Continue reading your article witha WSJ subscription, Already a member? 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. 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. To show that Beyond Meats protein is just good as alternative protein on the market the brand has partnered with NBA players like Kyrie Irving and Chris Paul who are not only brand ambassadors but are also investors in the company. Beyond Meat entered into a partnership with PepsiCo. 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. So, what can you learn from Beyond Meat's marketing strategy? 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. Lets have a look at their most serious competitor: Impossible Foods. Consensus estimates expect revenue will grow 61% YoY in 2020, and just 17% YoY by 2025, per Figure 1. Time to Buy? But keep in mind to do this, youll need data on how consumers are responding to your competitors. Clearly, vegan meat alternatives were no longer a fad. Create a great product. 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. They have sharply improved from -93.3% in 2016 to -4.2% in 2019. Vegans and vegetarians, on the contrary, are often perceived as struggling to get enough protein and iron daily, as unhealthy weaklings. Beyond Meat Reports Fourth Quarter and Full Year 2020 Financial There are several lessons to be learned from Beyond Meats story. Also, seeing that a lot of slaughter houses will absolutely not let anyone come see the inside conditions that animals are facing. This is a major strength: a high speed-to-market. Made from "soy powder, gluten-free flour, carrot fiber and other ingredients", they used a food extrusion machine to create a chicken-like texture. But beneath these numbers, the dynamics of Beyond Meat's business model have been radically altered by its response to the COVID-19 pandemic. Corporate Governance | Beyond Meat, Inc. Beyond Meat positioned its products as similar to animal meat as they could. Stage of Market Lifestyle- The stage of the market lifestyle will influence the company on a few different categories. And if this happens, you need to have others you can roll out. 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. To fight this incorrect belief, Ethan Brown launched a campaign featuring famous athletes. Recent Improvement in Profitability Was Short-Lived. 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. Read the full post on my retail trends blog by clicking here. Brown. 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. 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. In any case, I view recent moves as encouraging as Beyond makes moves to improve its footing to grow as a . Plant-based foods are more than a fad, they are a huge economic trend. The companys marketing strategy is multiple layers one and has evolved over time, to keep up with the market trend. For example. Even with that success, Brown continues to think big . Plant-based eaters now account for 8% of the global population. 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. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services. Beyond Meat Lab Where It Develops Plant-Based "Meat" - Business Insider 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. Are they only for vegans? This adjustment represents 7% of Beyond Meats market cap. 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. Beyond Meats massive revenue growth cannot last forever. Dollar figures in millions. Beyond Meat uses a robot to imitate the process of chewing. To do so, employees need to very clearly understand the companys priority: is it safety, profits, brand fidelity? Beyond Meat was the first company to sell plant-based burgers in grocery stores meat sections. 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. Ads like this are created to convert the masses instead of targeting a niche market. You can see all the adjustments made to Beyond Meats balance sheethere. Heres a post fromBeyond Meats Facebook page: There is no mention at all that the Even-Better Beyond Burger is plant based. 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). 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. The company's second-quarter 2020 earnings report, released Tuesday after the markets closed, revealed that it's still experiencing rampant growth. KFC, Beyond Meat ready nationwide plant-based chicken rollout Beyond Meat Is On Its Path To Irrelevance - SeekingAlpha When the Chicken-Free Strips failed, it wasnt only about the taste something was just off. Beyond Meat burgerseven have grill marks further convincing consumers that maybe it really is like meat. Beyond Meat (NASDAQ: BYND) was founded in 2009 by Ethan Brown, a Californian entrepreneur with an interest in environmental topics, who is also a vegan. Beyond Meat Has Completely Altered Its Go-to-Market Strategy Changes that have inspired the birth of Beyond Meat is the increased demand on plant-based products. Sounds too good to be true, right? Figure 2: Beyond Meats Profitability vs. Beyond Meat in midst of sales strategy revamp - WSJ 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. 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. Get the latest information and insights into the world of brand. I assume revenue grows 47% in years four and five, the same as year three. Plant based meats are not filled with dead animals which include bacteria growth and can contain other substances such as feces. Plant based burgers are not new but Beyond Meat has been able to capture more of the mainstream market. 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. 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. 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. A vegan burger that bleeds. Beyond Meat Continues to Strengthen its Global Innovation Capabilities 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. Figure 10: Implied Acquisition Prices for Value-Neutral Deal. In 2014 they developed their first simulated beef product and expanded their presence from 1,500 to 6,000 stores in the US. 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. 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. In this scenario, Beyond Meat grows revenue by 37% compounded annually (which results in NOPAT growing 42% compounded annually) for the next 12 years. This is not by accident but instead by design. When vegan meat alternatives first started to appear on the market, many people saw them as a fad. [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. Economic earnings, which account for the unusual items on the income statement and changes to the balance sheet, are negative $6 million and declining over the TTM, even as adjusted EBITDA is positive and rising. Koshy has 29.5 million followers on TikTok and 17.5 million fans on YouTube. Remember the man-ish look of the burger boxes, the focus on the amounts of protein? Instead, they persevered. Why? The company launched the Impossible Burger in 2016. However, the lack of fervor for their first product did nothing to stop Beyond Meat from trudging forward. this also includes knowledge of every product that comes in contact with your body on a daily basis. 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. By shifting from animal-based meat to plant-based meat, we can positively impact four growing global issues: human health, climate change, constraints on natural resources and animal welfare. This allows consumers to make their own informed decision. For non-personal use or to order multiple copies, please contact Especially when competitors will try to introduce products that may be better than the original. 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. Considering our revenue projections of roughly $1.1 billion and 6% margins, almost $66 million in net income is possible by 2023. With such high expectations, nearly any negative news could place Beyond Meats future earnings in doubt and cause shares to fall. They only get anxious when they realize that they havent eaten something theyve come to believe they need., Beyond Meat believes that protein is protein and consumers shouldnt care if it comes from a plant or an animal. Insider Trading and Short Interest Indicate Market Skepticism. With these headwinds Beyond Meat had to convince meat lovers that its products passed the test. Founder and Tech Inventor at Princess Technologies. This is one of the biggest first-day pop-ups in recent history. Lets take a look at data from Germany. Beyond Meat is seeking a marketing, advertising, regulatory, and trademark attorney with 10-12 years of experience. As we touched on earlier, not everything was easy for Beyond Meat they made their fair share of mistakes along the way. The mission of the company is focused on plant-based meat alternatives, using pea and other plant protein isolates. What kind of external factors/changes do you think may have inspired the birth of Beyond Meat? The founder, Ethan Brown, said in June that the companys objective is to make plant-based meat cheaper than animal protein. 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. Still, disputes aside, Beyond Meat has been doing very well these past few years. . 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. She has also held senior leadership roles across PepsiCo's North America business during her more than 15-year career at the food . After adjusting for this liability, I can model multiple purchase price scenarios. Each implied price is based on a goal ROIC assuming different levels of revenue growth. After all, nothing could replace a real burger, could it? 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. Fourth Quarter 2021. It looks like meat, tastes like meat, and even feels like meatbut its made entirely of plants. 5 Lessons for Food Startups From Beyond Meat's Stunning Success This is a full-time position, reporting to the Chief Legal Officer. However, Kelloggs appears it is ready to launch Incogmeato and recently partnered with Postmates to deliver free Incogmeato samples to residents of Denver and Dallas. Figure 4: Expenses as % of Revenue: Beyond Meat 2Q19 vs. 2Q20, BYND Operating Expense As Of Revenue 2Q19 Vs. 2Q20. It provided Beyond Meat with one of the best forms of advertising, credibility. Figure 11 shows the implied values for Beyond Meat assuming Kraft Heinz wants to achieve an ROIC on the acquisition that equals 6%. 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.
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