Instead, it avoids labelling its products as vegan even though they are. Beyond Meat was one of the most successful IPOs (Initial Public Offerings) of 2019. Despite less transparency, I know that Beyond Meats executive compensation plan consists of a cash bonus, option grants, and restricted share units (RSUs). They have sharply improved from -93.3% in 2016 to -4.2% in 2019. The Motley Fool has a disclosure policy. + Follow. 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. Changes that have inspired the birth of Beyond Meat is the increased demand on plant-based products. With the high expectations of consumers and the competition they were about to create, knowing that they got in during the right time when consumers would take it as a positive and embrace this new way to eating meat, or meat substitute.. 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. 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. 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. Focus Strategy- Beyond Meats strategy was to focus on creating meat that isnt actually meat, but tastes just like the real thing to replace meat in peoples diets. Time to Buy? The organizational goals have to be settled and explained. However, the lack of fervor for their first product did nothing to stop Beyond Meat from trudging forward. A new marketing strategy will play up the health and sustainability benefits of Beyond Meat, Brown said. BYND revenues saw a rise of 36.6% y-o-y in 2020, which was sharply lower than historical growth rates. Weve previously shown how linking executive compensation to faulty metrics such asadjusted EBITDAcan lead to the destruction of shareholder value. 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. Various trademarks held by their owners. 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. 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. January 2021. Conference: 2021 3rd International Conference on Economic Management and Cultural . Vegans and vegetarians, on the contrary, are often perceived as struggling to get enough protein and iron daily, as unhealthy weaklings. Opinions expressed by Forbes Contributors are their own. We can perceive more confidence from the company, in line with its media and advertising strategy. Each implied price is based on a goal ROIC assuming different levels of revenue growth. 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. Plant based burgers are not new but Beyond Meat has been able to capture more of the . 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. With low margins and little control over the majority of distribution, I think shares can fall sharply from current levels. 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. Its an era of growth for the still young start-up. Per Figure 6, Beyond Meats TTM adjusted EBITDA of $45 million is well above core earnings of $4 million. Figure 7 compares the firms implied future NOPAT in this scenario to its historical NOPAT. 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. Made from "soy powder, gluten-free flour, carrot fiber and other ingredients", they used a food extrusion machine to create a chicken-like texture. 2019: A Change In the Branding Strategy With the Arrival of Stun. Beyond Meat founder, Ethan Brown, understood the place of meat in the collective perception very early on. 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. By 2015, even Walmart was selling Beyond Meats plant-based products! All rights reserved. Success of any of Beyond Meats competitors could also further threaten future profit growth for Beyond Meat. 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. They clearly prioritize innovation. Figure 11 shows the implied values for Beyond Meat assuming Kraft Heinz wants to achieve an ROIC on the acquisition that equals 6%. 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). Beyond Meat had originally been sold in retail shops across the USA, then worldwide. They did not service the vegan and vegetarian markets as traditional players did. Instead Beyond Meat fought for placement within the meat section of grocery stores. Beyond Meats success comes partially from the fact that it has been able to evolve alongside or prior to consumer demand. Plant-based burgers have existed for decades before Beyond Meat. 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 . Some of the largest consumer food brands have followed suit. Attracted by Beyond Meats impressive growth rates and soaring market value, multiple competitors are entering the alternative meat industry. Find out how 3 brands use customer data to find success! We believe there's a better way to feed our future. Stage of Market Lifestyle- The stage of the market lifestyle will influence the company on a few different categories. While I chose Kraft Heinz, analysts can use just about any company to do the same analysis. June 4, 2021 . See the math behind this reverse DCF scenario. 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. Heres a high-quality portfolio to beat the market, with over 100% return since 2016, versus 55% for the S&P 500. Beyond Meats massive revenue growth cannot last forever. Theres no actual blood,instead beet juice isused but it does the trick. Plant based burgers are not new but Beyond Meat has been able to capture more of the mainstream market. Brands. This assumption is highly unlikely but allows us to create best-case scenarios that demonstrate how high expectations embedded in the current valuation are. Beyond Meat's marketing strategy is to convert carnivores into occasional vegans. Evaluation of Options- Evaluating the options of Beyond Meat vs. regular meat. I believe this drive will continue and not stop. While this may seem like a minor detail using beetroot juice to mimic blood it helped the Beyond Burger get one step close to winning over non-vegans. This is very rare: imagine if menus displayed all the product brands they use to cook the dishes you eat. 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. With a sound marketing strategy, Beyond Meat may be able to make its product cool again. Low margins in an increasingly competitive industry leave Beyond Meat with less flexibility to compete on price or invest in marketing and R&D. Landing in Whole Foods which takes the brands it allows in its doors seriously was a signal to both consumers and retail customers that Beyond Meat was a brand worth giving a chance. As we touched on earlier, not everything was easy for Beyond Meat they made their fair share of mistakes along the way. So, what can you learn from Beyond Meat's marketing strategy? 2. Beyond Meat ( NASDAQ: BYND) is streamlining its sales strategy, according to internal documents reviewed by the Wall Street Journal. Baseball player David Wright was the first celebrity to sign a contract with the brand. This is, in fact, after BYND partnered with Starbucks, Yum Brands, and Sinodis. Their products are now sold in 17,000 grocery stores and 12,000 eateries. At the end of 2Q20, Beyond Meat had $222 million of cash and cash equivalents on its balance sheet. Strategic Windows- Beyond Meat knew that because of the health craze in the world and the expansion of knowledge surrounding healthy food has widened, that they have a short window to get in and get it done right when it comes to plant-based foods. But at this stage of Beyond Meat's growth, converting new customers remains the utmost priority. And if this happens, you need to have others you can roll out. We visited . Remember the man-ish look of the burger boxes, the focus on the amounts of protein? It doesnt matter what industry your brand is in theres always a chance consumers wont take to your product or service. 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. This allows consumers to make their own informed decision. A lot of that clothing ends up in landfills which proves that the product often matters more than the social cause a customer is interested in. To illustrate, the company repackaged a portion of its slow-moving food service inventory for retail consumption. Their main rival is the company Impossible Foods. Plant based meats are not filled with dead animals which include bacteria growth and can contain other substances such as feces. 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. If Beyond Meat created the healthiest plant based products that dont taste very good then it wouldnt be in business very long. For example, Kelloggs delayed the launch of itsfirst roundof Incogmeato products due to the COVID-19 pandemic. This wasn't a cheap decision -- Beyond Meat incurred a charge of nearly $6 million to repack and reroute this inventory in response to consumer demand. 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. This adjustment represents 7% of Beyond Meats market cap. Additionally, the companys new partnerships will also drive impressive top line growth. In order to get ahead of the competition, never stop innovating. They both rearrange proteins to create their plant-based products. This created a need for plant-based foods to replace the broken system of meats. The mission of the company is focused on plant-based meat alternatives, using pea and other plant protein isolates. Create a great product. Are they only for vegans? This is a major strength: a high speed-to-market. It began trading at $25/share on the Nasdaq stock exchange and ended the day at $65.75. 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. 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. They entered the restaurant market, and are currently sold to plant-based and mainstream restaurants. Read the full post on my retail trends blog by clicking here. Marketing for meat is just showing the happy times with your family eating meat. 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. If you do subscribe to our retail trends newsletter to get the latest retail insights & trends delivered to your inbox. 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, they persevered. When vegan meat alternatives first started to appear on the market, many people saw them as a fad. Case in point, revenue grew 239% YoY in 2019, 141% YoY in 1Q20, and 69% YoY in 2Q20. 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. Lots of small companies have also emerged and targeted the same audience, such as Purple Carrot or Sunfed Meats. Net revenues were $406.8 million, an increase of 36.6% year-over-year. Some of the largest retailers in the world including Zara and H&M are in the fast fashion business which is not environmentally friendly. Catalyst: Others Success Could Come at Beyond Meats Expense. In any case, I view recent moves as encouraging as Beyond makes moves to improve its footing to grow as a . 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. 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. 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. The original packaging did not display vegetables, and the words meat and best in the products names were not chosen randomly. In 2021 Beyond Meat's revenue increased by 14.2% to reach $464.7 million. We hope this article helped you understand how crucial a good marketing strategy is for a companys success. Additionally, Beyond Meat is introducing its plant-based meatballs in Coles, the second largest supermarket chain in Australia with over 2,500 stores. Recent Improvement in Profitability Was Short-Lived. By shifting from animal to plant-based meat, we can positively affect the planet, the environment, the climate and even ourselves. The Motley Fool owns shares of and recommends Beyond Meat, Inc. Digital Marketing @ Beyond Meat | Award-Winning Author | Driving Success Through Tech, Creativity, & Strategy Pittsburgh, Pennsylvania, United States 631 followers 500+ connections This competitive disadvantage only makes Beyond Meats path to sustainable profitability that much more difficult. When I use myreverse discounted cash flow (DCF) modelto analyze the expectations implied by the stock price, BYND appears significantly overvalued. Beyond is working to streamline its operations and reverse declining sales. While many consumers are not willing to pay an average of $3 more a pound for a. 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. Considering our revenue projections of roughly $1.1 billion and 6% margins, almost $66 million in net income is possible by 2023. Since going public in early May, Beyond Meat's stock has soared more than 450 percent and its market value is over $8 billion. Brown. 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. Especially when competitors will try to introduce products that may be better than the original. Another key marketing vehicle for the company is its partnerships with big brands likeMcDonalds, KFCand Pizza Hut. See the math behind this reverse DCF scenario. 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". 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. 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.. Word of . For example, without any existing shelf space, and only recently announcing an e-commerce platform, Beyond Meat must spend more on not only convincing consumers to try their products, but also on retailers to display their products. Like Comment Share . Learn how you can use Latana to improve your brand marketing and grow faster. Beyond Meat is a Los Angeles-based producer of plant-based meat substitutes, including vegan versions of burgers and sausages. The Impossible Foods start-up was founded in 2011 in California by Patrick O. Published May 20, 2021. Its stock value gained 163% on the day of its stock introduction. The company launched the Impossible Burger in 2016. This would be unreadable! 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. Showing that meat is not necessary to enjoy the same flavors while reaping more plant-based benefits. 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. Dow Jones Reprints at 1-800-843-0008 or visit www.djreprints.com. For example. Learn More. Then, followed by J.J. Redick, Maya Moore, April Ross, Eric Bledsoe, Maggie Vessey, and Tia Blanco. 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. The mattress. 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. 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. BEYOND MEAT ANNOUNCES NEW . Beyond Meatis one of them for the plant-based segment. Should Kellogg continue to push the marketing of Incogmeato and swiftly gain customers, investors may kiss the ultra-high expectations baked into BYND goodbye. Tackle stereotypes about who your customers should be. . What can you learn from this? 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". Making the world smarter, happier, and richer. 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. Even more impressive is that Beyond Meat is, well, a food company (it develops plant-based meat products) and the sales for 2018 were only $87.9 million (and yes, the company has yet to post a . Net revenues decreased 1.2% to $100.7 million in the fourth quarter of 2021, compared to $101.9 million in the year-ago period. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Of course, this is wrong, and our body adapts to whatever we give it. Beyond Meat, a producer of plant-based meat substitutes, was founded in 2009 in Los Angeles, California. 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. This vision can be found throughout Beyond Meats marketing collateral. 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. Beyond Meat, therefore, accomplished something huge: its name is enough to make people reassured about the quality and taste. Beyond Meats successes have inspired the giants to create new categories. See all adjustments to Beyond Meats valuationhere. Previously, people were limited to information they see on television which is in the best interests of companies that can afford those ad campaigns. Sustainable Competitive Advantage- Beyond Meats formula for the perfect flavoring to taste just like a real burger. Competition- Beyond Meat has created competition by completing innovating meat and how meat is viewed. 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. How did Beyond Meat become the leader it is today? 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. However, it hasnt always been smooth sailing for Beyond Meat in March 2019, Don Lee Farms filed a civil suit against its former business partner. 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. 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. With sharp growth in revenues, margins have increased from -89% in 2017 to -9.4% over the last twelve months. One of the ways it did this was by creating burgers that look like meat burgers down to the meat actually bleeding. In this scenario, Beyond Meat grows revenue by 37% compounded annually (which results in NOPAT growing 42% compounded annually) for the next 12 years. There are currently 7 million shares sold short, which equates to 9% of shares outstanding and just over one day to cover. Beyond Meat positioned its products as similar to animal meat as they could. Beyond Meat was the first company to sell plant-based burgers in grocery stores meat sections. In 2021 Beyond Meats revenue increased by14.2%to reach $464.7 million. After all, nothing could replace a real burger, could it? 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. What is Beyond Meats marketing strategy? 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. 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. 2 1 Comment. Plant-based eaters now account for 8% of the global population. For example, Kelloggs delayed the launch of its first round of Incogmeato products due to the COVID-19 pandemic. 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. These days, fewer investors pay attention to fundamentals and the red flags buried in financial filings. This scenario represents the minimum level of performance required not to destroy value. While comprising only 5% of its total revenue, Tyson outspent Beyond Meats SG&A by 20 times over the TTM. DOI: 10.2991/assehr.k.211209.003. 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. In2016 Whole Foods decided to give the company a chance by placing Beyond Meat in its meat section. The QSR is looking to get the lion's share of the meat substitute market with Beyond Meat. It began trading at $25/share on the Nasdaq stock exchange and ended the day at $65.75.