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. Beyond is working to streamline its operations and reverse declining sales. 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. But how they handled it is what makes them a successful brand. Many people do not know that eating meat is not only eating meat, but eating the history in which the meat came from. In2016 Whole Foods decided to give the company a chance by placing Beyond Meat in its meat section. While Beyond Meats SG&A (which includes marketing and advertising expenses) represents a large percentage of the firms TTM revenue, the firms total dollars spent on SG&A pales in comparison to larger competitors. Beyond Meat and Impossible Foods have many common points. Success of any of Beyond Meats competitors could also further threaten future profit growth for Beyond Meat. Production Supervisor - 2nd Shift. Eating meat has long been associated with masculinity. Made from "soy powder, gluten-free flour, carrot fiber and other ingredients", they used a food extrusion machine to create a chicken-like texture. Stun is a creative branding agency. Also, seeing that a lot of slaughter houses will absolutely not let anyone come see the inside conditions that animals are facing. Figure 3: Operating Expense as % of Revenue: Beyond Meat vs. Concentrating on the health market, they were able to target a broad range of people seeking a better meat option than real meat. If you are wondering how Beyond Meat has been able to make strides where others havent consider these four elements of its marketing strategy. 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. They entered the restaurant market, and are currently sold to plant-based and mainstream restaurants. And this failure didnt break them for a few reasons most importantly, because they already had new products in the works. For reference, Beyond Meats invested capital has increased by an average of $84 million (28% of 2019 revenue) over the past two years. Things Are Only Getting Worse for Beyond Meat Stock. The California-based company is orienting its retail business around Kroger Co., Walmart Inc., Publix Super Markets Inc., Costco Wholesale Corp. and Whole Foods Market, according to internal company presentations and documents. And now the ravenous race for market share begins, with Beyond Meat and Impossible Foods (which has raised nearly $500 million in debt and equity) in prime position to . 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. Opinions expressed by Forbes Contributors are their own. 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. This is one of the biggest first-day pop-ups in recent history. 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. See the math behind this reverse DCF scenario. The Double Distribution Canal: A Major Strength. However, the lack of fervor for their first product did nothing to stop Beyond Meat from trudging forward. 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. Links: https://zaap.bio/lillytalavera. Beyond Meat had originally been sold in retail shops across the USA, then worldwide. Devault, PA Operations - DEPA Production On-site. What can you learn from this? The implied stock values in this scenario are significantly below Beyond Meats current price. First, consumers expectations for new products and innovation will rise over time. Instead of drawing attention to a product that consumers didnt love, they simply discontinued it and slowly fazed it out of supermarkets. Even in the most optimistic of scenarios, Beyond Meat is worth less than its current share price. Looking ahead to 2021, consensus earnings estimates are a much higher $0.47/share. The design softened. 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%. Changes that have inspired the birth of Beyond Meat is the increased demand on plant-based products. Changes that have inspired the birth of Beyond Meat is the increased demand on plant-based products. revenue grows at consensus rates in 2021, 2022, and 2023, and. This created a need for plant-based foods to replace the broken system of meats. But just how do these brands fare when it comes to brand awareness and consideration. For example, Kelloggs delayed the launch of itsfirst roundof Incogmeato products due to the COVID-19 pandemic. Beyond Meat constantly reinvests their earnings in further research and development, as well as in marketing, and in scaling up production and distribution. The first six months of 2020 have visibly transformed Beyond Meat 's ( BYND -0.58%) approach to marketing its plant-based, meat substitute products. Continue reading your article witha WSJ subscription, Already a member? The following fund receives an unattractive rating and allocates significantly to BYND. About 70% of the global population is cutting down its meat consumption. They have sharply improved from -93.3% in 2016 to -4.2% in 2019. Beyond Meat, a producer of plant-based meat substitutes, was founded in 2009 in Los Angeles, California. Placing its hamburgers and breakfast proteins in major quick-service restaurant chains was a logical approach to igniting brand awareness. . Management's flexibility and willingness to alter the company's go-to-market strategy during the era of COVID-19 has the potential to pay off handsomely over a multiyear horizon. Baseball player David Wright was the first celebrity to sign a contract with the brand. 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. Plant based meats are not filled with dead animals which include bacteria growth and can contain other substances such as feces. Another key marketing vehicle for the company is its partnerships with big brands likeMcDonalds, KFCand Pizza Hut. Additionally, the companys new partnerships will also drive impressive top line growth. Consensus estimates expect revenue will grow 61% YoY in 2020, and just 17% YoY by 2025, per Figure 1. Success of any of Beyond Meats competitors could also further threaten future profit growth for Beyond Meat. The larger the firm gets, the more difficult it becomes to achieve large year-over-year (YoY) growth rates. Many people can not even tell the difference between real meat and Beyond Meat. 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. The alternative meat producer is reportedly focusing its retail . Our goal is to give you the key to understanding Beyond Meats rapid success, to show you the hidden reasons for their success. Expand the definition of your target market. Beyond Meat stated that its mission is to push boundaries and disrupt. Furthermore, Don Lee alleged significant concerns about food safety protocols concerning the raw materials that Beyond Meat sent. The companys marketing strategy is multiple layers one and has evolved over time, to keep up with the market trend. This is the market drive for Beyond Meat. Beyond Meat Narrows Its Losses. our Subscriber Agreement and by copyright law. 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. 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. Per Figure 6, Beyond Meats TTM adjusted EBITDA of $45 million is well above core earnings of $4 million. Making the world smarter, happier, and richer. . Even with that success, Brown continues to think big . Do you like this content? 3. This makes a lot of sense since only2.7%of packaged meat sales in the United States are plant based. Though their first product received positive reviews from some celebrities and PETA named Beyond Meat their 2013 Company of the Year, journalists who actually tasted the chicken reported that the "likeness to real chicken was tolerable, at best". 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. Figure 7 compares the firms implied future NOPAT in this scenario to its historical NOPAT. Your brand, too, needs the liberty to change. January 2021. From the beginning Beyond Meat has viewed itself as a company that could take a typical meat eater and get them to consider a tasty alternative. You can see all the adjustments made to Beyond Meats balance sheethere. Plant-based meats look like an attractive bet to play the future of food. 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. 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? Could they suit flexitarians, meat-eaters? 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. 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. For instance, over the TTM, ConAgra spent 15 times more on SG&A than Beyond Meat. 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. This is rather than Beyond Meat actually creating a meat brand that is real meat. Market Drivers- Market drives come from the availability of knowledge on healthy products vs. mass marketing for bad products. 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. 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. If, however, McDonalds chooses to not continue on with the PLT or finds another supplier for its plant-based protein items, BYND could fall even further. In the first quarter of 2019, Beyond Meat's first as a public company, its gross profit was just 26.8% of net revenue. 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. They began targeting not only vegetarians and vegans, but also and mainly meat-eaters; flexitarians. Such high spending is not only unsustainable, but it also means Beyond Meats product must be more expensive than competitors products for the firm to turn a profit. Since going public in early May, Beyond Meat's stock has soared more than 450 percent and its market value is over $8 billion. 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. These days, fewer investors pay attention to fundamentals and the red flags buried in financial filings. Further, consensus estimates for Beyond Meats 2020 earnings are now $0.07/share. Beyond Meat might be the pioneer in this segment, but now it faces fierce competition. Plant-based foods are more than a fad, they are a huge economic trend. Prior to that Mr. Oghoghomeh served as Head of Recruitment Marketing - West Zone for Amazon, an eCommerce company from 2019 to 2021. 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. We believe Beyond Meat Revenues have the potential to rise close to 2.7x from the level of $407 million in 2020 to $1.1 billion by 2023, representing a growth rate of roughly 40% per year (for context, the compounded annual growth rate was a very healthy at 164% between 2016 and 2019). 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. Previously, people were limited to information they see on television which is in the best interests of companies that can afford those ad campaigns. In total, the global market for meat substitutes is set to grow to $23.4 billion by 2024, according to market research company Euromonitor. 8 Facts About Pelotons Marketing Strategy You Need to Know, Dirty Lemons Marketing & Growth Strategy, How it Became a Success, Crocs Marketing Strategy. As of 2020, the Beyond Meat company sells: Cookout Classic (10 plant-based burgers). Beyond Meat ( NASDAQ: BYND) is streamlining its sales strategy, according to internal documents reviewed by the Wall Street Journal. And if youre looking to follow in this impressive brands footsteps, keep our above tips in mind and consider adding brand tracking software to your lineup because, without insight into how consumers feel about your brand, you wont know where to grow next.