From the beginning Beyond Meat had a vision for its business that was much broader than any of its predecessors. The Double Distribution Canal: A Major Strength. This adjustment represents 7% of Beyond Meats market cap. However, the improvement in Beyond Meat's margins has been eye-popping. Invest better with The Motley Fool. In the second quarter, U.S. retail sales (mostly through grocery channels) almost tripled to $90 million, while foodservice sales in the U.S. plunged by 61% to $6.5 million. Beyond Meat Continues to Strengthen its Global Innovation Capabilities Part of Beyond Meats strategy is to redefine what the best source of protein is. It looks like meat, tastes like meat, and even feels like meatbut its made entirely of plants. Should Kellogg continue to push the marketing of Incogmeato and swiftly gain customers, investors may kiss the ultra-high expectations baked into BYND goodbye. Beyond Meat just IPOd last year, it is very interesting to me to see that it is a 9.30B company as of today. 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. In any case, I view recent moves as encouraging as Beyond makes moves to improve its footing to grow as a . Among the items Beyond Meat excludes when calculating its adjusted EBITDA are equity-based compensation, restructuring expenses, and a vague line item labeled other. Beyond Meat went from very dark and meat-like packagings to a fresher and smoother look. Although its products are plant based Beyond Meats marketing does not explicitly call that out. Join the Team | Beyond Meat Careers | Beyond Meat 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. For reference, Beyond Meats invested capital has increased by an average of $84 million (28% of 2019 revenue) over the past two years. 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 doesnt matter what industry your brand is in theres always a chance consumers wont take to your product or service. In 2014 they developed their first simulated beef product and expanded their presence from 1,500 to 6,000 stores in the US. Figure 8: Current Valuation Implies Massive Revenue Growth, Significant Downside in a More Realistic Scenario. 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. Beyond is working to streamline its operations and reverse declining sales. The following fund receives an unattractive rating and allocates significantly to BYND. This does not boil down to just knowledge on slaughter houses, animal conditions, bacteria etc. 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. 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. Expand the definition of your target market. 4 Challenges That Could Hurt Beyond Meat Stock | The Motley Fool . Beyond Meat Announces New Executive Leadership Appointments to When vegan meat alternatives first started to appear on the market, many people saw them as a fad. 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 . This is one of the biggest first-day pop-ups in recent history. Yet Beyond Meat's management made a critical decision during the second quarter to change course on product distribution. Whos to say that its red meat? Though BYNDs margins remained negative at close to -13% in 2020 (due to the impact of the pandemic), the companys operations are expected to improve and turn profitable in 2022, with projected margins of 3%. Weve previously shown how linking executive compensation to faulty metrics such asadjusted EBITDAcan lead to the destruction of shareholder value. [1]My firms core earnings are a superior measure of profits, as demonstrated inCore Earnings: New Data & Evidencea paper by professors at Harvard Business School (HBS) & MIT Sloan. Now, lets proudly assume what they are: a plant-based burger, extracting plant proteins to make a tasty and healthy burger. Opinions expressed by Forbes Contributors are their own. 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 . A new marketing strategy will play up the health and sustainability benefits of Beyond Meat, Brown said. Plus, they created a new category by being one of the first to do it and do it right. Instead of drawing attention to a product that consumers didnt love, they simply discontinued it and slowly fazed it out of supermarkets. And if this happens, you need to have others you can roll out. Do you like this content? Each implied price is based on a goal ROIC assuming different levels of revenue growth. More and more meat-eaters and flexitarians are looking to plant-based products to offset their carbon footprints and help them live a more sustainable lifestyle. 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.. 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 year also saw Beyond Meat join forces with Mcdonalds to develop their McPlant option. Measuring Brand Awareness As Told By Marketing Experts, journalists who actually tasted the chicken reported. This would, in turn, take BYNDs market cap to about $14 billion by 2023, from $9.6 billion currently. Beyond Meat Reports Fourth Quarter and Full Year 2020 Financial This assumption is highly unlikely but allows us to create best-case scenarios that demonstrate how high expectations embedded in the current valuation are. 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. In 2021 Beyond Meat's revenue increased by 14.2% to reach $464.7 million. 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. After adjusting for this liability, I can model multiple purchase price scenarios. 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. One of Beyond Meat's biggest and earliest investors was Tyson Foods, which had a 5 percent stake in 2016, later raised to 6.52 percent. Get the latest information and insights into the world of brand. Beyond Meat revamps its retail strategy, hires new marketing executive 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, Kelloggs appears it is ready to launch Incogmeato and recently partnered with Postmates to deliver free Incogmeato samples to residents of Denver and Dallas. While consumer interest in protecting the environment or having a healthier lifestyle continues to grow it doesnt always mean consumption follows. Figure 7 compares the firms implied future NOPAT in this scenario to its historical NOPAT. With these headwinds Beyond Meat had to convince meat lovers that its products passed the test. First of all, think of the big picture when it comes to segmentation: who will really buy your products? 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. We can perceive more confidence from the company, in line with its media and advertising strategy. Beyond Meat's marketing strategy is to convert carnivores into occasional vegans. When I use myreverse discounted cash flow (DCF) modelto analyze the expectations implied by the stock price, BYND appears significantly overvalued. Weve tried to run straight at the question: is a plant-based meat sufficient for humans to be vital and robust,saysBrown. 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. 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. 5 Lessons for Food Startups From Beyond Meat's Stunning Success 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. 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. This is, in fact, after BYND partnered with Starbucks, Yum Brands, and Sinodis. Figure 9: BYND Has Large Downside Risk: DCF Valuation Scenario. Since going public in early May, Beyond Meat's stock has soared more than 450 percent and its market value is over $8 billion. Beyond Meat Inc. 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. Disclosure: David Trainer, Kyle Guske II, and Matt Shuler receive no compensation to write about any specific stock, sector, style, or theme. Beyond Meat Is On Its Path To Irrelevance - SeekingAlpha This is a full-time position, reporting to the Chief Legal Officer. 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. As revenue slides, Beyond Meat CEO outlines strategy to improve Lets have a look at their most serious competitor: Impossible Foods. Leverage partners with larger platforms to expand reach. See Figure 8 for details. 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). Conference: 2021 3rd International Conference on Economic Management and Cultural . 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. Figures 10 and 11 show what I think Kraft Heinz should pay for Beyond Meat to ensure it does not destroy shareholder value. Beyond Meat constantly reinvests their earnings in further research and development, as well as in marketing, and in scaling up production and distribution. Plant based meats are not filled with dead animals which include bacteria growth and can contain other substances such as feces. Back in 1988 when John Mackey, co-founder of Whole Foodstried to get funding to expand his companyhe was rejected by many venture capitalists. 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. This copy is for your personal, non-commercial use only. Time to Buy? Mission | Beyond Meat For example, Tyson Food, one of the biggest and earliest investors in Beyond Meat, which had a 5% stake in 2016 exited in 2019. illustration, packages of Beyond Meat "The Beyond Burger" sit in a refrigerator, June 13, 2019 in the Brooklyn borough of New York City. Plant-based eaters now account for 8% of the global population. Beyond Meat ( NASDAQ: BYND) is streamlining its sales strategy, according to internal documents reviewed by the Wall Street Journal. Even with that success, Brown continues to think big . Plant based burgers are not new but Beyond Meat has been able to capture more of the mainstream market. While comprising only 5% of its total revenue, Tyson outspent Beyond Meats SG&A by 20 times over the TTM. Beyond Meat Announces New Executive Leadership Appointments to 2 Reasons to Avoid a Roth 401(k) for Your Retirement Savings, Warren Buffett's Latest $2.9 Billion Buy Brings His Total Investment in This Stock to $66 Billion in 4 Years, Want $1 Million in Retirement? Sign up for our Newsletter to receive free, insightful tips on all things brand! Various trademarks held by their owners. Another key marketing vehicle for the company is its partnerships with big brands likeMcDonalds, KFCand Pizza Hut. Beyond Meat's Price Approaches That of Real Beef However, some investors have growing concerns about the companys ability to maintain these results. What can you learn from this? They entered the restaurant market, and are currently sold to plant-based and mainstream restaurants.