However, one of the biggest deal breakers for potential. 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. Apply. Making the world smarter, happier, and richer. Over the past two years, the firm has burned a cumulative $179 million (2% of market cap) in FCF. However, the lack of fervor for their first product did nothing to stop Beyond Meat from trudging forward. Management's flexibility and willingness to alter the company's go-to-market strategy during the era of COVID-19 has the potential to pay off handsomely over a multiyear horizon. 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. Like Comment Share . Still, disputes aside, Beyond Meat has been doing very well these past few years. To fight this incorrect belief, Ethan Brown launched a campaign featuring famous athletes. Plant-based meats look like an attractive bet to play the future of food. I would prefer Beyond Meat align executives interests with shareholders interests and link executive compensation with improving ROIC, which isdirectly correlated with creating shareholder value. Figure 10: Implied Acquisition Prices for Value-Neutral Deal. Figure 3: Operating Expense as % of Revenue: Beyond Meat vs. Considering our revenue projections of roughly $1.1 billion and 6% margins, almost $66 million in net income is possible by 2023. Beyond Meat entered into a partnership with PepsiCo. 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. 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. This scenario represents the minimum level of performance required not to destroy value. Since its high-flying IPO at $46, this stock has soared to $135. The emphasis on the grocery channel will now almost certainly evolve into a long-term focal point for Beyond Meat. 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". 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. Beyond Meatis one of them for the plant-based segment. But what has allowed them to be so successful despite their setbacks? The Motley Fool has a disclosure policy. This would make growth in Beyond Meats stock price a real possibility in the next two years, taking its stock price to $200. Stage of Market Lifestyle- The stage of the market lifestyle will influence the company on a few different categories. 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. last yearwhere it will: develop, produce and market snacks and beverages made from plant-based protein bringing together Beyond Meats innovation expertise with PepsiCos marketing and commercial capabilities. PepsiCo is known for its marketing prowess and just working with PepsiCo will expand Beyond Meats reach. Stun is a creative branding agency. 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. 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. Opinions expressed by Forbes Contributors are their own. Beyond Meats profitability ranks at the bottom of this peer group. 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. Competitors, Serious Uphill Battle for Beyond Meat to Improve Profitability. Beyond Meat, Inc. (NASDAQ: BYND) is one of the fastest growing publicly-traded food companies in the United States, offering a portfolio of revolutionary plant-based proteins made from simple ingredients without GMOs, bioengineered ingredients, hormones, antibiotics or cholesterol. For example. We can spot changes in the design since their arrival. If you think about the first time you heard about Beyond Meat it very well many have been when the product launched at a large fast food chain. Net revenues were $406.8 million, an increase of 36.6% year-over-year. Dont be afraid to really study the competition and pay attention to all the little details that have made them successful. . The company launched the Impossible Burger in 2016. Over 2Q20, Beyond Meat removed $1.5 million (1% of revenue) in other expenses when calculating adjusted EBITDA. Now, lets proudly assume what they are: a plant-based burger, extracting plant proteins to make a tasty and healthy burger. Nope, its just Beyond Meat. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services. This new knowledge of healthy vs. unhealthy created a new market drive for healthy products. This is rather than Beyond Meat actually creating a meat brand that is real meat. Beyond Meat was one of the most successful IPOs (Initial Public Offerings) of 2019. This created a need for plant-based foods to replace the broken system of meats. 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. 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. Instead, it avoids labelling its products as vegan even though they are. After much anticipation, Beyond Meat announced a three-year partnership with McDonalds in February 2021, under which BYND will be McDonalds preferred supplier for the patty in the McPlant, a new plant-based burger being tested in select McDonalds markets globally. 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. Plant-based foods are more than a fad, they are a huge economic trend. If yes (which is the most common case), you can sell them to way more people and have an even greater impact. Heres a quick summary for noise traders when analyzing BYND: Executive Compensation Adds Additional Risk. With a sound marketing strategy, Beyond Meat may be able to make its product cool again. Beyond Meat was one of the most successful IPOs (Initial Public Offerings) of 2019. Why? Dollar figures in millions. You can see all the adjustments made to Beyond Meats balance sheethere. 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. In 2021 Beyond Meats revenue increased by14.2%to reach $464.7 million. 1. Eating meat has long been associated with masculinity. 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. About 70% of the global population is cutting down its meat consumption. Instead, they persevered. 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. However, the fundamentals reveal this stock is more style than substance. 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. Attracted by Beyond Meats impressive growth rates and soaring market value, multiple competitors are entering the alternative meat industry. A lot of people are trading so I know a lot of people are interested in the future of this company. Do you like this content? It is better to create a plant-based meat product, not only because of meat expiration issues, but bacterial issues with animals, mad cow disease, and so many other factors that clearly make eating plants natural to humans and such a better option. Beyond Meat uses a robot to imitate the process of chewing. Acquisitions completed at these prices would be truly accretive to Kraft Heinzs shareholders. revenue grows at consensus rates in 2021, 2022, and 2023, and. Changes that have inspired the birth of Beyond Meat is the increased demand on plant-based products. revenue grows 24% a year from 2023-2027 (continuation of 2023 consensus), then. Beyond Meats success comes partially from the fact that it has been able to evolve alongside or prior to consumer demand. 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). The following fund receives an unattractive rating and allocates significantly to BYND. Koshy has 29.5 million followers on TikTok and 17.5 million fans on YouTube. This is one of the biggest first-day pop-ups in recent history. word of mouth. Looking ahead to 2021, consensus earnings estimates are a much higher $0.47/share. This adjustment represented 3% of reported net assets. Beyond Meats massive revenue growth cannot last forever. How? The companys marketing strategy is multiple layers one and has evolved over time, to keep up with the market trend. How did Beyond Meat become the leader it is today? Along with continued marketing investment, the plant-based company strikes partnerships with McDonald's and Yum! Published May 20, 2021. This is one of the biggest first-day pop-ups in recent history. (Photo Illustration by Drew Angerer/Getty Images). Low margins in an increasingly competitive industry leave Beyond Meat with less flexibility to compete on price or invest in marketing and R&D. At its TTM FCF burn rate, the firm has enough cash to operate for just over 16 months before needing additional capital. Total revenue jumped by 69% against the prior-year quarter to $113.3 million. 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. Per Figure 5, Beyond Meat saw significant improvement in profitability in 2018, but the improvement was short lived. To illustrate, the company repackaged a portion of its slow-moving food service inventory for retail consumption. Insider Trading and Short Interest Indicate Market Skepticism. 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. Per Figure 6, Beyond Meats TTM adjusted EBITDA of $45 million is well above core earnings of $4 million. Youre reading a free article with opinions that may differ from The Motley Fools Premium Investing Services. 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. Beyond Meat is seeking a marketing, advertising, regulatory, and trademark attorney with 10-12 years of experience. The alternative meat producer is reportedly focusing its retail . Leverage partners with larger platforms to expand reach. Time to Buy? The implied stock values in this scenario are significantly below Beyond Meats current price. Among the items Beyond Meat excludes when calculating its adjusted EBITDA are equity-based compensation, restructuring expenses, and a vague line item labeled other. 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. Brands. Eating plants is the best thing you can do for your diet. 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. Firstly, the gradual lifting of lockdowns in recent months will help the restaurant segment register strong growth along with sales from retail chains. From the Beyond Burger to Beyond Sausage, and their latest Beyond Meatballs this brand is really on a roll. Plant-based meat alternatives are on the rise and not just with vegans. 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. 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. 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. Beyond Meat Narrows Its Losses. Devault, PA Operations - DEPA Production On-site. But what if youre looking for a more balanced portfolio instead? 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. 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. 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. BYND revenues saw a rise of 36.6% y-o-y in 2020, which was sharply lower than historical growth rates. Creating effective ad campaigns is every marketers struggle but thats where customer data comes in. Beyond Meat Announces New Executive Leadership Appointments to Accelerate and Support the Company's Vision for Strategic Growth. 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. 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. 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. 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. Lets take a look at data from Germany. It began trading at $25/share on the Nasdaq stock exchange and ended the day at $65.75. The plant-based food market will grow bigger and bigger every year. At the end of 2Q20, Beyond Meat had $222 million of cash and cash equivalents on its balance sheet. 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. 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. This copy is for your personal, non-commercial use only. Production Supervisor - 2nd Shift. 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. 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. strategy uncovers and shares the "bold vision, . Our goal is to give you the key to understanding Beyond Meats rapid success, to show you the hidden reasons for their success. 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. Beyond Meat stock has staged a dramatic recovery in January, rising by more than 50% since the end of last year. Sign up for our Newsletter to receive free, insightful tips on all things brand! They entered the restaurant market, and are currently sold to plant-based and mainstream restaurants. But just how do these brands fare when it comes to brand awareness and consideration. 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. 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. 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. Highlighted by Beyond Meat 's stunning public debutwhich recorded a jaw-dropping 163% gain in its first daythe vegetarian alternatives category of foodtech is blowing up. With such high expectations, nearly any negative news could place Beyond Meats future earnings in doubt and cause shares to fall. 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. Nestl, JBS, and Tyson have all recently launched plant-based burgers. But instead of doubling down and spending millions of dollars more to try and fix a product receiving a lukewarm response at best Beyond Meat chose to pivot. For example, Kelloggs delayed the launch of itsfirst roundof Incogmeato products due to the COVID-19 pandemic. In any case, I view recent moves as encouraging as Beyond makes moves to improve its footing to grow as a . Some of the largest retailers in the world including Zara and H&M are in the fast fashion business which is not environmentally friendly. After all, the positive choices we make every day - no matter how small - can have a great impact on our world. Competitors. on July 4th, eating a hot dog with your family. 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. Back in 1988 when John Mackey, co-founder of Whole Foodstried to get funding to expand his companyhe was rejected by many venture capitalists. Figure 2: Beyond Meats Profitability vs. 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 . 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 .