In this scenario, Beyond Meat grows revenue by 37% compounded annually (which results in NOPAT growing 42% compounded annually) for the next 12 years. 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%. 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. KFC and Beyond Meat are partnering with YouTube star and influencer Liza Koshy to help reveal the debut. 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. Many people can not even tell the difference between real meat and Beyond Meat. From the Beyond Burger to Beyond Sausage, and their latest Beyond Meatballs this brand is really on a roll. They have sharply improved from -93.3% in 2016 to -4.2% in 2019. Brown. 2 1 Comment. By Tricia McKinnon. 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. The Double Distribution Canal: A Major Strength. 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. 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. Beyond Meat stock has staged a dramatic recovery in January, rising by more than 50% since the end of last year. Figure 4: Expenses as % of Revenue: Beyond Meat 2Q19 vs. 2Q20, BYND Operating Expense As Of Revenue 2Q19 Vs. 2Q20. The difference with other plant-based patties is that their name is a synonym of quality for their clients. Like Comment Share . 2023 Latana GmbH. These launches create a lot of buzz and put Beyond the Meat on the map. 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. Beyond Meat Inc. is revamping its retail sales strategy to center on five major grocers and hiring a new marketing executive as part of .css-1h1us5y-StyledLink{color:var(--interactive-text-color);-webkit-text-decoration:underline;text-decoration:underline;}.css-1h1us5y-StyledLink:hover{-webkit-text-decoration:none;text-decoration:none;}an effort to reinvigorate the plant-based food makers business. Create a great product. Instead, it avoids labelling its products as vegan even though they are. Many undercover operations are conducted to get footage and investigate what is really going on inside the slaughter houses. While many consumers are not willing to pay an average of $3 more a pound for a. Along with continued marketing investment, the plant-based company strikes partnerships with McDonald's and Yum! Moreover, the existing plant-based burgers had a disastrous reputation, they were ironically said to have as much flavor as the box they were in. Beyond Meat had to position itself as different from them as possible. Eating meat is associated with strength and power while a plant based diet is not, at least not for now. This is very rare: imagine if menus displayed all the product brands they use to cook the dishes you eat. Instead of drawing attention to a product that consumers didnt love, they simply discontinued it and slowly fazed it out of supermarkets. Despite less transparency, I know that Beyond Meats executive compensation plan consists of a cash bonus, option grants, and restricted share units (RSUs). Attracted by Beyond Meats impressive growth rates and soaring market value, multiple competitors are entering the alternative meat industry. Plant based burgers are not new but Beyond Meat has been able to capture more of the mainstream market. The plant-based food market will grow bigger and bigger every year. Figures 10 and 11 show what I think Kraft Heinz should pay for Beyond Meat to ensure it does not destroy shareholder value. In 2019, they partnered up with Dunkin Donuts to supply their Meatless Sausage for the breakfast chains sandwiches nationwide. 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. 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. Over the TTM period, FCF is -$164 million. Another key marketing vehicle for the company is its partnerships with big brands likeMcDonalds, KFCand Pizza Hut. 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. First, investors need to know that Beyond Meat has a large liability that makes it more expensive than the accounting numbers would initially suggest. 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 order to increase its manufacturing capacity, in June 2018, Beyond Meat opened a second production facility in Columbia, Missouri and a third in El Segundo, California. Why did it work for them? 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. Dow Jones Reprints at 1-800-843-0008 or visit www.djreprints.com. Tackle stereotypes about who your customers should be. Prior to that Mr. Oghoghomeh served as Head of Recruitment Marketing - West Zone for Amazon, an eCommerce company from 2019 to 2021. Resourceful, strategic, and self-directed leader with a proven record of achievement in global account management, business development and sales strategy leadership. Extensive background in CPG . There are currently 7 million shares sold short, which equates to 9% of shares outstanding and just over one day to cover. Now, information and videos are easily assessable to people of all ages to make a truly informed decision on healthy options such as plan-based meat. The alternative meat producer is reportedly focusing its retail . Making the world smarter, happier, and richer. 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, the poultry producer exited earlier this year . The company's second-quarter 2020 earnings report, released Tuesday after the markets closed, revealed that it's still experiencing rampant growth. 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. 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. 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. 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. Impossible Foods sells slightly different products: Impossible Burger, Impossible Pork, Impossible Sausage. We're here to help brands make better marketing decisions by delivering world-class, scalable insights. With sharp growth in revenues, margins have increased from -89% in 2017 to -9.4% over the last twelve months. Lots of small companies have also emerged and targeted the same audience, such as Purple Carrot or Sunfed Meats. It looks like meat, tastes like meat, and even feels like meatbut its made entirely of plants. Beyond Meat will face difficulty maintaining an innovative edge over its peers, who already spend much more on research and development (R&D). 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). Beyond Meat stated that its mission is to push boundaries and disrupt. To fight this incorrect belief, Ethan Brown launched a campaign featuring famous athletes. While consumer interest in protecting the environment or having a healthier lifestyle continues to grow it doesnt always mean consumption follows. Previously, people were limited to information they see on television which is in the best interests of companies that can afford those ad campaigns. 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. However, the fundamentals reveal this stock is more style than substance. Back in 1988 when John Mackey, co-founder of Whole Foodstried to get funding to expand his companyhe was rejected by many venture capitalists. Continue reading your article witha WSJ subscription, Already a member? Knowing that the meat is expired and poses a hazard to eat it. Beyond Meat, therefore, accomplished something huge: its name is enough to make people reassured about the quality and taste. Stun is a creative branding agency. Production Supervisor - 2nd Shift. Several of Beyond Meats competitors, including Hormel, Nestle, Kellogg, Tyson, Kroger, ConAgra, and Kraft Heinz, enjoy key competitive advantages: These advantages are very important and very difficult, if not impossible, for new entrants like Beyond Meat to match or overcome in the near term, if ever. Changes that have inspired the birth of Beyond Meat is the increased demand on plant-based products. 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. 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. Disclosure: David Trainer, Kyle Guske II, and Matt Shuler receive no compensation to write about any specific stock, sector, style, or theme. We can spot changes in the design since their arrival. 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. Looking ahead to 2021, consensus earnings estimates are a much higher $0.47/share. Beyond Meat, the company that is making eating plant-based protein mainstream continues to grow at a fast pace. 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. These days, fewer investors pay attention to fundamentals and the red flags buried in financial filings. Figure 10: Implied Acquisition Prices for Value-Neutral Deal. Yet Beyond Meat's management made a critical decision during the second quarter to change course on product distribution. While Beyond Meat could continue to rally, it faces four challenges that. word of mouth. This allows consumers to make their own informed decision. The following fund receives an unattractive rating and allocates significantly to BYND. Instead Beyond Meat fought for placement within the meat section of grocery stores. You can find Beyond Meat in many places from small restaurants to national chains but what really accelerated its growth in the beginning was its partnership with Whole Foods. For example, Kelloggs delayed the launch of itsfirst roundof Incogmeato products due to the COVID-19 pandemic. Many people do not know that eating meat is not only eating meat, but eating the history in which the meat came from. Showing that meat is not necessary to enjoy the same flavors while reaping more plant-based benefits. 8 Facts About Pelotons Marketing Strategy You Need to Know, Dirty Lemons Marketing & Growth Strategy, How it Became a Success, Crocs Marketing Strategy. 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. 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. 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. By focusing on their fresh foods, like their Beyond Burger patties which many agreed pulled off the meatless meat trick more convincingly they were able to put their time and effort into a product that was going to make them more successful in the long run. 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. The founder, Ethan Brown, said in June that the companys objective is to make plant-based meat cheaper than animal protein. A new marketing strategy will play up the health and sustainability benefits of Beyond Meat, Brown said. Each implied price is based on a goal ROIC assuming different levels of revenue growth. 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. 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. 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. 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. In the first quarter of 2019, Beyond Meat's first as a public company, its gross profit was just 26.8% of net revenue. Should Kellogg continue to push the marketing of Incogmeato and swiftly gain customers, investors may kiss the ultra-high expectations baked into BYND goodbye. 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. Sign up for our Newsletter to receive free, insightful tips on all things brand! Engineered plant-based burger patties from food, company Beyond Meat are visible on shelves among other meat alternatives at a grocery store in San Ramon, California, August 28, 2019. 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. A lot of people are trading so I know a lot of people are interested in the future of this company. 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. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. 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. 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. Digital Marketing @ Beyond Meat | Award-Winning Author | Driving Success Through Tech, Creativity, & Strategy Pittsburgh, Pennsylvania, United States 631 followers 500+ connections This copy is for your personal, non-commercial use only. Beyond Meat also has big contracts with fast-food chains, as mentioned before, which is a distribution canal bringing lots of cash flow. 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. The redistribution of cash flow to its investors is a challenge. People are able to do extensive research on problems after recognizing that there is an issue. With a sound marketing strategy, Beyond Meat may be able to make its product cool again. Figure 11: Implied Acquisition Prices to Create Value. 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. With a sound marketing strategy, Beyond Meat may be able to make its product cool again. 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. The key variables are the weighted average cost of capital (WACC) and ROIC for assessing different hurdle rates for a deal to create value. Beyond Meat founder, Ethan Brown, understood the place of meat in the collective perception very early on. If Beyond Meat created the healthiest plant based products that dont taste very good then it wouldnt be in business very long. 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. How did Beyond Meat become the leader it is today? For example, Tyson Food, one of the biggest and earliest investors in Beyond Meat, which had a 5% stake in 2016 exited in 2019. By shifting from animal to plant-based meat, we can positively affect the planet, the environment, the climate and even ourselves. While I chose Kraft Heinz, analysts can use just about any company to do the same analysis. All rights reserved. Heres a high-quality portfolio to beat the market, with over 100% return since 2016, versus 55% for the S&P 500. This has come from the increased consumer-knowledge on healthy products, plant-based diets,. 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. 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. 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. After all, the positive choices we make every day - no matter how small - can have a great impact on our world. Part of this shift happened without much intervention by management, as consumption in restaurants and other institutional foodservice outlets has plummeted since the spring, while at-home consumption has soared. Figure 9: BYND Has Large Downside Risk: DCF Valuation Scenario. 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. Figure 6: Beyond Meats Adjusted EBITDA Misleads on Profitability, BYND Adjusted EBITDA Misleads On Profitability, Doing the Math: Valuation Implies Significant Disruption of the Entire Meat Industry. Beyond Meatis one of them for the plant-based segment. Find out how 3 brands use customer data to find success! What can you learn from this? Koshy has 29.5 million followers on TikTok and 17.5 million fans on YouTube. on July 4th, eating a hot dog with your family. Concentrating on the health market, they were able to target a broad range of people seeking a better meat option than real meat. As of December 31, 2020, Beyond Meat had products available at approximately 122,000 retail and foodservice outlets in over 80 countries worldwide. Sounds too good to be true, right? revenue grows at consensus rates in 2021, 2022, and 2023, and. 1. For comparison, this scenario implies Beyond Meat would generate more sales than incumbent competitors such as Pilgrims Pride (PPC), ConAgra Foods (CAG), and Hormel Foods (HRL) in their last fiscal years. Eating meat has long been associated with masculinity. Measuring Brand Awareness As Told By Marketing Experts, journalists who actually tasted the chicken reported. This year also saw Beyond Meat join forces with Mcdonalds to develop their McPlant option. While Tyson Foods posted almost 5% margin in FY2020 (ending 3rd Oct, 2020), the company is a dominant force in the market with its size being significantly larger in comparison, which makes it probably unreasonable to expect similar margins for Beyond Meat, which has still not made any profits. 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. Since going public, four of its six quarters have shown improvement from. If you want to stay up-to-date on the latest news in the plant-based market, to learn about the most recent innovations as they come out, do not hesitate tofollow us. The main difference is that Impossible Foods takes its proteins from soy whereas Beyond Meat extracts it from peas. Beyond Meat might be the pioneer in this segment, but now it faces fierce competition. Plus, they created a new category by being one of the first to do it and do it right. *Average returns of all recommendations since inception. 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. Also, these meat products are offered by themselves at the grocery stores. illustration, packages of Beyond Meat "The Beyond Burger" sit in a refrigerator, June 13, 2019 in the Brooklyn borough of New York City. A vegan burger that bleeds. Per Figure 6, Beyond Meats TTM adjusted EBITDA of $45 million is well above core earnings of $4 million. The Impossible Foods start-up was founded in 2011 in California by Patrick O. Beyond Meat has earned a premium name thanks to its marketing strategies, but this premium is too much. In any case, I view recent moves as encouraging as Beyond makes moves to improve its footing to grow as a . . Sustainable Competitive Advantage- Beyond Meats formula for the perfect flavoring to taste just like a real burger. They began targeting not only vegetarians and vegans, but also and mainly meat-eaters; flexitarians. Its an era of growth for the still young start-up. 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. past presidents of southwestern baptist theological seminary, 285 main street, san francisco, ca 94105,