Changes that have inspired the birth of Beyond Meat is the increased demand on plant-based products. Furthermore, Beyond Meats current valuation implies it will generate sales equal to 29% of Tysons 2019 revenue a level that places it as thesixth largestmeat and poultry processor in the world in 2019. Opinions expressed by Forbes Contributors are their own. 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. This new knowledge of healthy vs. unhealthy created a new market drive for healthy products. 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. Beyond Meats case also shows that a marketing strategy is not fixed: it has to evolve along with the companys positioning. From the beginning Beyond Meat had a vision for its business that was much broader than any of its predecessors. What can you learn from this? This scenario represents the minimum level of performance required not to destroy value. Beyond Meats profitability ranks at the bottom of this peer group. The design softened. Even with that success, Brown continues to think big . See the math behind this reverse DCF scenario. In 2020, they even signed a deal to open another production facility in Shanghai! 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 ANNOUNCES NEW . 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. 1. 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. Instead, due to theproliferation of noise traders, the focus tends toward technical trading tends while high-quality fundamental research is overlooked. Beyond Meat, therefore, accomplished something huge: its name is enough to make people reassured about the quality and taste. Asit Sharma has no position in any of the stocks mentioned. In order to get ahead of the competition, never stop innovating. 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. They did not service the vegan and vegetarian markets as traditional players did. Baseball player David Wright was the first celebrity to sign a contract with the brand. 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. Beyond Meat Is Down 93% From Its High. 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. But what if youre looking for a more balanced portfolio instead? Meditation apps have seen a boom in popularity over the past few years in the US but does their growth extend to Europe? 2019: A Change In the Branding Strategy With the Arrival of Stun. Plant-based meats look like an attractive bet to play the future of food. Beyond Meat is Wasting Its Advertising The company's strategy promotes plant-based meat as a category, not as a brand, which is ideal for its competitors Hermes Rivera via Unsplash From one perspective, Beyond Meat could hardly be in a better position. The company's second-quarter 2020 earnings report, released Tuesday after the markets closed, revealed that it's still experiencing rampant growth. While there are numerous brands that have popped up over the years whove thrown their metaphorical hats into the meat alternatives ring such as Impossible Foods and Quorn Beyond Meat is still one of the most successful and well-known. Making the world smarter, happier, and richer. It looks like meat, tastes like meat, and even feels like meatbut its made entirely of plants. 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 . 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. This would be unreadable! While consumer interest in protecting the environment or having a healthier lifestyle continues to grow it doesnt always mean consumption follows. 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. By 2015, even Walmart was selling Beyond Meats plant-based products! 3. Heres a high-quality portfolio to beat the market, with over 100% return since 2016, versus 55% for the S&P 500. Though the stock is likely to remain volatile in the near term, the strong growth outlook will help it once again reach the $200 level once the current crisis abates. Weve previously shown how linking executive compensation to faulty metrics such asadjusted EBITDAcan lead to the destruction of shareholder value. Especially when competitors will try to introduce products that may be better than the original. 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. Plant based options are the obvious choice. Our marketing speaks very much to the ability for the highest-performing people in our society to perform not just as good, but better as result of the consumption of plant-based meat, particularly, our plant-based meat.. While many consumers are not willing to pay an average of $3 more a pound for a. Letting go of your vision and plans is hard, but if its the right thing to do, you have to be willing to pivot. Among the items Beyond Meat excludes when calculating its adjusted EBITDA are equity-based compensation, restructuring expenses, and a vague line item labeled other. 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. These sales represent 5% of shares outstanding. 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. They both rearrange proteins to create their plant-based products. The first six months of 2020 have visibly transformed Beyond Meat's(BYND 5.83%) approach to marketing its plant-based, meat substitute products. This created a need for plant-based foods to replace the broken system of meats. 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 . Youre reading a free article with opinions that may differ from The Motley Fools Premium Investing Services. Your brand, too, needs the liberty to change. Expand the definition of your target market. By Christopher Lombardo. Beyond is working to streamline its operations and reverse declining sales. 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. 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. See allTrefis Featured AnalysesandDownloadTrefis Datahere. Brown. Below is a short list of some of Beyond Meats alternative meat competitors: This list is not exhaustive and doesnt include any of the traditional meat products that continue to garner a large share of consumer dollars. One of the most notable adjustments was $11 million inoperating leases. Figure 7 compares the firms implied future NOPAT in this scenario to its historical NOPAT. Their products are now sold in 17,000 grocery stores and 12,000 eateries. 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. Plant-based eaters now account for 8% of the global population. They exploit their established brand engagement to build more brand equity, at a low cost, because they dont pay a cent for restaurants to make this kind of indirect advertising for them. The organizational goals have to be settled and explained. 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. Competitors, Serious Uphill Battle for Beyond Meat to Improve Profitability. Do you like this content? For reference, Beyond Meats TTM NOPAT margin is 2% and the TTM NOPAT margin of one of the largest food producers in the world, Tyson Foods, is 5%. 2023 Latana GmbH. 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. While Tyson Foods posted almost 5% margin in FY2020 (ending 3rd Oct, 2020), the company is a dominant force in the market with its size being significantly larger in comparison, which makes it probably unreasonable to expect similar margins for Beyond Meat, which has still not made any profits. This is, in fact, after BYND partnered with Starbucks, Yum Brands, and Sinodis. Per Figure 5, Beyond Meat saw significant improvement in profitability in 2018, but the improvement was short lived. Valuation: I made $757 million of adjustments with a net effect of decreasing shareholder value by $513 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. 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. 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. Part of Beyond Meats strategy is to redefine what the best source of protein is. But beneath these numbers, the dynamics of Beyond Meat's business model have been radically altered by its response to the COVID-19 pandemic. Prior to that Mr. Oghoghomeh served as Head of Recruitment Marketing - West Zone for Amazon, an eCommerce company from 2019 to 2021. Also, because of technology, people are becoming more and more informed about problems with big brands and the cancerous chemicals used in products for decades. Per Figure 6, Beyond Meats TTM adjusted EBITDA of $45 million is well above core earnings of $4 million. After all, nothing could replace a real burger, could it? . From the Beyond Burger to Beyond Sausage, and their latest Beyond Meatballs this brand is really on a roll. 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. Beyond Meat founder, Ethan Brown, understood the place of meat in the collective perception very early on. 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. Beyond Meat burgerseven have grill marks further convincing consumers that maybe it really is like meat. This has come from the increased consumer-knowledge on healthy products, plant-based diets,. We believe there's a better way to feed our future. What can you learn from this? Below are specifics on the adjustments I make based on Robo-Analyst findings in Beyond Meats 10-Q and 10-K: Income Statement: I made $33 million of adjustments, with a net effect of removing $21 million innon-operating income(5% of revenue). Beyond Meat also has big contracts with fast-food chains, as mentioned before, which is a distribution canal bringing lots of cash flow. 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. The company's second-quarter 2020. Beyond Meat has been working with them since February 2019. on July 4th, eating a hot dog with your family. What are your predictions for the future of this company? This competitive disadvantage only makes Beyond Meats path to sustainable profitability that much more difficult. 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. Eat What You Love In any case, I view recent moves as encouraging as Beyond makes moves to improve its footing to grow as a . Like Comment Share . This would, in turn, take BYNDs market cap to about $14 billion by 2023, from $9.6 billion currently. The difference with other plant-based patties is that their name is a synonym of quality for their clients. Often the largest risk to any bear thesis is what I call stupid money risk, which means an acquirer comes in and buys Beyond Meat at the current, or higher, share price despite the stock being overvalued. This is a major strength: a high speed-to-market. + Follow. When the Chicken-Free Strips failed, it wasnt only about the taste something was just off. 2 1 Comment. 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. Furthermore, Beyond Meat has a history of significant free cash flow (FCF) burn that is unlikely to change anytime soon. Plant-based foods are more than a fad, they are a huge economic trend. For non-personal use or to order multiple copies, please contact 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. At its TTM FCF burn rate, the firm has enough cash to operate for just over 16 months before needing additional capital. But how they handled it is what makes them a successful brand. Why did it work for them? Figure 1: Consensus Revenue Growth Estimates: 2020-2025, 2020-2025 revenue growth rates based on consensus estimates, Competition is Plentiful and Has Competitive Advantages. 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. Since going public in early May, Beyond Meat's stock has soared more than 450 percent and its market value is over $8 billion. And this failure didnt break them for a few reasons most importantly, because they already had new products in the works. Fourth Quarter 2021. Entrepreneur, retail expert, strategy consultant and author. 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. 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. 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. 4. Plant based burgers are not new but Beyond Meat has been able to capture more of the mainstream market. Success of any of Beyond Meats competitors could also further threaten future profit growth for Beyond Meat. Many people do not know that eating meat is not only eating meat, but eating the history in which the meat came from. 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. 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). Then, followed by J.J. Redick, Maya Moore, April Ross, Eric Bledsoe, Maggie Vessey, and Tia Blanco. Over the past twelve months, insiders have purchased 700 thousand shares and sold 4 million shares for a net effect of 3.3 million shares sold. The following fund receives an unattractive rating and allocates significantly to BYND. 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. Insider Trading and Short Interest Indicate Market Skepticism. Market Drivers- Market drives come from the availability of knowledge on healthy products vs. mass marketing for bad products.