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. Stun is a creative branding agency. The company's second-quarter 2020 earnings report, released Tuesday after the markets closed, revealed that it's still experiencing rampant growth. In total, the global market for meat substitutes is set to grow to $23.4 billion by 2024, according to market research company Euromonitor. Evaluation of Options- Evaluating the options of Beyond Meat vs. regular meat. The founder, Ethan Brown, said in June that the companys objective is to make plant-based meat cheaper than animal protein. revenue grows at consensus rates in 2021, 2022, and 2023, and. One of the ways it did this was by creating burgers that look like meat burgers down to the meat actually bleeding. While consumer interest in protecting the environment or having a healthier lifestyle continues to grow it doesnt always mean consumption follows. Beyond Meat Stock (NASDAQ:BYND): Looking Beyond the Headwinds It may even get heavier as more people understand healthy food from non-healthy food. Beyond Meat's Price Approaches That of Real Beef Considering our revenue projections of roughly $1.1 billion and 6% margins, almost $66 million in net income is possible by 2023. However, one of the biggest deal breakers for potential. Beyond Meat's Competitive Advantage, Market Driver, and The - Medium With sharp growth in revenues, margins have increased from -89% in 2017 to -9.4% over the last twelve months. Without having that partnership in the beginning Beyond Meat may have floundered for many years trying to build a customer base on its own. 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. Beyond Meat is a Los Angeles-based producer of plant-based meat substitutes, including vegan versions of burgers and sausages. Figure 4: Expenses as % of Revenue: Beyond Meat 2Q19 vs. 2Q20, BYND Operating Expense As Of Revenue 2Q19 Vs. 2Q20. The following fund receives an unattractive rating and allocates significantly to BYND. Many people can not even tell the difference between real meat and Beyond Meat. Therefore, they have a lot of time and competitive advantage before others to create the most well-known category before all other competitors. Beyond Meat stock has staged a dramatic recovery in January, rising by more than 50% since the end of last year. Measuring Brand Awareness As Told By Marketing Experts, journalists who actually tasted the chicken reported. Furthermore, Don Lee alleged significant concerns about food safety protocols concerning the raw materials that Beyond Meat sent. By Christopher Lombardo. 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. Its stock value gained 163% on the day of its stock introduction. on July 4th, eating a hot dog with your family. 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. 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. 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. Beyond Meat burgerseven have grill marks further convincing consumers that maybe it really is like meat. Data by YCharts Kellogg ( K ) and Conagra ( CAG ) are already big established brands, that . 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. 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 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". Many people do not know that eating meat is not only eating meat, but eating the history in which the meat came from. News Corp is a global, diversified media and information services company focused on creating and distributing authoritative and engaging content and other products and services. I assume revenue grows 47% in years four and five, the same as year three. In the second scenario, I use 61% growth (2020 consensus estimate) for all years to illustrate a best-case scenario where I assume Beyond Meat could grow revenue faster within the larger distribution network, resources, and customer base of Kraft Heinz. Beyond Meat had originally been sold in retail shops across the USA, then worldwide. Back in 1988 when John Mackey, co-founder of Whole Foodstried to get funding to expand his companyhe was rejected by many venture capitalists. Invest better with The Motley Fool. Plant based burgers are not new but Beyond Meat has been able to capture more of the mainstream market. And by 2020, Beyond Meat had launched an e-commerce site that served as a direct-to-consumers portal, allowing customers to purchase their products individually. Find out how 3 brands use customer data to find success! Even with that success, Brown continues to think big . As investorsfocus moreon fundamental research, research automation technology is needed to analyze all the critical financialdetails in financial filingsas shown in the Harvard Business School and MIT Sloan paper,Core Earnings: New Data and Evidence. In the first quarter of 2019, Beyond Meat's first as a public company, its gross profit was just 26.8% of net revenue. It looks like meat, tastes like meat, and even feels like meatbut its made entirely of plants. But how they handled it is what makes them a successful brand. Success of any of Beyond Meats competitors could also further threaten future profit growth for Beyond Meat. The organizational goals have to be settled and explained. KFC and Beyond Meat are partnering with YouTube star and influencer Liza Koshy to help reveal the debut. Beyond Meats successes have inspired the giants to create new categories. BYND revenues saw a rise of 36.6% y-o-y in 2020, which was sharply lower than historical growth rates. Corporate Governance | Beyond Meat, Inc. Attracted by Beyond Meats impressive growth rates and soaring market value, multiple competitors are entering the alternative meat industry. June 4, 2021 . However, the poultry producer exited earlier this year . These features also convince consumers that Beyond Meat burgers are not your average veggie burgers which were never popular with mainstream consumers. Nope, its just Beyond Meat. Figure 11 shows the implied values for Beyond Meat assuming Kraft Heinz wants to achieve an ROIC on the acquisition that equals 6%. In 2014 they developed their first simulated beef product and expanded their presence from 1,500 to 6,000 stores in the US. The company launched the Impossible Burger in 2016. 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 Has Completely Altered Its Go-to-Market Strategy The implied stock values in this scenario are significantly below Beyond Meats current price. 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. And if this happens, you need to have others you can roll out. 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. Another key marketing vehicle for the company is its partnerships with big brands likeMcDonalds, KFCand Pizza Hut. To illustrate, the company repackaged a portion of its slow-moving food service inventory for retail consumption. Dollar figures in millions. Lets have a look at their most serious competitor: Impossible Foods. In 2020, they even signed a deal to open another production facility in Shanghai! 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 . Market Drivers- Market drives come from the availability of knowledge on healthy products vs. mass marketing for bad products. Time to Buy? Acquisitions completed at these prices would be truly accretive to Kraft Heinzs shareholders. 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. This new knowledge of healthy vs. unhealthy created a new market drive for healthy products. Beyond Meat Narrows Its Losses. Of course, this is wrong, and our body adapts to whatever we give it. This is, in fact, after BYND partnered with Starbucks, Yum Brands, and Sinodis. This indicates an extremely successful uptake by consumers. 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. The mission of the company is focused on plant-based meat alternatives, using pea and other plant protein isolates. Resourceful, strategic, and self-directed leader with a proven record of achievement in global account management, business development and sales strategy leadership. Why? But consumers shop there because the low price points allow them to have a constant rotation of outfits. 2023 Latana GmbH. See all adjustments to Beyond Meats valuationhere. Learn how you can use Latana to improve your brand marketing and grow faster. 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. Net revenues were $406.8 million, an increase of 36.6% year-over-year. See the math behind this reverse DCF scenario. The plant-based food market will grow bigger and bigger every year. The first campaign, The Future of Protein, was launched in 2015. 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. 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. 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. However, Beyond Meat staunchly defended itself and its food safety protocols, turning the tables on Don Lee and saying: We simply couldnt get Don Lee Farms to meet our standards. Even in 2021, the dispute is still going on, though both sides seem to have claimed victory. The alternative meat producer is reportedly focusing its retail . The superior scale of Beyond Meats peers will also challenge what the firm believes to be a critical competitive advantage its innovation. BEYOND MEAT ANNOUNCES NEW . 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. Apply. 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. How Beyond Meat's Marketing Strategy Set it Apart - LinkedIn To fight this incorrect belief, Ethan Brown launched a campaign featuring famous athletes. Beyond is working to streamline its operations and reverse declining sales. These days, fewer investors pay attention to fundamentals and the red flags buried in financial filings. Each implied price is based on a goal ROIC assuming different levels of revenue growth. 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. Stage of Market Lifestyle- The stage of the market lifestyle will influence the company on a few different categories. Competitors. 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. However, the fundamentals reveal this stock is more style than substance. the stock is worth just $30/share today - a 57% . 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. Figure 7: Current Valuation Implies Drastic Profit Growth. 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. 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. The design softened. 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. Figure 9 compares the firms implied future NOPAT in this scenario to its historical NOPAT. Dow Jones Reprints at 1-800-843-0008 or visit www.djreprints.com. Beyond Meat stated that its mission is to push boundaries and disrupt. 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. With such strong momentum and triple-digit year-over-year revenue growth, traders may push this stock higher. As revenue slides, Beyond Meat CEO outlines strategy to improve Over the TTM period, FCF is -$164 million. 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. .css-16c7pto-SnippetSignInLink{-webkit-text-decoration:underline;text-decoration:underline;cursor:pointer;}Sign In, Copyright 2023 Dow Jones & Company, Inc. All Rights Reserved, adidas Promo Code - $30 Off 1000s of Best-Sellers + Free Shipping, 60% off running shoes and apparel at Nike without a promo code, Michael Kors promo code First Order: sign up for KORSVIP + Get 10% off. Beyond Meat was one of the most successful IPOs (Initial Public Offerings) of 2019. 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. Figure 2: Beyond Meats Profitability vs. Previously, people were limited to information they see on television which is in the best interests of companies that can afford those ad campaigns. 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. 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. Impossible Foods sells slightly different products: Impossible Burger, Impossible Pork, Impossible Sausage. Research on Beyond Meat's Profitability Problems and Strategies There are several lessons to be learned from Beyond Meats story. our Subscriber Agreement and by copyright law. About 70% of the global population is cutting down its meat consumption. Despite less transparency, I know that Beyond Meats executive compensation plan consists of a cash bonus, option grants, and restricted share units (RSUs). 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. This is the first time a vegan meat alternative has been merchandised in the meat department at Whole Foods Market.After that Beyond Meatstarted calling itself:the worldsfirst plant-based burger sold in the meat case of U.S. grocery stores.. 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. 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. When vegan meat alternatives first started to appear on the market, many people saw them as a fad. CEO and founder Ethan Brown understood that the target audience was not only vegetarians and vegans, but also flexitarians, or meat-eaters who occasionally want a healthier, high-quality option. 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. A new marketing strategy will play up the health and sustainability benefits of Beyond Meat, Brown said. 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. For non-personal use or to order multiple copies, please contact Some of the largest retailers in the world including Zara and H&M are in the fast fashion business which is not environmentally friendly.