beyond meat marketing strategy
Their products are now sold in 17,000 grocery stores and 12,000 eateries. Entrepreneur, retail expert, strategy consultant and author. How did Beyond Meat become the leader it is today? Here's how KFC is marketing its updated Beyond Meat faux - Ad Age Tackle stereotypes about who your customers should be. Of course, this is wrong, and our body adapts to whatever we give it. Buy These 2 Stocks in 2023 and Hold for the Next Decade, 2 Growth Stocks to Buy Before the Big Bull Rally, Join Over Half a Million Premium Members And Get More In-Depth Stock Guidance and Research, Copyright, Trademark and Patent Information. And if this happens, you need to have others you can roll out. Their main rival is the company Impossible Foods. Is It Time to Buy? But what has allowed them to be so successful despite their setbacks? Weve previously shown how linking executive compensation to faulty metrics such asadjusted EBITDAcan lead to the destruction of shareholder value. 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. When I use myreverse discounted cash flow (DCF) modelto analyze the expectations implied by the stock price, BYND appears significantly overvalued. In 2021 Beyond Meats revenue increased by14.2%to reach $464.7 million. This new knowledge of healthy vs. unhealthy created a new market drive for healthy products. These sales represent 5% of shares outstanding. 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. Resourceful, strategic, and self-directed leader with a proven record of achievement in global account management, business development and sales strategy leadership. 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. Figure 7 compares the firms implied future NOPAT in this scenario to its historical NOPAT. 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. Impossible Foods sells slightly different products: Impossible Burger, Impossible Pork, Impossible Sausage. If you are wondering how Beyond Meat has been able to make strides where others havent consider these four elements of its marketing strategy. 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. Evaluation of Options- Evaluating the options of Beyond Meat vs. regular meat. The larger the firm gets, the more difficult it becomes to achieve large year-over-year (YoY) growth rates. Going forward, Beyond Meat will find it even more difficult to grow revenue and profits as competitors flood the market. I assume revenue grows 47% in years four and five, the same as year three. This is not by accident but instead by design. Beyond Meatis one of them for the plant-based segment. 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. Meditation apps have seen a boom in popularity over the past few years in the US but does their growth extend to Europe? Plant based meats are not filled with dead animals which include bacteria growth and can contain other substances such as feces. Gross profit was $122.3 million, or gross margin of 30.1% of net revenues; Adjusted gross profit was $133.7 million, or Adjusted gross margin of 32.9% of net revenues, reflecting exclusion of expenses attributable to COVID-19. 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". The companys marketing strategy is multiple layers one and has evolved over time, to keep up with the market trend. Considering our revenue projections of roughly $1.1 billion and 6% margins, almost $66 million in net income is possible by 2023. Figure 5: Beyond Meats Revenue & Core Earnings Since 2017. This copy is for your personal, non-commercial use only. As of 2020, the Beyond Meat company sells: Cookout Classic (10 plant-based burgers). Full Year 2020 Financial Highlights1. This adjustment represents 7% of Beyond Meats market cap. They entered the restaurant market, and are currently sold to plant-based and mainstream restaurants. Heres a post fromBeyond Meats Facebook page: There is no mention at all that the Even-Better Beyond Burger is plant based. 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. Create a great product. But beneath these numbers, the dynamics of Beyond Meat's business model have been radically altered by its response to the COVID-19 pandemic. There are countless advertisements with men barbequing burgers or hanging out with their friends as they bond over their favourite protein, read meat. Extensive background in CPG . BEYOND MEAT ANNOUNCES NEW . The mission of the company is focused on plant-based meat alternatives, using pea and other plant protein isolates. It began trading at $25/share on the Nasdaq stock exchange and ended the day at $65.75. One of the most important pieces of furniture we own. But what if youre looking for a more balanced portfolio instead? 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%). 3. A lot of people are trading so I know a lot of people are interested in the future of this 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 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. 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. Figure 11: Implied Acquisition Prices to Create Value. And while their Chicken-Free Strips were sold at big-name stores like Whole Foods all across the US, they were later discontinued in 2019. Eating meat is associated with strength and power while a plant based diet is not, at least not for now. Brands. Also, seeing that a lot of slaughter houses will absolutely not let anyone come see the inside conditions that animals are facing. I also assume Beyond Meat achieves an 8% NOPAT margin, which equals the average of Beyond Meats and Kraft Heinzs TTM NOPAT margins. Beyond Meat had originally been sold in retail shops across the USA, then worldwide. After tying up with Dunkin soon after its IPO, Beyond Meat entered China in 2020. 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%. While comprising only 5% of its total revenue, Tyson outspent Beyond Meats SG&A by 20 times over the TTM. 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. Beyond Meat Stock: A Competitive Analysis | Nasdaq Are they only for vegans? 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. The organizational goals have to be settled and explained. Consensus estimates expect revenue will grow 61% YoY in 2020, and just 17% YoY by 2025, per Figure 1. Michelle Amador - Sr. Director, Global Strategic Partnerships - Beyond In fact, it has been shown that heart disease, cancer, and diabetes, three of the top ten causes of death, are linked to eating too much meat. In the first quarter of 2019, Beyond Meat's first as a public company, its gross profit was just 26.8% of net revenue. 4 Challenges That Could Hurt Beyond Meat Stock | The Motley Fool To do so, employees need to very clearly understand the companys priority: is it safety, profits, brand fidelity? Beyond Meat stock has staged a dramatic recovery in January, rising by more than 50% since the end of last year. Between 2013-2016, Beyond Meat was funded by the likes of Tyson Foods, Bill Gates, and the Humane Society and by 2018, theyd raised $72 million in venture financing. Option grants and RSUs directly align executives interests with the price of the companys shares and not necessarily with creating shareholder value. Baseball player David Wright was the first celebrity to sign a contract with the brand. Koshy has 29.5 million followers on TikTok and 17.5 million fans on YouTube. Plant-based eaters now account for 8% of the global population. Nonetheless, Beyond Meat's earnings press release observed that the value packs, which hit grocery stores only in the last two weeks of the quarter, were responsible for 16 percentage points of volume growth for the entire period. Recent Improvement in Profitability Was Short-Lived. Sounds too good to be true, right? (Photo Illustration by Drew Angerer/Getty Images). This has come from the increased consumer-knowledge on healthy products, plant-based diets, and understanding what goes into the food we as consumers eat. 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. 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. 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 in midst of sales strategy revamp - WSJ With these headwinds Beyond Meat had to convince meat lovers that its products passed the test. 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. Inside Beyond Meat's lab, where the company transforms plants into faux meat with microscopic analysis and robot mouths. Changes that have inspired the birth of Beyond Meat is the increased demand on plant-based products. The following fund receives an unattractive rating and allocates significantly to BYND. 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. Plus, they created a new category by being one of the first to do it and do it right. By 2015, even Walmart was selling Beyond Meats plant-based products! Many people do not know that eating meat is not only eating meat, but eating the history in which the meat came from. Especially when competitors will try to introduce products that may be better than the original. Plant-based burgers have existed for decades before Beyond Meat. See the math behind this reverse DCF scenario. The bottom line is that even if Beyond Meat can grow revenue by 51% compounded annually for five years at an 8% NOPAT margin, the firm is worth much less than $135/share. What can you learn from this? 2. Figure 11 shows the implied values for Beyond Meat assuming Kraft Heinz wants to achieve an ROIC on the acquisition that equals 6%. There was also a long standing view which only recently has begun to change that veganism or vegetarianism will only be embraced by a narrow part of society. These days, fewer investors pay attention to fundamentals and the red flags buried in financial filings. Beyond Meat is a Los Angeles-based producer of plant-based meat substitutes, including vegan versions of burgers and sausages. 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. The original packaging did not display vegetables, and the words meat and best in the products names were not chosen randomly. 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. When grocery stores resisted this in the beginning Beyond Meat declined to place its product in those stores and decided to wait until a grocery store embraced its vision. In order to get ahead of the competition, never stop innovating. Further, consensus estimates for Beyond Meats 2020 earnings are now $0.07/share. The implied stock values in this scenario are significantly below Beyond Meats current price. 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. 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. See all adjustments to Beyond Meats valuationhere. However, the poultry producer exited earlier this year . Expand the definition of your target market. Along with continued marketing investment, the plant-based company strikes partnerships with McDonald's and Yum! This is a major strength: a high speed-to-market. 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. They have sharply improved from -93.3% in 2016 to -4.2% in 2019. It may even get heavier as more people understand healthy food from non-healthy food. 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. Beyond Meat revamps its retail strategy, hires new marketing executive Part of Beyond Meats strategy is to redefine what the best source of protein is. Considering these competitors are already supplying plant-based protein products, Beyond Meat faces an increasingly uphill battle to reach the size it needs to match the cost efficiencies of larger competitors like these two established firms. For example. 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. As of December 31, 2020, Beyond Meat had products available at approximately 122,000 retail and foodservice outlets in over 80 countries worldwide. Beyond Meat's Branding Helped Take Plant-Based Mainstream Lots of small companies have also emerged and targeted the same audience, such as Purple Carrot or Sunfed Meats. While consumer interest in protecting the environment or having a healthier lifestyle continues to grow it doesnt always mean consumption follows. If Beyond Meat created the healthiest plant based products that dont taste very good then it wouldnt be in business very long. Each implied price is based on a goal ROIC assuming different levels of revenue growth. Additionally, when their Chicken-Free Strips were finally taken off the market in 2019, they did so quietly. Many undercover operations are conducted to get footage and investigate what is really going on inside the slaughter houses. When vegan meat alternatives first started to appear on the market, many people saw them as a fad. Beyond Meats massive revenue growth cannot last forever. By Christopher Lombardo. The Motley Fool has a disclosure policy. Figure 10: Implied Acquisition Prices for Value-Neutral Deal. It began trading at $25/share on the Nasdaq stock exchange and ended the day at $65.75. Beyond Meat Has Completely Altered Its Go-to-Market Strategy Sign up for our Newsletter to receive free, insightful tips on all things brand! Creating effective ad campaigns is every marketers struggle but thats where customer data comes in. Per Figure 2, Beyond Meats NOPAT margin and return on invested capital (ROIC) are below each of the competitors listed above, and well below the market-cap-weighted average of all the Food Processing firms under coverage. + Follow. With a sound marketing strategy, Beyond Meat may be able to make its product cool again. In 2020, they even signed a deal to open another production facility in Shanghai! With such strong momentum and triple-digit year-over-year revenue growth, traders may push this stock higher. These features also convince consumers that Beyond Meat burgers are not your average veggie burgers which were never popular with mainstream consumers. With the high expectations of consumers and the competition they were about to create, knowing that they got in during the right time when consumers would take it as a positive and embrace this new way to eating meat, or meat substitute.. 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. illustration, packages of Beyond Meat "The Beyond Burger" sit in a refrigerator, June 13, 2019 in the Brooklyn borough of New York City. last yearwhere it will: develop, produce and market snacks and beverages made from plant-based protein bringing together Beyond Meats innovation expertise with PepsiCos marketing and commercial capabilities. PepsiCo is known for its marketing prowess and just working with PepsiCo will expand Beyond Meats reach. Why? 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. Furthermore, Don Lee alleged significant concerns about food safety protocols concerning the raw materials that Beyond Meat sent. . In 2021 Beyond Meat's revenue increased by 14.2% to reach $464.7 million. Instead, due to theproliferation of noise traders, the focus tends toward technical trading tends while high-quality fundamental research is overlooked. Various trademarks held by their owners. Per Figure 6, Beyond Meat's TTM adjusted EBITDA of $45 million is well above core earnings of $4 million. 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. Rising beef prices, coupled with the overwhelming at-home food consumption trend, present an unforeseen opportunity for the company to entice new customers by doubling down on grocery sales. Beyond Meat was the first company to sell plant-based burgers in grocery stores meat sections. So, what can you learn from Beyond Meat's marketing strategy? Beyond Meat: Analysis of a Successful Marketing Strategy Beyond Meat went from very dark and meat-like packagings to a fresher and smoother look. January 2021. Eating meat has long been associated with masculinity. 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. From the Beyond Burger to Beyond Sausage, and their latest Beyond Meatballs this brand is really on a roll. 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. The key variables are the weighted average cost of capital (WACC) and ROIC for assessing different hurdle rates for a deal to create value. 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. 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. Things Are Only Getting Worse for Beyond Meat Stock. However, by now its clear that plant-based meat alternatives are here to stay and theyre gaining traction every year. After all, the positive choices we make every day - no matter how small - can have a great impact on our world. 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. How? 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. The paper empirically shows that my firms data is superior to Operating Income After Depreciation and Income Before Special Items from Compustat, owned by S&P Global (SPGI). The company has a culture of accountability among its employees: they are all responsible for driving up performances by making suggestions, pointing out what is not working. Founder and Tech Inventor at Princess Technologies. Fourth Quarter 2021. This created the need for healthy products. Well, when Beyond Meat chose to switch suppliers, they allegedly shared details of Don Lees manufacturing process which Don Lee saw as a breach of contract. . A vegan burger that bleeds. Distribution and use of this material are governed by 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. 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. 2019: A Change In the Branding Strategy With the Arrival of Stun. The main difference is that Impossible Foods takes its proteins from soy whereas Beyond Meat extracts it from peas. Although its products are plant based Beyond Meats marketing does not explicitly call that out. See allTrefis Featured AnalysesandDownloadTrefis Datahere. *Average returns of all recommendations since inception. We can perceive more confidence from the company, in line with its media and advertising strategy. Beyond Meat, a producer of plant-based meat substitutes, was founded in 2009 in Los Angeles, California. The promises of Beyond Meats burgers: they produce 90% less greenhouse gas emissions and require 93% less land, 99% less water, and 46% less energy than a traditional beef patty. Back in 1988 when John Mackey, co-founder of Whole Foodstried to get funding to expand his companyhe was rejected by many venture capitalists. However, the fundamentals reveal this stock is more style than substance. Problem Recognition- Consumers did not know about the conditions of the animals that are actively being slaughtered to create meat. This does not boil down to just knowledge on slaughter houses, animal conditions, bacteria etc. 1. While this may seem like a minor detail using beetroot juice to mimic blood it helped the Beyond Burger get one step close to winning over non-vegans. 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. Figure 9 compares the firms implied future NOPAT in this scenario to its historical NOPAT. 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. Previously, people were limited to information they see on television which is in the best interests of companies that can afford those ad campaigns. This all ended with Beyond Meats new look. The difference with other plant-based patties is that their name is a synonym of quality for their clients. With a market cap of over $9.6 billion, the stock now trades a little over 17x projected 2021 revenues, despite the fact that 2020 was the toughest year for the company due to the pandemic and it also missed analysts expectations for Q1 2021. revenue grows at consensus rates in 2021, 2022, and 2023, and. But how they handled it is what makes them a successful brand. 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. Beyond Meat Stock (NASDAQ:BYND): Looking Beyond the Headwinds This year also saw Beyond Meat join forces with Mcdonalds to develop their McPlant option. Beyond Meat's Price Approaches That of Real Beef Furthermore, Beyond Meat has a history of significant free cash flow (FCF) burn that is unlikely to change anytime soon. Find out how 3 brands use customer data to find success! Net revenues were $406.8 million, an increase of 36.6% year-over-year. But just how do these brands fare when it comes to brand awareness and consideration. The first campaign, The Future of Protein, was launched in 2015. There are currently 7 million shares sold short, which equates to 9% of shares outstanding and just over one day to cover. About 70% of the global population is cutting down its meat consumption. Figure 2: Beyond Meats Profitability vs. Leverage partners with larger platforms to expand reach. Beyond Meat also has big contracts with fast-food chains, as mentioned before, which is a distribution canal bringing lots of cash flow. But keep in mind to do this, youll need data on how consumers are responding to your competitors. Insider Trading and Short Interest Indicate Market Skepticism. Instead Beyond Meat fought for placement within the meat section of grocery stores. Making the world smarter, happier, and richer. Instead, it avoids labelling its products as vegan even though they are. This makes a lot of sense since only2.7%of packaged meat sales in the United States are plant based. They clearly prioritize innovation. Many people can not even tell the difference between real meat and Beyond Meat.