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. After all, nothing could replace a real burger, could it? 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. One of the most notable adjustments was $11 million inoperating leases. Changes that have inspired the birth of Beyond Meat is the increased demand on plant-based products. Do you like this content? 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. 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. 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. Inside Beyond Meat's lab, where the company transforms plants into faux meat with microscopic analysis and robot mouths. Get the latest information and insights into the world of brand. By Tricia McKinnon. Is It Time to Buy? Plant-based eaters now account for 8% of the global population. Beyond Meat uses a robot to imitate the process of chewing. Time to Buy? If Beyond Meat created the healthiest plant based products that dont taste very good then it wouldnt be in business very long. 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. Since going public, four of its six quarters have shown improvement from. 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. Youre reading a free article with opinions that may differ from The Motley Fools Premium Investing Services. (Photo Illustration by Drew Angerer/Getty Images). To make the world smarter, happier, and richer. 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 new knowledge of healthy vs. unhealthy created a new market drive for healthy products. word of mouth. Shares have fallen 10% since news onJune 25, 2020that McDonalds was discontinuing testing of a plant-based burger it dubbed the PLT made with a Beyond Meat patty in several Canadian markets. This would be unreadable! And by 2020, Beyond Meat had launched an e-commerce site that served as a direct-to-consumers portal, allowing customers to purchase their products individually. 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. DOI: 10.2991/assehr.k.211209.003. Beyond Meat's marketing strategy is to convert carnivores into occasional vegans. 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. People are able to do extensive research on problems after recognizing that there is an issue. But thats what BYNDs investors are betting will not happen! 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. Plus, they created a new category by being one of the first to do it and do it right. After tying up with Dunkin soon after its IPO, Beyond Meat entered China in 2020. This copy is for your personal, non-commercial use only. By Christopher Lombardo. Some of the largest retailers in the world including Zara and H&M are in the fast fashion business which is not environmentally friendly. Its an era of growth for the still young start-up. 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. Koshy has 29.5 million followers on TikTok and 17.5 million fans on YouTube. 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. As the industry becomes more commoditized, economies of scale will be even more important for firms seeking profitability, which doesnt bode well for smaller firms such as Beyond Meat. Instead Beyond Meat fought for placement within the meat section of grocery stores. Brown. This year also saw Beyond Meat break into the international market partnering with the likes of Tesco in the UK to A&W in Canada). 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. Plant based meats are not filled with dead animals which include bacteria growth and can contain other substances such as feces. 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. This indicates an extremely successful uptake by consumers. Weve previously shown how linking executive compensation to faulty metrics such asadjusted EBITDAcan lead to the destruction of shareholder value. Making the world smarter, happier, and richer. Instead, due to theproliferation of noise traders, the focus tends toward technical trading tends while high-quality fundamental research is overlooked. 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. In 2021 Beyond Meat's revenue increased by 14.2% to reach $464.7 million. Insider Trading and Short Interest Indicate Market Skepticism. Total revenue jumped by 69% against the prior-year quarter to $113.3 million. 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 ( NASDAQ: BYND) is streamlining its sales strategy, according to internal documents reviewed by the Wall Street Journal. 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 . Per Figure 4, Beyond Meats operating expenses as a percent of revenue have actually increased over the past twelve months from 97% in 2Q19 to 107% in 2Q20. For example. 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. Instead, it avoids labelling its products as vegan even though they are. Should Kellogg continue to push the marketing of Incogmeato and swiftly gain customers, investors may kiss the ultra-high expectations baked into BYND goodbye. It began trading at $25/share on the Nasdaq stock exchange and ended the day at $65.75. However, one of the biggest deal breakers for potential. Sign up for our Newsletter to receive free, insightful tips on all things brand! Beyond Meat went from very dark and meat-like packagings to a fresher and smoother look. Also, seeing that a lot of slaughter houses will absolutely not let anyone come see the inside conditions that animals are facing. While Beyond Meat could continue to rally, it faces four challenges that. our Subscriber Agreement and by copyright law. 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. This year also saw Beyond Meat join forces with Mcdonalds to develop their McPlant option. This assumption is highly unlikely but allows us to create best-case scenarios that demonstrate how high expectations embedded in the current valuation are. Over 2Q20, Beyond Meat removed $1.5 million (1% of revenue) in other expenses when calculating adjusted EBITDA. Beyond Meat Announces New Executive Leadership Appointments to Accelerate and Support the Company's Vision for Strategic Growth. Since its high-flying IPO at $46, this stock has soared to $135. 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. This adjustment represented 3% of reported net assets. Even in the most optimistic of scenarios, Beyond Meat is worth less than its current share price. 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. A year ago, the consumer discretionary upstart's top line reflected the depth of its marketing and supply chain investment in the restaurant business: These sales were nearly identical to their retail counterpart: Source: Beyond Meat. Therefore, restaurant owners tend to put the Beyond Meat logo on the menu when featuring their products. 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. Plant-based foods are more than a fad, they are a huge economic trend. Beyond Meatis one of them for the plant-based segment. In total, the global market for meat substitutes is set to grow to $23.4 billion by 2024, according to market research company Euromonitor. In 2014 they developed their first simulated beef product and expanded their presence from 1,500 to 6,000 stores in the US. Looking ahead to 2021, consensus earnings estimates are a much higher $0.47/share. 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 mattress. Figure 7 compares the firms implied future NOPAT in this scenario to its historical NOPAT. Create a great product. Nonetheless, Beyond Meat's earnings press release observed that the value packs, which hit grocery stores only in the last two weeks of the quarter, were responsible for 16 percentage points of volume growth for the entire period. But what if youre looking for a more balanced portfolio instead? This is very rare: imagine if menus displayed all the product brands they use to cook the dishes you eat. We can perceive more confidence from the company, in line with its media and advertising strategy. 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 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. Although its products are plant based Beyond Meats marketing does not explicitly call that out. This report helps investors of all types see just how extreme the risk in BYND is based on: Growth Will Slow Down, but Competitors Wont. 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. Knowing that the meat is expired and poses a hazard to eat it. 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. 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. Additionally, when their Chicken-Free Strips were finally taken off the market in 2019, they did so quietly. They have sharply improved from -93.3% in 2016 to -4.2% in 2019. Beyond Meat constantly reinvests their earnings in further research and development, as well as in marketing, and in scaling up production and distribution. 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. 4. Additionally, the companys new partnerships will also drive impressive top line growth. 2023 Latana GmbH. 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. Many people do not know that eating meat is not only eating meat, but eating the history in which the meat came from. One venture capitalist even told Mackeythis: you know, John, I see you have got a pretty good business here, but it looks to me I looked at all the stores like you are a just a bunch of hippies and you are just selling food to other hippies and I dont think that is a very big market. He passed on investing in Whole Foods and ten years later that very same venture capitalist told Mackey that not investing in Whole Foods was the worst decision he had ever made. For non-personal use or to order multiple copies, please contact Dollar figures in millions. 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. Are they only for vegans? 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. Prior to that Mr. Oghoghomeh served as Head of Recruitment Marketing - West Zone for Amazon, an eCommerce company from 2019 to 2021. For example, Kelloggs delayed the launch of itsfirst roundof Incogmeato products due to the COVID-19 pandemic. If youre always innovating and looking towards the future, youll rarely be caught off guard. Beyond Meat has been working with them since February 2019. They entered the restaurant market, and are currently sold to plant-based and mainstream restaurants. 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. 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. From the beginning Beyond Meat had a vision for its business that was much broader than any of its predecessors. 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. Dont become so attached to a product that you arent willing to see when it no longer serves you. The design softened. 2 1 Comment. The organizational goals have to be settled and explained. What kind of external factors/changes do you think may have inspired the birth of Beyond Meat? Beyond is working to streamline its operations and reverse declining sales. 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. 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. Founder and Tech Inventor at Princess Technologies. This is not by accident but instead by design. Going forward, Beyond Meat will find it even more difficult to grow revenue and profits as competitors flood the market. 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. 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. CEO and founder Ethan Brown understood that the target audience was not only vegetarians and vegans, but also flexitarians, or meat-eaters who occasionally want a healthier, high-quality option. Beyond Meat will face difficulty maintaining an innovative edge over its peers, who already spend much more on research and development (R&D). For reference, Beyond Meats invested capital has increased by an average of $84 million (28% of 2019 revenue) over the past two years. 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 plants is the best thing you can do for your diet. Eat What You Love Beyond Meats massive revenue growth cannot last forever. Case in point, revenue grew 239% YoY in 2019, 141% YoY in 1Q20, and 69% YoY in 2Q20. Furthermore, Beyond Meat has a history of significant free cash flow (FCF) burn that is unlikely to change anytime soon. If you do subscribe to our retail trends newsletter to get the latest retail insights & trends delivered to your inbox. The Motley Fool has a disclosure policy. 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. A lot of people are trading so I know a lot of people are interested in the future of this company. this also includes knowledge of every product that comes in contact with your body on a daily basis. 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. With a sound marketing strategy, Beyond Meat may be able to make its product cool again. See the math behind this reverse DCF scenario. People tend to associate meat with strength, with muscles. Its stock value gained 163% on the day of its stock introduction. Yet Beyond Meat's management made a critical decision during the second quarter to change course on product distribution. Some of the largest consumer food brands have followed suit. A new marketing strategy will play up the health and sustainability benefits of Beyond Meat, Brown said. While many consumers are not willing to pay an average of $3 more a pound for a. Beyond Meat has earned a premium name thanks to its marketing strategies, but this premium is too much. The first campaign, The Future of Protein, was launched in 2015. 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 . Extensive background in CPG . Further, consensus estimates for Beyond Meats 2020 earnings are now $0.07/share. In any case, I view recent moves as encouraging as Beyond makes moves to improve its footing to grow as a . Resourceful, strategic, and self-directed leader with a proven record of achievement in global account management, business development and sales strategy leadership. Balance Sheet: I made $290 million of adjustments to calculate invested capital with a net decrease of $228 million. This is the market drive for Beyond Meat. How Beyond Meat's Marketing Strategy Set it Apart . 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 . In the first quarter of 2019, Beyond Meat's first as a public company, its gross profit was just 26.8% of net revenue. At the end of 2Q20, Beyond Meat had $222 million of cash and cash equivalents on its balance sheet. 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. In order to get ahead of the competition, never stop innovating. The companys marketing strategy is multiple layers one and has evolved over time, to keep up with the market trend. Their main rival is the company Impossible Foods. the stock is worth just $30/share today - a 57% . These days, fewer investors pay attention to fundamentals and the red flags buried in financial filings. 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. Valuation: I made $757 million of adjustments with a net effect of decreasing shareholder value by $513 million. They began targeting not only vegetarians and vegans, but also and mainly meat-eaters; flexitarians. This pivot on management's part is undergirded by a continuing commitment to building out manufacturing and distribution capacity -- even in the middle of a pandemic, Beyond Meat more than tripled its capital expenditures in the second quarter against the prior year, to $26 million. 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. Furthermore, many of the firms in Figure 2 have other key advantages multi-year relationships and existing distribution networks with grocery stores and quick-serve restaurants such asTyson, or in the case of Kroger, direct control of distribution and the end-consumer relationship. 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 burgerseven have grill marks further convincing consumers that maybe it really is like meat. From the Beyond Burger to Beyond Sausage, and their latest Beyond Meatballs this brand is really on a roll. 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). Figure 10 shows the implied values for BYND assuming Kraft Heinz wants to achieve an ROIC on the acquisition that equals its WACC of 4.4%. 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. on July 4th, eating a hot dog with your family. But just how do these brands fare when it comes to brand awareness and consideration. These features also convince consumers that Beyond Meat burgers are not your average veggie burgers which were never popular with mainstream consumers. Devault, PA Operations - DEPA Production On-site. The difference with other plant-based patties is that their name is a synonym of quality for their clients. Firstly, the gradual lifting of lockdowns in recent months will help the restaurant segment register strong growth along with sales from retail chains. Beyond Meats profitability ranks at the bottom of this peer group. According to the Partners In Leadership Happiness at Work survey, when employees are happier at work, 85% take more initiative. Figure 4: Expenses as % of Revenue: Beyond Meat 2Q19 vs. 2Q20, BYND Operating Expense As Of Revenue 2Q19 Vs. 2Q20. Invest better with The Motley Fool. Beyond Meats successes have inspired the giants to create new categories. 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 . Leverage partners with larger platforms to expand reach. There are currently 7 million shares sold short, which equates to 9% of shares outstanding and just over one day to cover. Why? When Beyond Meat was met with the failure of their Chicken-Free Strips their first real product they didnt fold. Beyond Meat was one of the most successful IPOs (Initial Public Offerings) of 2019. Concentrating on the health market, they were able to target a broad range of people seeking a better meat option than real meat. Over the TTM period, FCF is -$164 million. Net revenues were $406.8 million, an increase of 36.6% year-over-year. Plant based burgers are not new but Beyond Meat has been able to capture more of the mainstream market. These sales represent 5% of shares outstanding. The company launched the Impossible Burger in 2016. Per Figure 5, Beyond Meat saw significant improvement in profitability in 2018, but the improvement was short lived. Our goal is to give you the key to understanding Beyond Meats rapid success, to show you the hidden reasons for their success. 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. 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). Acquisitions completed at these prices would be truly accretive to Kraft Heinzs shareholders. With a sound marketing strategy, Beyond Meat may be able to make its product cool again.