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). How? Furthermore, many of the firms in Figure 2 have other key advantages multi-year relationships and existing distribution networks with grocery stores and quick-serve restaurants such asTyson, or in the case of Kroger, direct control of distribution and the end-consumer relationship. Beyond Meats successes have inspired the giants to create new categories. Beyond Meat stock has staged a dramatic recovery in January, rising by more than 50% since the end of last year. 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). If you do subscribe to our retail trends newsletter to get the latest retail insights & trends delivered to your inbox. However, by now its clear that plant-based meat alternatives are here to stay and theyre gaining traction every year. The mattress. Economic earnings, which account for the unusual items on the income statement and . However, the improvement in Beyond Meat's margins has been eye-popping. You can see all the adjustments made to Beyond Meats income statementhere. Made from "soy powder, gluten-free flour, carrot fiber and other ingredients", they used a food extrusion machine to create a chicken-like texture. Over the TTM period, FCF is -$164 million. Another key marketing vehicle for the company is its partnerships with big brands likeMcDonalds, KFCand Pizza Hut. Create a great product. We can perceive more confidence from the company, in line with its media and advertising strategy. They both rearrange proteins to create their plant-based products. Additionally, Beyond Meat is introducing its plant-based meatballs in Coles, the second largest supermarket chain in Australia with over 2,500 stores. After tying up with Dunkin soon after its IPO, Beyond Meat entered China in 2020. Beyond Meat is seeking a marketing, advertising, regulatory, and trademark attorney with 10-12 years of experience. + Follow. (Photo Illustration by Drew Angerer/Getty Images). Word of . Creating effective ad campaigns is every marketers struggle but thats where customer data comes in. Do you like this content? Beyond Meat might be the pioneer in this segment, but now it faces fierce competition. Beyond Meat also has big contracts with fast-food chains, as mentioned before, which is a distribution canal bringing lots of cash flow. While Beyond Meats stock performance is attractive to many momentum traders, investors with fiduciary responsibilities should consider the deteriorating fundamentals, weak prospects to compete at the scale of its competition, and the unrealistic increase in profits implied by the current valuation. Making the world smarter, happier, and richer. 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 . 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. 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. However, its reasonable to assume that as Beyond Meats business gains scale and the company expands aggressively, it can boost margins to the levels of Tyson Foods in the next few years, so we estimate roughly 6% margins by 2023. 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. 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. 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. Extensive background in CPG . In any case, I view recent moves as encouraging as Beyond makes moves to improve its footing to grow as a . The plant-based food market will grow bigger and bigger every year. The QSR is looking to get the lion's share of the meat substitute market with Beyond Meat. Especially when competitors will try to introduce products that may be better than the original. 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 all ended with Beyond Meats new look. https://www.wsj.com/articles/beyond-meat-hires-marketing-executive-revamps-retail-strategy-11675379688. 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. Whos to say that its red meat? Figures 10 and 11 show what I think Kraft Heinz should pay for Beyond Meat to ensure it does not destroy shareholder value. Your brand, too, needs the liberty to change. The first campaign, The Future of Protein, was launched in 2015. With low margins and little control over the majority of distribution, I think shares can fall sharply from current levels. It's unfortunately difficult for investors to gauge the impact of this promotion on profits, since Beyond Meat books the discount as a reduction in sales to arrive at net revenue, rather than a reduction in gross profit margin. To illustrate, the company repackaged a portion of its slow-moving food service inventory for retail consumption. 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. To fight this incorrect belief, Ethan Brown launched a campaign featuring famous athletes. 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. Beyond Meat went from very dark and meat-like packagings to a fresher and smoother look. 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. 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. We believe there's a better way to feed our future. Devault, PA Operations - DEPA Production On-site. 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%. Beyond Meat, a producer of plant-based meat substitutes, was founded in 2009 in Los Angeles, California. 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. You can see all the adjustments made to Beyond Meats balance sheethere. Figure 11 shows the implied values for Beyond Meat assuming Kraft Heinz wants to achieve an ROIC on the acquisition that equals 6%. 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. Figure 7: Current Valuation Implies Drastic Profit Growth. Though the firms revenue has improved from $298 million in 2019 to $401 million over the trailing-twelve-months, Beyond Meatscore earnings[1]have fallen from $6 million to $4 million over the same time. Placing its hamburgers and breakfast proteins in major quick-service restaurant chains was a logical approach to igniting brand awareness. Investors are beginning to worry whether or not Beyond Meat will be able to sustain the $4 billion valuation in stock it currently has. Even with that success, Brown continues to think big . Each implied price is based on a goal ROIC assuming different levels of revenue growth. 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. If yes (which is the most common case), you can sell them to way more people and have an even greater impact. What is Beyond Meats marketing strategy? Eating plants is the best thing you can do for your diet. People are able to do extensive research on problems after recognizing that there is an issue. To justify its current price of $135/share, Beyond Meat must immediately improve its NOPAT margin to 5% (same as Tyson and more than double its current margin of 2%). 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. One of the most important pieces of furniture we own. Showing that meat is not necessary to enjoy the same flavors while reaping more plant-based benefits. Some of the largest consumer food brands have followed suit. Although its products are plant based Beyond Meats marketing does not explicitly call that out. 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. But at this stage of Beyond Meat's growth, converting new customers remains the utmost priority. By focusing on their fresh foods, like their Beyond Burger patties which many agreed pulled off the meatless meat trick more convincingly they were able to put their time and effort into a product that was going to make them more successful in the long run. 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. Beyond Meat was the first company to sell plant-based burgers in grocery stores meat sections. Eating meat has long been associated with masculinity. As of December 31, 2020, Beyond Meat had products available at approximately 122,000 retail and foodservice outlets in over 80 countries worldwide. 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. The main difference is that Impossible Foods takes its proteins from soy whereas Beyond Meat extracts it from peas. Beyond Meat's marketing strategy is to convert carnivores into occasional vegans. 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. The Motley Fool has a disclosure policy. A year ago, the consumer discretionary upstart's top line reflected the depth of its marketing and supply chain investment in the restaurant business: These sales were nearly identical to their retail counterpart: Source: Beyond Meat. When I use myreverse discounted cash flow (DCF) modelto analyze the expectations implied by the stock price, BYND appears significantly overvalued. And the organization continues to spill a slight amount of red ink, generating a loss of $10.2 million over the last three months versus a loss of $9.4 million in the second quarter of 2019. Koshy has 29.5 million followers on TikTok and 17.5 million fans on YouTube. For example, Kelloggs delayed the launch of its first round of Incogmeato products due to the COVID-19 pandemic. Could they suit flexitarians, meat-eaters? The Double Distribution Canal: A Major Strength. This is the market drive for Beyond Meat. Its stock value gained 163% on the day of its stock introduction. Figure 1: Consensus Revenue Growth Estimates: 2020-2025, 2020-2025 revenue growth rates based on consensus estimates, Competition is Plentiful and Has Competitive Advantages. Why did it work for them? 1. 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. Along with continued marketing investment, the plant-based company strikes partnerships with McDonald's and Yum! Beyond Meat Narrows Its Losses. Plant-based eaters now account for 8% of the global population. Knowing that the meat is expired and poses a hazard to eat it. 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 . I assume revenue grows 47% in years four and five, the same as year three. Dont become so attached to a product that you arent willing to see when it no longer serves you. Back in 1988 when John Mackey, co-founder of Whole Foodstried to get funding to expand his companyhe was rejected by many venture capitalists. More than simply providing a case study of a successful plant-based start-up, this analysis can provide your plant-based business with a complete understanding of the market. This does not boil down to just knowledge on slaughter houses, animal conditions, bacteria etc. 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. This allows consumers to make their own informed decision. The design softened. 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. This is one of the biggest first-day pop-ups in recent history. Acquisitions completed at these prices would be truly accretive to Kraft Heinzs shareholders. Their main rival is the company Impossible Foods. It provided Beyond Meat with one of the best forms of advertising, credibility. I believe this drive will continue and not stop. 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 is a full-time position, reporting to the Chief Legal Officer. In 2014 they developed their first simulated beef product and expanded their presence from 1,500 to 6,000 stores in the US. Plants come directly from the sun and reap the energy created from the sun. These expenses, and the need to maintain them to support Beyond Meats already declining growth, illustrate that the firm is not approaching economies of scale anytime soon. As an emerging growth company, Beyond Meat has opted to comply with the executive compensation disclosure rules applicable to smaller reporting companies, which require less stringent disclosures regarding compensation. Now, information and videos are easily assessable to people of all ages to make a truly informed decision on healthy options such as plan-based meat. For instance, over the TTM, ConAgra spent 15 times more on SG&A than Beyond Meat. 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. BYND entered into a partnership with Alibaba Group, whereby its products will be available in Freshippo stores (Alibabas supermarkets) in Shanghai. When Beyond Meat was met with the failure of their Chicken-Free Strips their first real product they didnt fold. Plant-based meats look like an attractive bet to play the future of food. 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. Part of Beyond Meats strategy is to redefine what the best source of protein is. Nope, its just Beyond Meat. Moral of the story? How did Beyond Meat become the leader it is today? 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. word of mouth. 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. 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. This Beyond Meat Burger in particular cooks like a burger and looks like one,saidJoe Wood, who was the mid-Atlantic meat coordinator for Whole Foods Market at the time. Beyond Meat and Impossible Foods have many common points. 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. About 70% of the global population is cutting down its meat consumption. Prior to that Mr. Oghoghomeh served as Head of Recruitment Marketing - West Zone for Amazon, an eCommerce company from 2019 to 2021. 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. It began trading at $25/share on the Nasdaq stock exchange and ended the day at $65.75. Our marketing speaks very much to the ability for the highest-performing people in our society to perform not just as good, but better as result of the consumption of plant-based meat, particularly, our plant-based meat.. We visited . 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. 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. For example. This created the need for healthy products. 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. Since going public in early May, Beyond Meat's stock has soared more than 450 percent and its market value is over $8 billion. But what has allowed them to be so successful despite their setbacks? Things Are Only Getting Worse for Beyond Meat Stock. While Beyond Meat could continue to rally, it faces four challenges that. People are perfectly happy eating vegan food as long as they dont know thats what theyre doing,saysCarol J. Adams, author ofThe Sexual Politics of Meat. Beyond Meat founder, Ethan Brown, understood the place of meat in the collective perception very early on. this also includes knowledge of every product that comes in contact with your body on a daily basis. Also, these meat products are offered by themselves at the grocery stores. See the math behind this reverse DCF scenario. Going forward, Beyond Meat will find it even more difficult to grow revenue and profits as competitors flood the market. 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. 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. In2016 Whole Foods decided to give the company a chance by placing Beyond Meat in its meat section. The mission of the company is focused on plant-based meat alternatives, using pea and other plant protein isolates. Finally, in 2021, Beyond Meat began supplying Taco Bell with plant-based meat products and partnered with PepsiCo to develop and market plant-based drinks and snacks. revenue grows 24% a year from 2023-2027 (continuation of 2023 consensus), then. First, consumers expectations for new products and innovation will rise over time. 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. Weve tried to run straight at the question: is a plant-based meat sufficient for humans to be vital and robust,saysBrown. At the end of 2Q20, Beyond Meat had $222 million of cash and cash equivalents on its balance sheet. The difference with other plant-based patties is that their name is a synonym of quality for their clients. BYND revenues saw a rise of 36.6% y-o-y in 2020, which was sharply lower than historical growth rates. 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. We hope this article helped you understand how crucial a good marketing strategy is for a companys success. Therefore, restaurant owners tend to put the Beyond Meat logo on the menu when featuring their products. Net revenues were $406.8 million, an increase of 36.6% year-over-year. It may even get heavier as more people understand healthy food from non-healthy food. However, the poultry producer exited earlier this year . A lot of people are trading so I know a lot of people are interested in the future of this company. 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.. 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. Firstly, the gradual lifting of lockdowns in recent months will help the restaurant segment register strong growth along with sales from retail chains. Figure 7 compares the firms implied future NOPAT in this scenario to its historical NOPAT. Insider Trading and Short Interest Indicate Market Skepticism. Beyond Meatis one of them for the plant-based segment. Instead, it avoids labelling its products as vegan even though they are. But consumers shop there because the low price points allow them to have a constant rotation of outfits. Plant based burgers are not new but Beyond Meat has been able to capture more of the mainstream market. However, the lack of fervor for their first product did nothing to stop Beyond Meat from trudging forward. With sharp growth in revenues, margins have increased from -89% in 2017 to -9.4% over the last twelve months. 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. 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. But keep in mind to do this, youll need data on how consumers are responding to your competitors. So, what can you learn from Beyond Meat's marketing strategy? Yet Beyond Meat's management made a critical decision during the second quarter to change course on product distribution. June 4, 2021 . Theres no actual blood,instead beet juice isused but it does the trick. Beyond Meat positioned its products as similar to animal meat as they could. Youre reading a free article with opinions that may differ from The Motley Fools Premium Investing Services. The Motley Fool owns shares of and recommends Beyond Meat, Inc. But beneath these numbers, the dynamics of Beyond Meat's business model have been radically altered by its response to the COVID-19 pandemic. This vision can be found throughout Beyond Meats marketing collateral. Plant-based burgers have existed for decades before Beyond Meat. Figure 8: Current Valuation Implies Massive Revenue Growth, Significant Downside in a More Realistic Scenario. Beyond Meat had originally been sold in retail shops across the USA, then worldwide. Success of any of Beyond Meats competitors could also further threaten future profit growth for Beyond Meat. Changes that have inspired the birth of Beyond Meat is the increased demand on plant-based products. After all, the positive choices we make every day - no matter how small - can have a great impact on our world. Beyond is working to streamline its operations and reverse declining sales. KFC and Beyond Meat are partnering with YouTube star and influencer Liza Koshy to help reveal the debut. Is It Time to Buy? 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). 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. Part of this shift happened without much intervention by management, as consumption in restaurants and other institutional foodservice outlets has plummeted since the spring, while at-home consumption has soared. 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. All rights reserved. These sales represent 5% of shares outstanding. By 2015, even Walmart was selling Beyond Meats plant-based products! I would prefer Beyond Meat align executives interests with shareholders interests and link executive compensation with improving ROIC, which isdirectly correlated with creating shareholder value. The key variables are the weighted average cost of capital (WACC) and ROIC for assessing different hurdle rates for a deal to create value. 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. The redistribution of cash flow to its investors is a challenge. 8 Facts About Pelotons Marketing Strategy You Need to Know, Dirty Lemons Marketing & Growth Strategy, How it Became a Success, Crocs Marketing Strategy. 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.
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