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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 . Like Comment Share . 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. 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. 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. 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. The mission of the company is focused on plant-based meat alternatives, using pea and other plant protein isolates. Nestl, JBS, and Tyson have all recently launched plant-based burgers. Despite less transparency, I know that Beyond Meats executive compensation plan consists of a cash bonus, option grants, and restricted share units (RSUs). Beyond Meat might be the pioneer in this segment, but now it faces fierce competition. In 2014 they developed their first simulated beef product and expanded their presence from 1,500 to 6,000 stores in the US. 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". It looks like meat, tastes like meat, and even feels like meatbut its made entirely of plants. Find out how 3 brands use customer data to find success! 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. 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. 4. However, some investors have growing concerns about the companys ability to maintain these results. The original packaging did not display vegetables, and the words meat and best in the products names were not chosen randomly. In 2021 Beyond Meat's revenue increased by 14.2% to reach $464.7 million. 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. Creating effective ad campaigns is every marketers struggle but thats where customer data comes in. We can spot changes in the design since their arrival. 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. In this scenario, Beyond Meat grows revenue by 37% compounded annually (which results in NOPAT growing 42% compounded annually) for the next 12 years. Eating meat has long been associated with masculinity. 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. 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. this also includes knowledge of every product that comes in contact with your body on a daily basis. Plant-based meat alternatives are on the rise and not just with vegans. About 70% of the global population is cutting down its meat consumption. 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. 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. 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. Founder and Tech Inventor at Princess Technologies. Does this make the stock expensive considering the recent volatility in the stock price? 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. And if this happens, you need to have others you can roll out. Competitors, Serious Uphill Battle for Beyond Meat to Improve Profitability. But thats what BYNDs investors are betting will not happen! Another key marketing vehicle for the company is its partnerships with big brands likeMcDonalds, KFCand Pizza Hut. A new marketing strategy will play up the health and sustainability benefits of Beyond Meat, Brown said. Additionally, when their Chicken-Free Strips were finally taken off the market in 2019, they did so quietly. With low margins and little control over the majority of distribution, I think shares can fall sharply from current levels. on July 4th, eating a hot dog with your family. 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. Some of the largest consumer food brands have followed suit. Inside Beyond Meat's lab, where the company transforms plants into faux meat with microscopic analysis and robot mouths. Your brand, too, needs the liberty to change. 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. + Follow. Its an era of growth for the still young start-up. Beyond Meat stated that its mission is to push boundaries and disrupt. 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. 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. 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. Beyond Meat would rather investors focus onflawed non-GAAP metricssuch as adjusted EBITDA, which allow management to remove real costs of the business and to paint a rosier view of profits. But keep in mind to do this, youll need data on how consumers are responding to your competitors. Acquisitions completed at these prices would be truly accretive to Kraft Heinzs shareholders. As of December 31, 2020, Beyond Meat had products available at approximately 122,000 retail and foodservice outlets in over 80 countries worldwide. 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. 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. This assumption is highly unlikely but allows us to create best-case scenarios that demonstrate how high expectations embedded in the current valuation are. While the market hasnt liked this news, both the CEOs of Beyond Meat and McDonalds have stated that there isno changein the relationship between the two companies. Some of the largest retailers in the world including Zara and H&M are in the fast fashion business which is not environmentally friendly. One of the most notable adjustments was $11 million inoperating leases. 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. 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. This is very rare: imagine if menus displayed all the product brands they use to cook the dishes you eat. https://www.wsj.com/articles/beyond-meat-hires-marketing-executive-revamps-retail-strategy-11675379688. Get the latest information and insights into the world of brand. 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. Plant based meats are not filled with dead animals which include bacteria growth and can contain other substances such as feces. (Photo by Smith Collection/Gado/Getty Images), BYND Operating Expense As Of Revenue Beyond Meat, BYND Current Valuation Implies Massive Revenue, BYND Implied Acquisition Prices For Value Neutral, BYND Implied Acquisition Prices For Value, See the math behind this reverse DCF scenario, directly correlated with creating shareholder value, The lack of competitive advantages that nearly all competitors possess, Doing the math: stock price implies huge increase in revenue/profits, Incogmeato by Morningstar Farms, owned by Kellogg Co. (K), Simply Plant-Based Meatless Burger, a SYSCO Corp. (SYY) exclusive product, Simple Truth plant-based meat, owned by The Kroger Co. (KR), Sweet Earth Brand, owned by Nestle (NSRGY), Happy Little Plants, owned by Hormel (HRL), Lightlife Foods, owned by Maple Leaf Foods, Shelf space large amounts of space, which can be very difficult to acquire, especially from firms like Kroger who directly control shelf space allocation, Marketing and advertising capacity existing businesses generate lots of cash flow that enables these firms to spend much more on marketing and advertising than Beyond Meat, Strong brand decades-long relationships with consumers across multiple brands that engender the trust that enables quicker adoption of newer products, Valuation implies massive improvement in profitability with sustained revenue growth rates, Domini Sustainable Solutions Fund (LIFEX) 3.4% allocation and unattractive rating. Dollar figures in millions. 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. Therefore, they have a lot of time and competitive advantage before others to create the most well-known category before all other competitors. In 2019, they partnered up with Dunkin Donuts to supply their Meatless Sausage for the breakfast chains sandwiches nationwide. The redistribution of cash flow to its investors is a challenge. Since going public in early May, Beyond Meat's stock has soared more than 450 percent and its market value is over $8 billion. Beyond Meat is a Los Angeles-based producer of plant-based meat substitutes, including vegan versions of burgers and sausages. our Subscriber Agreement and by copyright law. From the beginning Beyond Meat had a vision for its business that was much broader than any of its predecessors. After adjusting for this liability, I can model multiple purchase price scenarios. However, the poultry producer exited earlier this year . 3. In 2020, they even signed a deal to open another production facility in Shanghai! 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. Various trademarks held by their owners. 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.. Now, lets proudly assume what they are: a plant-based burger, extracting plant proteins to make a tasty and healthy burger. 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 company's second-quarter 2020. Furthermore, Beyond Meat has a history of significant free cash flow (FCF) burn that is unlikely to change anytime soon. 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. The design softened. For reference, Beyond Meats invested capital has increased by an average of $84 million (28% of 2019 revenue) over the past two years. 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%. Looking ahead to 2021, consensus earnings estimates are a much higher $0.47/share. First, consumers expectations for new products and innovation will rise over time. Beyond Meat, therefore, accomplished something huge: its name is enough to make people reassured about the quality and taste. Beyond Meat Narrows Its Losses. While consumer interest in protecting the environment or having a healthier lifestyle continues to grow it doesnt always mean consumption follows. This has come from the increased consumer-knowledge on healthy products, plant-based diets,. Conference: 2021 3rd International Conference on Economic Management and Cultural . 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 . 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. At its TTM FCF burn rate, the firm has enough cash to operate for just over 16 months before needing additional capital. What can you learn from this? Over 2Q20, Beyond Meat removed $1.5 million (1% of revenue) in other expenses when calculating adjusted EBITDA. Figure 1: Consensus Revenue Growth Estimates: 2020-2025, 2020-2025 revenue growth rates based on consensus estimates, Competition is Plentiful and Has Competitive Advantages. 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. Finally, innovation is another key element of success for Beyond Meat: if they are the leaders, lets not forget that it is also because their products are great, packed with plant-based proteins. Especially when competitors will try to introduce products that may be better than the original. 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. Competition- Beyond Meat has created competition by completing innovating meat and how meat is viewed. 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. With these headwinds Beyond Meat had to convince meat lovers that its products passed the test. 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. After all, nothing could replace a real burger, could it? We visited . Catalyst: Others Success Could Come at Beyond Meats Expense. Part of Beyond Meats strategy is to redefine what the best source of protein is. Figure 11: Implied Acquisition Prices to Create Value. Economic earnings, which account for the unusual items on the income statement and . 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. Figure 10: Implied Acquisition Prices for Value-Neutral Deal. One of the most important pieces of furniture we own. Beyond Meat Inc. is revamping its retail sales strategy to center on five major grocers and hiring a new marketing executive as part of an effort to reinvigorate the plant-based food. Beyond Meat is seeking a marketing, advertising, regulatory, and trademark attorney with 10-12 years of experience. 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. See the math behind this reverse DCF scenario. Whos to say that its red meat? This all ended with Beyond Meats new look. Beyond is working to streamline its operations and reverse declining sales. It began trading at $25/share on the Nasdaq stock exchange and ended the day at $65.75. 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. Continue reading your article witha WSJ subscription, Already a member? 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. Beyond Meat stock has staged a dramatic recovery in January, rising by more than 50% since the end of last year. Furthermore, Don Lee alleged significant concerns about food safety protocols concerning the raw materials that Beyond Meat sent. Beyond Meat, the company that is making eating plant-based protein mainstream continues to grow at a fast pace. This is one of the biggest first-day pop-ups in recent history. 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. Plant-based eaters now account for 8% of the global population. What kind of external factors/changes do you think may have inspired the birth of Beyond Meat? Landing in Whole Foods which takes the brands it allows in its doors seriously was a signal to both consumers and retail customers that Beyond Meat was a brand worth giving a chance. 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. Heres a high-quality portfolio to beat the market, with over 100% return since 2016, versus 55% for the S&P 500. Figure 7: Current Valuation Implies Drastic Profit Growth. It provided Beyond Meat with one of the best forms of advertising, credibility. Many undercover operations are conducted to get footage and investigate what is really going on inside the slaughter houses. For example, Kelloggs delayed the launch of itsfirst roundof Incogmeato products due to the COVID-19 pandemic. Plus, they created a new category by being one of the first to do it and do it right. Changes that have inspired the birth of Beyond Meat is the increased demand on plant-based products. Apply. The emphasis on the grocery channel will now almost certainly evolve into a long-term focal point for Beyond Meat.

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