However, the fundamentals reveal this stock is more style than substance. 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. 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. 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.. Per Figure 6, Beyond Meat's TTM adjusted EBITDA of $45 million is well above core earnings of $4 million. Time to Buy? What Could Beyond Meat Look Like In 2023? - Forbes 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. 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. Plant based options are the obvious choice. It began trading at $25/share on the Nasdaq stock exchange and ended the day at $65.75. 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. Prior to that Mr. Oghoghomeh served as Head of Recruitment Marketing - West Zone for Amazon, an eCommerce company from 2019 to 2021. If youre always innovating and looking towards the future, youll rarely be caught off guard. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Beyond Meat strategy 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. 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. 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. This is one of the biggest first-day pop-ups in recent history. 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. The first six months of 2020 have visibly transformed Beyond Meat's(BYND 5.83%) approach to marketing its plant-based, meat substitute products. Your brand, too, needs the liberty to change. Beyond Meat Reports Fourth Quarter and Full Year 2021 Financial Baseball player David Wright was the first celebrity to sign a contract with the brand. 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. Without having that partnership in the beginning Beyond Meat may have floundered for many years trying to build a customer base on its own. Plant based burgers are not new but Beyond Meat has been able to capture more of the . Beyond Meat's Competitive Advantage, Market Driver, and The - Medium Knowing that the meat is expired and poses a hazard to eat it. Beyond Meat founder, Ethan Brown, understood the place of meat in the collective perception very early on. At the end of 2Q20, Beyond Meat had $222 million of cash and cash equivalents on its balance sheet. Beyond Meat Stock (NASDAQ:BYND): Looking Beyond the Headwinds Tackle stereotypes about who your customers should be. 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. It doesnt matter what industry your brand is in theres always a chance consumers wont take to your product or service. Eating meat is associated with strength and power while a plant based diet is not, at least not for now. The mission of the company is focused on plant-based meat alternatives, using pea and other plant protein isolates. There are countless advertisements with men barbequing burgers or hanging out with their friends as they bond over their favourite protein, read meat. 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. Case in point, revenue grew 239% YoY in 2019, 141% YoY in 1Q20, and 69% YoY in 2Q20. Plant-based meats look like an attractive bet to play the future of food. Beyond Meat ( NASDAQ: BYND) is streamlining its sales strategy, according to internal documents reviewed by the Wall Street Journal. Beyond Meat, a producer of plant-based meat substitutes, was founded in 2009 in Los Angeles, California. In this scenario, Beyond Meat grows revenue by 37% compounded annually (which results in NOPAT growing 42% compounded annually) for the next 12 years. 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. These days, fewer investors pay attention to fundamentals and the red flags buried in financial filings. 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. 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. Plant based burgers are not new but Beyond Meat has been able to capture more of the mainstream market. Beyond Meat, the company that is making eating plant-based protein mainstream continues to grow at a fast pace. Low margins in an increasingly competitive industry leave Beyond Meat with less flexibility to compete on price or invest in marketing and R&D. Beyond Meat's Price Approaches That of Real Beef 5 Lessons for Food Startups From Beyond Meat's Stunning Success The Double Distribution Canal: A Major Strength. Corporate Governance | Beyond Meat, Inc. 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. The plant-based food market will grow bigger and bigger every year. 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". Michelle Amador - Sr. Director, Global Strategic Partnerships - Beyond Our goal is to give you the key to understanding Beyond Meats rapid success, to show you the hidden reasons for their success. Even with that success, Brown continues to think big . 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. Beyond Meat would rather investors focus onflawed non-GAAP metricssuch as adjusted EBITDA, which allow management to remove real costs of the business and to paint a rosier view of profits. Beyond Meat and the Competitive Landscape | Toptal January 2021. See the math behind this reverse DCF scenario. Plants come directly from the sun and reap the energy created from the sun. But what if youre looking for a more balanced portfolio instead? BEYOND MEAT ANNOUNCES NEW . Read the full post on my retail trends blog by clicking here. Beyond Meat is seeking a marketing, advertising, regulatory, and trademark attorney with 10-12 years of experience. Heres a high-quality portfolio to beat the market, with over 100% return since 2016, versus 55% for the S&P 500. Beyond Meats real breakthrough is not landing in the meat aisle or having celebrity endorsements but creating a plant based product people actually want to eat. BYND revenues saw a rise of 36.6% y-o-y in 2020, which was sharply lower than historical growth rates. 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). Founded in 1993 by brothers Tom and David Gardner, The Motley Fool helps millions of people attain financial freedom through our website, podcasts, books, newspaper column, radio show, and premium investing services. Beyond Meats case also shows that a marketing strategy is not fixed: it has to evolve along with the companys positioning. Beyond Meat: Changing Consumers' Meat Preference | Harvard Business The main difference is that Impossible Foods takes its proteins from soy whereas Beyond Meat extracts it from peas. 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. Beyond Meat is Wasting Its Advertising - Better Marketing Although its products are plant based Beyond Meats marketing does not explicitly call that out. However, some investors have growing concerns about the companys ability to maintain these results. Beyond Meat Hires Marketing Executive, Revamps Retail Strategy .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. Dow Jones Reprints at 1-800-843-0008 or visit www.djreprints.com. But what has allowed them to be so successful despite their setbacks? Beyond Meats massive revenue growth cannot last forever. For example, Kelloggs delayed the launch of its first round of Incogmeato products due to the COVID-19 pandemic. Here's how KFC is marketing its updated Beyond Meat faux - Ad Age 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. It began trading at $25/share on the Nasdaq stock exchange and ended the day at $65.75. But thats what BYNDs investors are betting will not happen! What can you learn from this? Remember the man-ish look of the burger boxes, the focus on the amounts of protein? This is a full-time position, reporting to the Chief Legal Officer. Entrepreneur, retail expert, strategy consultant and author. Expand the definition of your target market. To fight this incorrect belief, Ethan Brown launched a campaign featuring famous athletes. Create a great product. strategy uncovers and shares the "bold vision, . Beyond Meat Lab Where It Develops Plant-Based "Meat" - Business Insider 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. Evaluation of Options- Evaluating the options of Beyond Meat vs. regular meat. Distribution and use of this material are governed by In 2019, they partnered up with Dunkin Donuts to supply their Meatless Sausage for the breakfast chains sandwiches nationwide. 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. The QSR is looking to get the lion's share of the meat substitute market with Beyond Meat. What can you learn from this? The following fund receives an unattractive rating and allocates significantly to BYND. We believe there's a better way to feed our future. Beyond Meat stated that its mission is to push boundaries and disrupt. With a sound marketing strategy, Beyond Meat may be able to make its product cool again. The implied stock values in this scenario are significantly below Beyond Meats current price. The first six months of 2020 have visibly transformed Beyond Meat 's ( BYND -0.58%) approach to marketing its plant-based, meat substitute products. Especially when competitors will try to introduce products that may be better than the original. Figure 4: Expenses as % of Revenue: Beyond Meat 2Q19 vs. 2Q20, BYND Operating Expense As Of Revenue 2Q19 Vs. 2Q20. After adjusting for this liability, I can model multiple purchase price scenarios. Plant-based eaters now account for 8% of the global population. Devault, PA Operations - DEPA Production On-site. This indicates an extremely successful uptake by consumers. Organic growth along with benefits from the recent partnerships are expected to support continued healthy growth in retail as well as the restaurant segments of Beyond Meat, potentially taking the companys revenues to almost $1.1 billion by 2023. the stock is worth just $30/share today - a 57% . 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. 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. Plant-based foods are more than a fad, they are a huge economic trend. 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. Still, disputes aside, Beyond Meat has been doing very well these past few years. All rights reserved. Plus, they created a new category by being one of the first to do it and do it right. Figure 1: Consensus Revenue Growth Estimates: 2020-2025, 2020-2025 revenue growth rates based on consensus estimates, Competition is Plentiful and Has Competitive Advantages. With sharp growth in revenues, margins have increased from -89% in 2017 to -9.4% over the last twelve months. Figure 11 shows the implied values for Beyond Meat assuming Kraft Heinz wants to achieve an ROIC on the acquisition that equals 6%. But beneath these numbers, the dynamics of Beyond Meat's business model have been radically altered by its response to the COVID-19 pandemic. 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. Digital Marketing @ Beyond Meat | Award-Winning Author | Driving Success Through Tech, Creativity, & Strategy Pittsburgh, Pennsylvania, United States 631 followers 500+ connections But at this stage of Beyond Meat's growth, converting new customers remains the utmost priority. 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. While comprising only 5% of its total revenue, Tyson outspent Beyond Meats SG&A by 20 times over the TTM. Option grants and RSUs directly align executives interests with the price of the companys shares and not necessarily with creating shareholder value. 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. Figure 7: Current Valuation Implies Drastic Profit Growth. 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.