Beyond Meat was one of the most successful IPOs (Initial Public Offerings) of 2019. This is one of the biggest first-day pop-ups in recent history. This allows consumers to make their own informed decision. Beyond Meat: Changing Consumers' Meat Preference | Harvard Business Distribution and use of this material are governed by 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. This makes a lot of sense since only2.7%of packaged meat sales in the United States are plant based. While many consumers are not willing to pay an average of $3 more a pound for a. 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. BEYOND MEAT ANNOUNCES NEW . Fiduciaries should avoid Beyond Meat Inc. (BYND). Changes that have inspired the birth of Beyond Meat is the increased demand on plant-based products. In2016 Whole Foods decided to give the company a chance by placing Beyond Meat in its meat section. 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. They both rearrange proteins to create their plant-based products. Beyond Meats success comes partially from the fact that it has been able to evolve alongside or prior to consumer demand. See allTrefis Featured AnalysesandDownloadTrefis Datahere. It provided Beyond Meat with one of the best forms of advertising, credibility. Now, if Beyond Meats revenues grow 2.7x, the P/S multiple will shrink by more than 60% from its current level, assuming the stock price stays the same, correct? Even with that success, Brown continues to think big . 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. 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. This created a need for plant-based foods to replace the broken system of meats. For instance, over the TTM, ConAgra spent 15 times more on SG&A than Beyond Meat. Concentrating on the health market, they were able to target a broad range of people seeking a better meat option than real meat. Since its high-flying IPO at $46, this stock has soared to $135. This does not boil down to just knowledge on slaughter houses, animal conditions, bacteria etc. But just how do these brands fare when it comes to brand awareness and consideration. Over 2Q20, Beyond Meat removed $1.5 million (1% of revenue) in other expenses when calculating adjusted EBITDA. According to the Partners In Leadership Happiness at Work survey, when employees are happier at work, 85% take more initiative. Of course, this is wrong, and our body adapts to whatever we give it. Per Figure 5, Beyond Meat saw significant improvement in profitability in 2018, but the improvement was short lived. If youre always innovating and looking towards the future, youll rarely be caught off guard. Are they only for vegans? Total revenue jumped by 69% against the prior-year quarter to $113.3 million. In 2019, they partnered up with Dunkin Donuts to supply their Meatless Sausage for the breakfast chains sandwiches nationwide. Moral of the story? 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. 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. Plant based burgers are not new but Beyond Meat has been able to capture more of the mainstream market. 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. But thats what BYNDs investors are betting will not happen! Another key marketing vehicle for the company is its partnerships with big brands likeMcDonalds, KFCand Pizza Hut. Our goal is to give you the key to understanding Beyond Meats rapid success, to show you the hidden reasons for their success. Plant-based burgers have existed for decades before Beyond Meat. Considering our revenue projections of roughly $1.1 billion and 6% margins, almost $66 million in net income is possible by 2023. For reference, Beyond Meats invested capital has increased by an average of $84 million (28% of 2019 revenue) over the past two years. But keep in mind to do this, youll need data on how consumers are responding to your competitors. While Beyond Meat could continue to rally, it faces four challenges that. About 70% of the global population is cutting down its meat consumption. No more comparison with animal meat products: Beyond Meat has nothing more to prove, its products are famous, recognized as good for the palate and for our health. Invest better with The Motley Fool. 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. Apart fromtotal debtwhich includes the operating leases noted above, the most notable adjustment to shareholder value was $572 million inoutstanding employee stock options. 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. 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. Plant-based meats look like an attractive bet to play the future of food. Beyond Meat strategy DOI: 10.2991/assehr.k.211209.003. 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. Beyond Meat (NASDAQ: BYND) was founded in 2009 by Ethan Brown, a Californian entrepreneur with an interest in environmental topics, who is also a vegan. Success of any of Beyond Meats competitors could also further threaten future profit growth for Beyond Meat. And while their Chicken-Free Strips were sold at big-name stores like Whole Foods all across the US, they were later discontinued in 2019. While comprising only 5% of its total revenue, Tyson outspent Beyond Meats SG&A by 20 times over the TTM. Beyond Meat ( NASDAQ: BYND) is streamlining its sales strategy, according to internal documents reviewed by the Wall Street Journal. Figure 9 compares the firms implied future NOPAT in this scenario to its historical NOPAT. Figure 3: Operating Expense as % of Revenue: Beyond Meat vs. Tackle stereotypes about who your customers should be. 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%. Beyond Meat Stock (NASDAQ:BYND): Looking Beyond the Headwinds Beyond Meats R&D in 2019 was just $21 million compared to $56 million for ConAgra and $97 million for Tyson over the same time. 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. You can see all the adjustments made to Beyond Meats balance sheethere. Instead Beyond Meat fought for placement within the meat section of grocery stores. To illustrate, the company repackaged a portion of its slow-moving food service inventory for retail consumption. Competitors, Serious Uphill Battle for Beyond Meat to Improve Profitability. Should Kellogg continue to push the marketing of Incogmeato and swiftly gain customers, investors may kiss the ultra-high expectations baked into BYND goodbye. Over the TTM period, FCF is -$164 million. Why did it work for them? 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. Therefore, restaurant owners tend to put the Beyond Meat logo on the menu when featuring their products. What can you learn from this? Whos to say that its red meat? If Beyond Meat created the healthiest plant based products that dont taste very good then it wouldnt be in business very long. 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. 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. . Research on Beyond Meat's Profitability Problems and Strategies. 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. Figure 7: Current Valuation Implies Drastic Profit Growth. People tend to associate meat with strength, with muscles. 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. Also, because of technology, people are becoming more and more informed about problems with big brands and the cancerous chemicals used in products for decades. However, the lack of fervor for their first product did nothing to stop Beyond Meat from trudging forward. Competition- Beyond Meat has created competition by completing innovating meat and how meat is viewed. In the first quarter of 2019, Beyond Meat's first as a public company, its gross profit was just 26.8% of net revenue. Despite less transparency, I know that Beyond Meats executive compensation plan consists of a cash bonus, option grants, and restricted share units (RSUs). The company's second-quarter 2020. Beyond Meat Is Down 93% From Its High. There are currently 7 million shares sold short, which equates to 9% of shares outstanding and just over one day to cover. Without having that partnership in the beginning Beyond Meat may have floundered for many years trying to build a customer base on its own. Like Comment Share . Time to Buy? Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services. our Subscriber Agreement and by copyright law. This is, in fact, after BYND partnered with Starbucks, Yum Brands, and Sinodis. Opinions expressed by Forbes Contributors are their own. Beyond Meat Announces New Executive Leadership Appointments to 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 vegan burger that bleeds. 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. Stage of Market Lifestyle- The stage of the market lifestyle will influence the company on a few different categories. 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. Cost basis and return based on previous market day close. revenue grows at consensus rates in 2021, 2022, and 2023, and. 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. 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. Dow Jones Reprints at 1-800-843-0008 or visit www.djreprints.com. Impossible Foods sells slightly different products: Impossible Burger, Impossible Pork, Impossible Sausage. This is a full-time position, reporting to the Chief Legal Officer. Nope, its just Beyond Meat. We hope this article helped you understand how crucial a good marketing strategy is for a companys success. The Double Distribution Canal: A Major Strength. Ads like this are created to convert the masses instead of targeting a niche market. They entered the restaurant market, and are currently sold to plant-based and mainstream restaurants. Therefore, they have a lot of time and competitive advantage before others to create the most well-known category before all other competitors. I assume revenue grows 47% in years four and five, the same as year three. Apply. 2023 Latana GmbH. Youre reading a free article with opinions that may differ from The Motley Fools Premium Investing Services. Its stock value gained 163% on the day of its stock introduction. Probably not, considering that revenues are likely to grow almost 2.7x by 2023, with net income turning positive in 2022 and growing steadily thereafter, generating continued returns for shareholders. Their main rival is the company Impossible Foods. Although its products are plant based Beyond Meats marketing does not explicitly call that out. Beyond Meat is Wasting Its Advertising - Better Marketing Plant based burgers are not new but Beyond Meat has been able to capture more of the . 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. Among the items Beyond Meat excludes when calculating its adjusted EBITDA are equity-based compensation, restructuring expenses, and a vague line item labeled other. And while there are a few ways to do this, brand monitoring software is your best bet, as it allows you to track your chosen brand KPIs for the target audiences that matter. This is one of the biggest first-day pop-ups in recent history. Stun is a creative branding agency. If you are wondering how Beyond Meat has been able to make strides where others havent consider these four elements of its marketing strategy. Additionally, when their Chicken-Free Strips were finally taken off the market in 2019, they did so quietly. Recent Improvement in Profitability Was Short-Lived. Each implied price is based on a goal ROIC assuming different levels of revenue growth. This vision can be found throughout Beyond Meats marketing collateral. Firstly, the gradual lifting of lockdowns in recent months will help the restaurant segment register strong growth along with sales from retail chains. When it comes to social causes brands still need to remember if the product isnt good no social cause, no matter how important can save it. Plants come directly from the sun and reap the energy created from the sun. 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. Even in the most optimistic of scenarios, Beyond Meat is worth less than its current share price. Extensive background in CPG . Beyond Meats profitability ranks at the bottom of this peer group. 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. But what has allowed them to be so successful despite their setbacks? 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. We can spot changes in the design since their arrival. . Beyond Meat stated that its mission is to push boundaries and disrupt. Instead of drawing attention to a product that consumers didnt love, they simply discontinued it and slowly fazed it out of supermarkets. This competitive disadvantage only makes Beyond Meats path to sustainable profitability that much more difficult. Things Are Only Getting Worse for Beyond Meat Stock. illustration, packages of Beyond Meat "The Beyond Burger" sit in a refrigerator, June 13, 2019 in the Brooklyn borough of New York City. But at this stage of Beyond Meat's growth, converting new customers remains the utmost priority.

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