Catalyst: Others Success Could Come at Beyond Meats Expense. The company's second-quarter 2020. 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". This would make growth in Beyond Meats stock price a real possibility in the next two years, taking its stock price to $200. Distribution and use of this material are governed by 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. Beyond Meat was one of the most successful IPOs (Initial Public Offerings) of 2019. Instead, it avoids labelling its products as vegan even though they are. Eating meat has long been associated with masculinity. Figure 7: Current Valuation Implies Drastic Profit Growth. Time to Buy? First, investors need to know that Beyond Meat has a large liability that makes it more expensive than the accounting numbers would initially suggest. While comprising only 5% of its total revenue, Tyson outspent Beyond Meats SG&A by 20 times over the TTM. Production Supervisor - 2nd Shift. 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? This scenario represents the minimum level of performance required not to destroy value. To illustrate, the company repackaged a portion of its slow-moving food service inventory for retail consumption. Figure 9: BYND Has Large Downside Risk: DCF Valuation Scenario. What can you learn from this? The alternative meat producer is reportedly focusing its retail . Beyond Meat stated that its mission is to push boundaries and disrupt. One of the most notable adjustments was $11 million inoperating leases. Beyond Meat's marketing strategy is to convert carnivores into occasional vegans. They did not service the vegan and vegetarian markets as traditional players did. Founder and Tech Inventor at Princess Technologies. 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. Acquisitions completed at these prices would be truly accretive to Kraft Heinzs shareholders. The coronavirus pandemic put a halt to the companys fast-growing revenues as shutting down of restaurants due to the lockdown significantly affected the companys restaurant and foodservice business, which was the fastest growing segment for BYND until 2019. 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. Since its high-flying IPO at $46, this stock has soared to $135. Part of Beyond Meats strategy is to redefine what the best source of protein is. Word of . It began trading at $25/share on the Nasdaq stock exchange and ended the day at $65.75. strategy uncovers and shares the "bold vision, . 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. Various trademarks held by their owners. .css-16c7pto-SnippetSignInLink{-webkit-text-decoration:underline;text-decoration:underline;cursor:pointer;}Sign In, Copyright 2023 Dow Jones & Company, Inc. All Rights Reserved, adidas Promo Code - $30 Off 1000s of Best-Sellers + Free Shipping, 60% off running shoes and apparel at Nike without a promo code, Michael Kors promo code First Order: sign up for KORSVIP + Get 10% off. 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. 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. Still, disputes aside, Beyond Meat has been doing very well these past few years. Entrepreneur, retail expert, strategy consultant and author. Knowing that the meat is expired and poses a hazard to eat it. So, what can you learn from Beyond Meat's marketing strategy? We can perceive more confidence from the company, in line with its media and advertising strategy. The Double Distribution Canal: A Major Strength. Several of Beyond Meats competitors, including Hormel, Nestle, Kellogg, Tyson, Kroger, ConAgra, and Kraft Heinz, enjoy key competitive advantages: These advantages are very important and very difficult, if not impossible, for new entrants like Beyond Meat to match or overcome in the near term, if ever. Its stock value gained 163% on the day of its stock introduction. This is a full-time position, reporting to the Chief Legal Officer. With such strong momentum and triple-digit year-over-year revenue growth, traders may push this stock higher. Like Comment Share . By Tricia McKinnon. First of all, think of the big picture when it comes to segmentation: who will really buy your products? Per Figure 6, Beyond Meats TTM adjusted EBITDA of $45 million is well above core earnings of $4 million. This would be unreadable! Even in the most optimistic of scenarios, Beyond Meat is worth less than its current share price. According to the Partners In Leadership Happiness at Work survey, when employees are happier at work, 85% take more initiative. This adjustment represents 7% of Beyond Meats market cap. 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. The number of shares sold short has increased by 10% since last month. Extensive background in CPG . The emphasis on the grocery channel will now almost certainly evolve into a long-term focal point for Beyond Meat. The California-based company is orienting its retail business around Kroger Co., Walmart Inc., Publix Super Markets Inc., Costco Wholesale Corp. and Whole Foods Market, according to internal company presentations and documents. Insider Trading and Short Interest Indicate Market Skepticism. 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. Some of the largest retailers in the world including Zara and H&M are in the fast fashion business which is not environmentally friendly. How? 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 . The company's second-quarter 2020 earnings report, released Tuesday after the markets closed, revealed that it's still experiencing rampant growth. This is the market drive for Beyond Meat. Their products are now sold in 17,000 grocery stores and 12,000 eateries. If yes (which is the most common case), you can sell them to way more people and have an even greater impact. Beyond Meat is seeking a marketing, advertising, regulatory, and trademark attorney with 10-12 years of experience. 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. 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. This year also saw Beyond Meat join forces with Mcdonalds to develop their McPlant option. This is a major strength: a high speed-to-market. 2023 Latana GmbH. Figure 2: Beyond Meats Profitability vs. At the end of 2Q20, Beyond Meat had $222 million of cash and cash equivalents on its balance sheet. Meditation apps have seen a boom in popularity over the past few years in the US but does their growth extend to Europe? 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. Plants come directly from the sun and reap the energy created from the sun. The Motley Fool owns shares of and recommends Beyond Meat, Inc. People tend to associate meat with strength, with muscles. 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. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services. 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. 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. Is It Time to Buy? Plant based burgers are not new but Beyond Meat has been able to capture more of the mainstream market. 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. In the second scenario, I use 61% growth (2020 consensus estimate) for all years to illustrate a best-case scenario where I assume Beyond Meat could grow revenue faster within the larger distribution network, resources, and customer base of Kraft Heinz. Impossible Foods sells slightly different products: Impossible Burger, Impossible Pork, Impossible Sausage. In 2019, they partnered up with Dunkin Donuts to supply their Meatless Sausage for the breakfast chains sandwiches nationwide. From the beginning Beyond Meat has viewed itself as a company that could take a typical meat eater and get them to consider a tasty alternative. 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. See all adjustments to Beyond Meats valuationhere. The first six months of 2020 have visibly transformed Beyond Meat 's ( BYND -0.58%) approach to marketing its plant-based, meat substitute products. Plus, they created a new category by being one of the first to do it and do it right. With insiders quick to sell their shares and a large and growing short interest forming, it seems that others in the market are also unwilling to bet on the future hurdles Beyond Meat must clear. 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. The following table, covering Q2 2020, shows how drastically this dynamic has changed, as management has leaned into winning customers at the grocery shelf during a near-cessation in dining-out activities: Beyond Meat is now incentivizing potential retail customers to try its products via a limited-time offering it dubs the "Cookout Classic" burger value pack. . Links: https://zaap.bio/lillytalavera. Net revenues were $406.8 million, an increase of 36.6% year-over-year. However, some investors have growing concerns about the companys ability to maintain these results.