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. For reference, Beyond Meats invested capital has increased by an average of $84 million (28% of 2019 revenue) over the past two years. Plant-based meat alternatives are on the rise and not just with vegans. 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. Extensive background in CPG . So, what can you learn from Beyond Meat's marketing strategy? The first six months of 2020 have visibly transformed Beyond Meat 's ( BYND -0.58%) approach to marketing its plant-based, meat substitute products. Case in point, revenue grew 239% YoY in 2019, 141% YoY in 1Q20, and 69% YoY in 2Q20. The companys marketing strategy is multiple layers one and has evolved over time, to keep up with the market trend. Plant based meats are not filled with dead animals which include bacteria growth and can contain other substances such as feces. We can perceive more confidence from the company, in line with its media and advertising strategy. People tend to associate meat with strength, with muscles. Figure 1: Consensus Revenue Growth Estimates: 2020-2025, 2020-2025 revenue growth rates based on consensus estimates, Competition is Plentiful and Has Competitive Advantages. 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. 8 Facts About Pelotons Marketing Strategy You Need to Know, Dirty Lemons Marketing & Growth Strategy, How it Became a Success, Crocs Marketing Strategy. The superior scale of Beyond Meats peers will also challenge what the firm believes to be a critical competitive advantage its innovation. Comprised of companies with strong revenue growth, healthy profits, lots of cash, and low risk, it has outperformed the broader market year after year, consistently. The Double Distribution Canal: A Major Strength. Valuation: I made $757 million of adjustments with a net effect of decreasing shareholder value by $513 million. 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. One of the most notable adjustments was $11 million inoperating leases. 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. Plant based options are the obvious choice. Our goal is to give you the key to understanding Beyond Meats rapid success, to show you the hidden reasons for their success. Per Figure 4, Beyond Meats operating expenses as a percent of revenue have actually increased over the past twelve months from 97% in 2Q19 to 107% in 2Q20. See Figure 8 for details. By Tricia McKinnon. This wasn't a cheap decision -- Beyond Meat incurred a charge of nearly $6 million to repack and reroute this inventory in response to consumer demand. There have been many stories of grocery story employees getting told by their bosses to take the expired meat and mix it with regular meat and put it back out there on the shelf. As we touched on earlier, not everything was easy for Beyond Meat they made their fair share of mistakes along the way. Beyond Meat and Impossible Foods have many common points. What is Beyond Meats marketing strategy? Beyond Meat had originally been sold in retail shops across the USA, then worldwide. word of mouth. Over the TTM period, FCF is -$164 million. Distribution and use of this material are governed by In2016 Whole Foods decided to give the company a chance by placing Beyond Meat in its meat section. It provided Beyond Meat with one of the best forms of advertising, credibility. 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. In this scenario, Beyond Meat grows revenue by 37% compounded annually (which results in NOPAT growing 42% compounded annually) for the next 12 years. Even though the firm doesnt necessarily hold logistical or technological advantages over its competitors, I think it helps to quantify what, if any, acquisition hopes are priced into the stock. They exploit their established brand engagement to build more brand equity, at a low cost, because they dont pay a cent for restaurants to make this kind of indirect advertising for them. It may even get heavier as more people understand healthy food from non-healthy food. Since going public, four of its six quarters have shown improvement from. illustration, packages of Beyond Meat "The Beyond Burger" sit in a refrigerator, June 13, 2019 in the Brooklyn borough of New York City. Made from "soy powder, gluten-free flour, carrot fiber and other ingredients", they used a food extrusion machine to create a chicken-like texture. Additionally, Beyond Meat is introducing its plant-based meatballs in Coles, the second largest supermarket chain in Australia with over 2,500 stores. Each of the above scenarios also assumes Beyond Meat is able to grow revenue, NOPAT, and FCF without increasing working capital or fixed assets. From the beginning Beyond Meat had a vision for its business that was much broader than any of its predecessors. 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. 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. Nope, its just Beyond Meat. + Follow. Theres no actual blood,instead beet juice isused but it does the trick. Time to Buy? We visited . Information Search- Consumers using this new information to do their own research on the history of slaughter houses and the conditions in which animals are being tortured and killed to create meat. Apply. Below are specifics on the adjustments I make based on Robo-Analyst findings in Beyond Meats 10-Q and 10-K: Income Statement: I made $33 million of adjustments, with a net effect of removing $21 million innon-operating income(5% of revenue). Disclosure: David Trainer, Kyle Guske II, and Matt Shuler receive no compensation to write about any specific stock, sector, style, or theme. Stun is a creative branding agency. Prior to that Mr. Oghoghomeh served as Head of Recruitment Marketing - West Zone for Amazon, an eCommerce company from 2019 to 2021. Often the largest risk to any bear thesis is what I call stupid money risk, which means an acquirer comes in and buys Beyond Meat at the current, or higher, share price despite the stock being overvalued. See the math behind this reverse DCF scenario. Why did it work for them? Expired Meat: https://youtu.be/ZxCT_D6HBd8, https://www.forbes.com/sites/greatspeculations/2020/09/14/competition-will-eat-beyond-meat-alive/#9d646992946b, https://www.cnbc.com/2019/08/21/whole-foods-ceo-john-mackey-plant-based-meat-not-good-for-your-health.html, https://www.cnbc.com/2020/09/14/beyond-meat-is-launching-meat-free-meatballs-in-grocery-stores.html, Female Entrepreneur. Plant-based meats look like an attractive bet to play the future of food. In 2014 they developed their first simulated beef product and expanded their presence from 1,500 to 6,000 stores in the US. Its stock value gained 163% on the day of its stock introduction. For reference, Beyond Meats TTM NOPAT margin is 2% and the TTM NOPAT margin of one of the largest food producers in the world, Tyson Foods, is 5%. They both rearrange proteins to create their plant-based products. Beyond Meat burgerseven have grill marks further convincing consumers that maybe it really is like meat. Weve tried to run straight at the question: is a plant-based meat sufficient for humans to be vital and robust,saysBrown. For non-personal use or to order multiple copies, please contact 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. It looks like meat, tastes like meat, and even feels like meatbut its made entirely of plants. 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. See the math behind this reverse DCF scenario. 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. 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. Beyond Meat, the company that is making eating plant-based protein mainstream continues to grow at a fast pace. Plant-based burgers have existed for decades before Beyond Meat. However, one of the biggest deal breakers for potential. For example, evaluating the conditions of the animals before death, the process in which the meat is processed, the drugs and antibiotics that the animals were treated with before getting slaughtered. 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%. First, investors need to know that Beyond Meat has a large liability that makes it more expensive than the accounting numbers would initially suggest. Beyond Meat was one of the most successful IPOs (Initial Public Offerings) of 2019. This report helps investors of all types see just how extreme the risk in BYND is based on: Growth Will Slow Down, but Competitors Wont. If Beyond Meat can improve its NOPAT margin to 5% (equal to Tysons TTM margin) and grow revenue at 61% in 2020, 55% in 2021, and 47% in 2022 (consensus estimates) and by 20% compounded annually thereafter, the stock has significant downside risk. 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. Sounds too good to be true, right? (Photo Illustration by Drew Angerer/Getty Images). While Beyond Meat could continue to rally, it faces four challenges that. Critical Details Found in Financial Filings by My Firms Robo-Analyst Technology. I believe this drive will continue and not stop. 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. 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. 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. If revenues expand 2.7x over the next few years, instead of the P/S shrinking from around 17x presently to less than 10x, a scenario where the P/S metric falls more modestly, perhaps to about 13x looks more likely, considering the fact that profitability is also projected to see sharp improvement. Their products are now sold in 17,000 grocery stores and 12,000 eateries. 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. After tying up with Dunkin soon after its IPO, Beyond Meat entered China in 2020. Figure 2: Beyond Meats Profitability vs. Also, seeing that a lot of slaughter houses will absolutely not let anyone come see the inside conditions that animals are facing. Economic earnings, which account for the unusual items on the income statement and . Plus, they created a new category by being one of the first to do it and do it right. Additionally, when their Chicken-Free Strips were finally taken off the market in 2019, they did so quietly. 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. 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. Below is a short list of some of Beyond Meats alternative meat competitors: This list is not exhaustive and doesnt include any of the traditional meat products that continue to garner a large share of consumer dollars. Its an era of growth for the still young start-up. 2 1 Comment. The first campaign, The Future of Protein, was launched in 2015. She has also held senior leadership roles across PepsiCo's North America business during her more than 15-year career at the food . 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. This created the need for healthy products. Success of any of Beyond Meats competitors could also further threaten future profit growth for Beyond Meat. 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. Plants come directly from the sun and reap the energy created from the sun. Also, these meat products are offered by themselves at the grocery stores. According to the Partners In Leadership Happiness at Work survey, when employees are happier at work, 85% take more initiative. 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. This created a need for plant-based foods to replace the broken system of meats. Invest better with The Motley Fool. Fourth Quarter 2021. Find out how 3 brands use customer data to find success! Plant based burgers are not new but Beyond Meat has been able to capture more of the . Figure 3: Operating Expense as % of Revenue: Beyond Meat vs. Placing its hamburgers and breakfast proteins in major quick-service restaurant chains was a logical approach to igniting brand awareness. I conservatively assume that Kraft Heinz can grow Beyond Meats revenue and NOPAT without spending any working capital or fixed assets beyond the original purchase price. We're here to help brands make better marketing decisions by delivering world-class, scalable insights. 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. Should Kellogg continue to push the marketing of Incogmeato and swiftly gain customers, investors may kiss the ultra-high expectations baked into BYND goodbye. Competition- Beyond Meat has created competition by completing innovating meat and how meat is viewed. June 4, 2021 . Nestl, JBS, and Tyson have all recently launched plant-based burgers. Before joining Beyond Meat, Mr. Oghoghomeh served as Senior Vice President, Brand Marketing at Red Bull from 2021 to February 2023. The key variables are the weighted average cost of capital (WACC) and ROIC for assessing different hurdle rates for a deal to create value. One of the most important pieces of furniture we own. Cost basis and return based on previous market day close. By shifting from animal to plant-based meat, we can positively affect the planet, the environment, the climate and even ourselves. 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 . Option grants and RSUs directly align executives interests with the price of the companys shares and not necessarily with creating shareholder value. 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. Learn how you can use Latana to improve your brand marketing and grow faster. DOI: 10.2991/assehr.k.211209.003. Some of the largest consumer food brands have followed suit. Heres a quick summary for noise traders when analyzing BYND: Executive Compensation Adds Additional Risk. Figure 11 shows the implied values for Beyond Meat assuming Kraft Heinz wants to achieve an ROIC on the acquisition that equals 6%. 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. This has come from the increased consumer-knowledge on healthy products, plant-based diets,. Balance Sheet: I made $290 million of adjustments to calculate invested capital with a net decrease of $228 million. Making the world smarter, happier, and richer. Beyond Meat has earned a premium name thanks to its marketing strategies, but this premium is too much. 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). 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. 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. To fight this incorrect belief, Ethan Brown launched a campaign featuring famous athletes. They did not service the vegan and vegetarian markets as traditional players did. Beyond Meat is seeking a marketing, advertising, regulatory, and trademark attorney with 10-12 years of experience. For example, Kelloggs delayed the launch of its first round of Incogmeato products due to the COVID-19 pandemic. It began trading at $25/share on the Nasdaq stock exchange and ended the day at $65.75. If yes (which is the most common case), you can sell them to way more people and have an even greater impact. They knew that vegans and vegetarians would use and love the product regardless if they targetted them because the products were so superior to what they were used to. revenue grows at consensus rates in 2021, 2022, and 2023, and. What kind of external factors/changes do you think may have inspired the birth of Beyond Meat? The mattress. The following fund receives an unattractive rating and allocates significantly to BYND. These features also convince consumers that Beyond Meat burgers are not your average veggie burgers which were never popular with mainstream consumers. Beyond Meat, a producer of plant-based meat substitutes, was founded in 2009 in Los Angeles, California. For this analysis, I choseKraft Heinz as a potential acquirer of Beyond Meat since it doesnt have a pea-protein based product like Beyond Meats and has a history of acquisitions. This would, in turn, take BYNDs market cap to about $14 billion by 2023, from $9.6 billion currently. Instead, due to theproliferation of noise traders, the focus tends toward technical trading tends while high-quality fundamental research is overlooked. When Beyond Meat was met with the failure of their Chicken-Free Strips their first real product they didnt fold. Learn More. . strategy uncovers and shares the "bold vision, . One of the ways it did this was by creating burgers that look like meat burgers down to the meat actually bleeding. 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. 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. 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. Changes that have inspired the birth of Beyond Meat is the increased demand on plant-based products. Youre reading a free article with opinions that may differ from The Motley Fools Premium Investing Services. 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. Vegans and vegetarians, on the contrary, are often perceived as struggling to get enough protein and iron daily, as unhealthy weaklings. https://www.wsj.com/articles/beyond-meat-hires-marketing-executive-revamps-retail-strategy-11675379688. Competitors. In any case, I view recent moves as encouraging as Beyond makes moves to improve its footing to grow as a . What can you learn from this? The larger the firm gets, the more difficult it becomes to achieve large year-over-year (YoY) growth rates. Brown. 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. Things Are Only Getting Worse for Beyond Meat Stock. Beyond Meat is a Los Angeles-based producer of plant-based meat substitutes, including vegan versions of burgers and sausages. Why? Opinions expressed by Forbes Contributors are their own. Sign up for our Newsletter to receive free, insightful tips on all things brand! To make the world smarter, happier, and richer. However, the poultry producer exited earlier this year . The plant-based food market will grow bigger and bigger every year. While I chose Kraft Heinz, analysts can use just about any company to do the same analysis. Instead, they persevered. There are several lessons to be learned from Beyond Meats story. 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. 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 . 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. 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. this also includes knowledge of every product that comes in contact with your body on a daily basis. 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. 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. 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. This vision can be found throughout Beyond Meats marketing collateral. 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. 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. Attracted by Beyond Meats impressive growth rates and soaring market value, multiple competitors are entering the alternative meat industry.