Plant based burgers are not new but Beyond Meat has been able to capture more of the . 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. This allows consumers to make their own informed decision. 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". 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. 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. BEYOND MEAT ANNOUNCES NEW . While Beyond Meat could continue to rally, it faces four challenges that. For this analysis, I choseKraft Heinz as a potential acquirer of Beyond Meat since it doesnt have a pea-protein based product like Beyond Meats and has a history of acquisitions. Prior to that Mr. Oghoghomeh served as Head of Recruitment Marketing - West Zone for Amazon, an eCommerce company from 2019 to 2021. Option grants and RSUs directly align executives interests with the price of the companys shares and not necessarily with creating shareholder value. Read the full post on my retail trends blog by clicking here. Of course, this is wrong, and our body adapts to whatever we give it. Part of Beyond Meats strategy is to redefine what the best source of protein is. Beyond Meat entered into a partnership with PepsiCo. 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. First of all, think of the big picture when it comes to segmentation: who will really buy your products? Back in 1988 when John Mackey, co-founder of Whole Foodstried to get funding to expand his companyhe was rejected by many venture capitalists. Beyond Meat, therefore, accomplished something huge: its name is enough to make people reassured about the quality and taste. 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. Lets have a look at their most serious competitor: Impossible Foods. Baseball player David Wright was the first celebrity to sign a contract with the brand. 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. Disclosure: David Trainer, Kyle Guske II, and Matt Shuler receive no compensation to write about any specific stock, sector, style, or theme. Your brand, too, needs the liberty to change. Extensive background in CPG . It is better to create a plant-based meat product, not only because of meat expiration issues, but bacterial issues with animals, mad cow disease, and so many other factors that clearly make eating plants natural to humans and such a better option. Plant based options are the obvious choice. However, it hasnt always been smooth sailing for Beyond Meat in March 2019, Don Lee Farms filed a civil suit against its former business partner. Youre reading a free article with opinions that may differ from The Motley Fools Premium Investing Services. The QSR is looking to get the lion's share of the meat substitute market with Beyond Meat. There are limits on how much Kraft Heinz should pay for Beyond Meat to earn a proper return, given the NOPAT or free cash flows being acquired. Find out how 3 brands use customer data to find success! [1]My firms core earnings are a superior measure of profits, as demonstrated inCore Earnings: New Data & Evidencea paper by professors at Harvard Business School (HBS) & MIT Sloan. 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. strategy uncovers and shares the "bold vision, . 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. Nestl, JBS, and Tyson have all recently launched plant-based burgers. 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. Stage of Market Lifestyle- The stage of the market lifestyle will influence the company on a few different categories. Many undercover operations are conducted to get footage and investigate what is really going on inside the slaughter houses. Eating meat has long been associated with masculinity. With sharp growth in revenues, margins have increased from -89% in 2017 to -9.4% over the last twelve months. 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. As of December 31, 2020, Beyond Meat had products available at approximately 122,000 retail and foodservice outlets in over 80 countries worldwide. This adjustment represents 7% of Beyond Meats market cap. These days, fewer investors pay attention to fundamentals and the red flags buried in financial filings. This is the market drive for Beyond Meat. Production Supervisor - 2nd Shift. The key variables are the weighted average cost of capital (WACC) and ROIC for assessing different hurdle rates for a deal to create value. Figure 4: Expenses as % of Revenue: Beyond Meat 2Q19 vs. 2Q20, BYND Operating Expense As Of Revenue 2Q19 Vs. 2Q20. After tying up with Dunkin soon after its IPO, Beyond Meat entered China in 2020. 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. Learn how you can use Latana to improve your brand marketing and grow faster. It may even get heavier as more people understand healthy food from non-healthy food. Total revenue jumped by 69% against the prior-year quarter to $113.3 million. When Beyond Meat was met with the failure of their Chicken-Free Strips their first real product they didnt fold. This makes a lot of sense since only2.7%of packaged meat sales in the United States are plant based. We hope this article helped you understand how crucial a good marketing strategy is for a companys success. Its stock value gained 163% on the day of its stock introduction. Changes that have inspired the birth of Beyond Meat is the increased demand on plant-based products. 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. Additionally, Beyond Meat is introducing its plant-based meatballs in Coles, the second largest supermarket chain in Australia with over 2,500 stores. To do so, employees need to very clearly understand the companys priority: is it safety, profits, brand fidelity? Over the TTM period, FCF is -$164 million. From the Beyond Burger to Beyond Sausage, and their latest Beyond Meatballs this brand is really on a roll. According to the Partners In Leadership Happiness at Work survey, when employees are happier at work, 85% take more initiative. Figures 10 and 11 show what I think Kraft Heinz should pay for Beyond Meat to ensure it does not destroy shareholder value. Beyond Meat went from very dark and meat-like packagings to a fresher and smoother look. Beyond is working to streamline its operations and reverse declining sales. illustration, packages of Beyond Meat "The Beyond Burger" sit in a refrigerator, June 13, 2019 in the Brooklyn borough of New York City. See all adjustments to Beyond Meats valuationhere. Beyond Meat burgerseven have grill marks further convincing consumers that maybe it really is like meat. 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. June 4, 2021 . Since its high-flying IPO at $46, this stock has soared to $135. 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. 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. Things Are Only Getting Worse for Beyond Meat Stock. January 2021. Expand the definition of your target market. By July 2019, Beyond Meat could claim a market value of $11.7 billion which was a huge increase from its pre-IPO valuation of $3.8 billion. 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. Figure 7: Current Valuation Implies Drastic Profit Growth. Plant-based foods are more than a fad, they are a huge economic trend. 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. The redistribution of cash flow to its investors is a challenge. When vegan meat alternatives first started to appear on the market, many people saw them as a fad. And while there are a few ways to do this, brand monitoring software is your best bet, as it allows you to track your chosen brand KPIs for the target audiences that matter. Without significant increases over the margins and revenue growth assumed in this scenario, an acquisition of Beyond Meat at its current price destroys significant shareholder value. 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 . One of the ways it did this was by creating burgers that look like meat burgers down to the meat actually bleeding. Plant-based burgers have existed for decades before Beyond Meat. 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. Our goal is to give you the key to understanding Beyond Meats rapid success, to show you the hidden reasons for their success. 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. Its an era of growth for the still young start-up. BYND revenues saw a rise of 36.6% y-o-y in 2020, which was sharply lower than historical growth rates. The larger the firm gets, the more difficult it becomes to achieve large year-over-year (YoY) growth rates. Why? Per Figure 5, Beyond Meat saw significant improvement in profitability in 2018, but the improvement was short lived. Figure 5: Beyond Meats Revenue & Core Earnings Since 2017. But keep in mind to do this, youll need data on how consumers are responding to your competitors. 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? However, this trend is expected to reverse in the short term and the company will once again get on its fast growth track and there are multiple trends that support this growth outlook. The Impossible Foods start-up was founded in 2011 in California by Patrick O. 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. The alternative meat producer is reportedly focusing its retail . 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. 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. The company's second-quarter 2020 earnings report, released Tuesday after the markets closed, revealed that it's still experiencing rampant growth. Lets take a look at data from Germany. However, by now its clear that plant-based meat alternatives are here to stay and theyre gaining traction every year. Going forward, Beyond Meat will find it even more difficult to grow revenue and profits as competitors flood the market. Dont become so attached to a product that you arent willing to see when it no longer serves you. While many consumers are not willing to pay an average of $3 more a pound for a. How Beyond Meat's Marketing Strategy Set it Apart . 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. 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. 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. What are your predictions for the future of this company? Per Figure 6, Beyond Meats TTM adjusted EBITDA of $45 million is well above core earnings of $4 million. This does not boil down to just knowledge on slaughter houses, animal conditions, bacteria etc. Even with that success, Brown continues to think big . 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 Meat has earned a premium name thanks to its marketing strategies, but this premium is too much. 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 founder, Ethan Brown, understood the place of meat in the collective perception very early on. Given that most plant-based protein products are now aiming for the same goal imitating the taste and texture of meat it stands to reason that as the plant-based protein market matures, differentiation between products will diminish as all products begin to taste more and more like meat. One of Beyond Meat's biggest and earliest investors was Tyson Foods, which had a 5 percent stake in 2016, later raised to 6.52 percent. 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. Now, lets proudly assume what they are: a plant-based burger, extracting plant proteins to make a tasty and healthy burger. 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. Figure 11 shows the implied values for Beyond Meat assuming Kraft Heinz wants to achieve an ROIC on the acquisition that equals 6%. They knew that vegans and vegetarians would use and love the product regardless if they targetted them because the products were so superior to what they were used to. Meditation apps have seen a boom in popularity over the past few years in the US but does their growth extend to Europe? This is not by accident but instead by design. Still, it's clear that Brown's idea has caught on: The 10-year old company went public earlier this month at a $1.5 billion valuation. 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". Since going public in early May, Beyond Meat's stock has soared more than 450 percent and its market value is over $8 billion. One of the most important pieces of furniture we own. In 2021 Beyond Meat's revenue increased by 14.2% to reach $464.7 million. For reference, Beyond Meats invested capital has increased by an average of $84 million (28% of 2019 revenue) over the past two years. 2 1 Comment. Create a great product. We can spot changes in the design since their arrival. Below is a short list of some of Beyond Meats alternative meat competitors: This list is not exhaustive and doesnt include any of the traditional meat products that continue to garner a large share of consumer dollars. Some of the largest retailers in the world including Zara and H&M are in the fast fashion business which is not environmentally friendly. For example, without any existing shelf space, and only recently announcing an e-commerce platform, Beyond Meat must spend more on not only convincing consumers to try their products, but also on retailers to display their products. What can you learn from this? In any case, I view recent moves as encouraging as Beyond makes moves to improve its footing to grow as a . People tend to associate meat with strength, with muscles. Beyond Meat has been working with them since February 2019. Beyond Meat was the first company to sell plant-based burgers in grocery stores meat sections. Though BYNDs margins remained negative at close to -13% in 2020 (due to the impact of the pandemic), the companys operations are expected to improve and turn profitable in 2022, with projected margins of 3%. It began trading at $25/share on the Nasdaq stock exchange and ended the day at $65.75. Looking ahead to 2021, consensus earnings estimates are a much higher $0.47/share.