Remember the man-ish look of the burger boxes, the focus on the amounts of protein? .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. Beyond Meat and Impossible Foods have many common points. This is a major strength: a high speed-to-market. First, consumers expectations for new products and innovation will rise over time. But what if youre looking for a more balanced portfolio instead? Prior to that Mr. Oghoghomeh served as Head of Recruitment Marketing - West Zone for Amazon, an eCommerce company from 2019 to 2021. (Photo Illustration by Drew Angerer/Getty Images). They entered the restaurant market, and are currently sold to plant-based and mainstream restaurants. Along with continued marketing investment, the plant-based company strikes partnerships with McDonald's and Yum! Opinions expressed by Forbes Contributors are their own. 2019: A Change In the Branding Strategy With the Arrival of Stun. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. 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. 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. word of mouth. BEYOND MEAT ANNOUNCES NEW . 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. With a sound marketing strategy, Beyond Meat may be able to make its product cool again. Beyond Meat has been working with them since February 2019. 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. Lets have a look at their most serious competitor: Impossible Foods. 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. The companys marketing strategy is multiple layers one and has evolved over time, to keep up with the market trend. 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. Beyond Meat stock has staged a dramatic recovery in January, rising by more than 50% since the end of last year. Many people do not know that eating meat is not only eating meat, but eating the history in which the meat came from. Figure 5: Beyond Meats Revenue & Core Earnings Since 2017. The superior scale of Beyond Meats peers will also challenge what the firm believes to be a critical competitive advantage its innovation. Plants come directly from the sun and reap the energy created from the sun. Figure 7: Current Valuation Implies Drastic Profit Growth. Beyond Meat, the company that is making eating plant-based protein mainstream continues to grow at a fast pace. 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. Success of any of Beyond Meats competitors could also further threaten future profit growth for Beyond Meat. According to the company, this package of 10 plant-based patties reduces the price of its burgers from nearly twice that of conventional burgers to a 20% premium. In this scenario, Beyond Meat would earn ~$12.5 billion (slightly more thanMarketsandMarkets2019 estimated global plant-based meat market size of $12.1 billion) in revenue in 2031, compared to $401 million TTM. Dont be afraid to really study the competition and pay attention to all the little details that have made them successful. Meditation apps have seen a boom in popularity over the past few years in the US but does their growth extend to Europe? Going forward, Beyond Meat will find it even more difficult to grow revenue and profits as competitors flood the market. 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. 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. However, the fundamentals reveal this stock is more style than substance. *Average returns of all recommendations since inception. Over the TTM period, FCF is -$164 million. Competitive Advantage- Because Beyond Meat was one of the first to actually create a meat patty from plant proteins, they were able to turn it into the now known Beyond Burger. A year later, Beyond Meat developed its first beef product made from plant proteins, which later morphed into its now-famous Beyond Burger in 2016. This is introducing the category and it was picked up by Burger King. This indicates an extremely successful uptake by consumers. Plant based burgers are not new but Beyond Meat has been able to capture more of the . One of the most notable adjustments was $11 million inoperating leases. Beyond Meat positioned its products as similar to animal meat as they could. In total, the global market for meat substitutes is set to grow to $23.4 billion by 2024, according to market research company Euromonitor. 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 . 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. 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. People are perfectly happy eating vegan food as long as they dont know thats what theyre doing,saysCarol J. Adams, author ofThe Sexual Politics of Meat. By shifting from animal to plant-based meat, we can positively affect the planet, the environment, the climate and even ourselves. Purchase Decision- When consumers are informed of the evaluation of options, information is readily available, and they have recognized a problem, it is so easy for consumers to make a newly informed decision. Beyond Meat, therefore, accomplished something huge: its name is enough to make people reassured about the quality and taste. 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. What kind of external factors/changes do you think may have inspired the birth of Beyond Meat? Beyond Meat went from very dark and meat-like packagings to a fresher and smoother look. By Christopher Lombardo. 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. Beyond Meats case also shows that a marketing strategy is not fixed: it has to evolve along with the companys positioning. Beyond Meat, which went public in the spring of 2019 and whose shares have fallen 16 percent this year, said it had completed a comprehensive greenhouse gas analysis that would be released in. Per Figure 5, Beyond Meat saw significant improvement in profitability in 2018, but the improvement was short lived. If yes (which is the most common case), you can sell them to way more people and have an even greater impact. This is not by accident but instead by design. Beyond Meat will face difficulty maintaining an innovative edge over its peers, who already spend much more on research and development (R&D). What can you learn from this? They have sharply improved from -93.3% in 2016 to -4.2% in 2019. 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. Lets take a look at data from Germany. This does not boil down to just knowledge on slaughter houses, animal conditions, bacteria etc. 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. Each implied price is based on a goal ROIC assuming different levels of revenue growth. 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. If youre always innovating and looking towards the future, youll rarely be caught off guard. At the end of 2Q20, Beyond Meat had $222 million of cash and cash equivalents on its balance sheet. As of December 31, 2020, Beyond Meat had products available at approximately 122,000 retail and foodservice outlets in over 80 countries worldwide. Opinions expressed by Forbes Contributors are their own. 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 . 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. Dow Jones Reprints at 1-800-843-0008 or visit www.djreprints.com. Evaluation of Options- Evaluating the options of Beyond Meat vs. regular meat. To illustrate, the company repackaged a portion of its slow-moving food service inventory for retail consumption. 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. To justify its current price of $135/share, Beyond Meat must immediately improve its NOPAT margin to 5% (same as Tyson and more than double its current margin of 2%). 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). Many undercover operations are conducted to get footage and investigate what is really going on inside the slaughter houses. Furthermore, Don Lee alleged significant concerns about food safety protocols concerning the raw materials that Beyond Meat sent. People tend to associate meat with strength, with muscles. This is very rare: imagine if menus displayed all the product brands they use to cook the dishes you eat. The future is one where the meat case is going to be called the protein case and consumers will be able to buy plant-based and animal-based protein side by side,saidEthan Brown, founder and CEO of Beyond Meat. Beyond Meat is seeking a marketing, advertising, regulatory, and trademark attorney with 10-12 years of experience. 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. 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. Combine revenue growth with the fact that Beyond Meats net income margins (net income, or profits after all expenses and taxes, calculated as a percent of revenues) are on an improving trajectory. Concentrating on the health market, they were able to target a broad range of people seeking a better meat option than real meat. Plant-based meats look like an attractive bet to play the future of food. Beyond Meat Narrows Its Losses. Success of any of Beyond Meats competitors could also further threaten future profit growth for Beyond Meat. We are providing energy for the body and we can pull it from a lot of different places. It represents what we feel is the first product that mainstream omnivores are willing to seek out and put at the center of their plate.. Measuring Brand Awareness As Told By Marketing Experts, journalists who actually tasted the chicken reported. Figures 10 and 11 show what I think Kraft Heinz should pay for Beyond Meat to ensure it does not destroy shareholder value. Sustainable Competitive Advantage- Beyond Meats formula for the perfect flavoring to taste just like a real burger. 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. In the first quarter of 2019, Beyond Meat's first as a public company, its gross profit was just 26.8% of net revenue. 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. There are limits on how much Kraft Heinz should pay for Beyond Meat to earn a proper return, given the NOPAT or free cash flows being acquired. 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. Recent Improvement in Profitability Was Short-Lived. 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.. The Double Distribution Canal: A Major Strength. Expand the definition of your target market. Even in the most optimistic of scenarios, Beyond Meat is worth less than its current share price. 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. With low margins and little control over the majority of distribution, I think shares can fall sharply from current levels. When the Chicken-Free Strips failed, it wasnt only about the taste something was just off. A vegan burger that bleeds. Are they only for vegans? 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 . 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. When vegan meat alternatives first started to appear on the market, many people saw them as a fad. By 2015, even Walmart was selling Beyond Meats plant-based products! This would, in turn, take BYNDs market cap to about $14 billion by 2023, from $9.6 billion currently. Instead, they persevered. Brown. Beyond Meat founder, Ethan Brown, understood the place of meat in the collective perception very early on. Furthermore, Beyond Meat has a history of significant free cash flow (FCF) burn that is unlikely to change anytime soon. 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. Nowadays, certain celebrities do more than advertise for the brand, some have become ambassadors for Beyond Meat, such as Byrie Irving, from the Boston Celtics. Founder and Tech Inventor at Princess Technologies. See Figure 8 for details.