Some of the largest retailers in the world including Zara and H&M are in the fast fashion business which is not environmentally friendly. 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. With these headwinds Beyond Meat had to convince meat lovers that its products passed the test. Figure 9 compares the firms implied future NOPAT in this scenario to its historical NOPAT. Beyond Meat, therefore, accomplished something huge: its name is enough to make people reassured about the quality and taste. In2016 Whole Foods decided to give the company a chance by placing Beyond Meat in its meat section. Stun is a creative branding agency. From the Beyond Burger to Beyond Sausage, and their latest Beyond Meatballs this brand is really on a roll. 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. When I use myreverse discounted cash flow (DCF) modelto analyze the expectations implied by the stock price, BYND appears significantly overvalued. People are able to do extensive research on problems after recognizing that there is an issue. With a sound marketing strategy, Beyond Meat may be able to make its product cool again. However, we can define the general key aspects: Targeting meat-eaters as well, not only vegans/vegetarians, Identifying the collective reputation of plant-based products, and changing it, Relying on its reputation to appear on restaurant menus and get cheap advertising. Knowing that the meat is expired and poses a hazard to eat it. 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. Along with continued marketing investment, the plant-based company strikes partnerships with McDonald's and Yum! Things Are Only Getting Worse for Beyond Meat Stock. Figure 3: Operating Expense as % of Revenue: Beyond Meat vs. 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. Is It Time to Buy? Their products are now sold in 17,000 grocery stores and 12,000 eateries. Figure 10: Implied Acquisition Prices for Value-Neutral Deal. Plant-based eaters now account for 8% of the global population. Continue reading your article witha WSJ subscription, Already a member? The following fund receives an unattractive rating and allocates significantly to BYND. Beyond Meat founder, Ethan Brown, understood the place of meat in the collective perception very early on. As in all markets, there are leaders. Brown. See allTrefis Featured AnalysesandDownloadTrefis Datahere. I believe this drive will continue and not stop. . 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. 4. Per Figure 5, Beyond Meat saw significant improvement in profitability in 2018, but the improvement was short lived. Beyond Meat Is On Its Path To Irrelevance - SeekingAlpha This has come from the increased consumer-knowledge on healthy products, plant-based diets,. Insider Trading and Short Interest Indicate Market Skepticism. We're here to help brands make better marketing decisions by delivering world-class, scalable insights. Beyond Meat Stock: A Competitive Analysis | Nasdaq I assume revenue grows 47% in years four and five, the same as year three. This is not by accident but instead by design. 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. 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%. Over 2Q20, Beyond Meat removed $1.5 million (1% of revenue) in other expenses when calculating adjusted EBITDA. Figures 10 and 11 show what I think Kraft Heinz should pay for Beyond Meat to ensure it does not destroy shareholder value. So, what can you learn from Beyond Meat's marketing strategy? 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. Dollar figures in millions. Since going public, four of its six quarters have shown improvement from. These features also convince consumers that Beyond Meat burgers are not your average veggie burgers which were never popular with mainstream consumers. 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. They entered the restaurant market, and are currently sold to plant-based and mainstream restaurants. Distribution and use of this material are governed by Over the TTM, Beyond Meat removed $23.7 million (6% of revenue) in share-based compensation and $7.5 million in restructuring expenses (2% of revenue) when calculating adjusted EBITDA. They only get anxious when they realize that they havent eaten something theyve come to believe they need., Beyond Meat believes that protein is protein and consumers shouldnt care if it comes from a plant or an animal. Letting go of your vision and plans is hard, but if its the right thing to do, you have to be willing to pivot. In 2021 Beyond Meat's revenue increased by 14.2% to reach $464.7 million. Big brands have started plant-based meats and substances that are more healthy in order to show that Beyond Meat is not the only plant-based guys in town and gain some market share. 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. 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. For example, Tyson Food, one of the biggest and earliest investors in Beyond Meat, which had a 5% stake in 2016 exited in 2019. And if this happens, you need to have others you can roll out. This is very rare: imagine if menus displayed all the product brands they use to cook the dishes you eat. The first campaign, The Future of Protein, was launched in 2015. 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. Many undercover operations are conducted to get footage and investigate what is really going on inside the slaughter houses. Apart fromtotal debtwhich includes the operating leases noted above, the most notable adjustment to shareholder value was $572 million inoutstanding employee stock options. How did Beyond Meat become the leader it is today? Devault, PA Operations - DEPA Production On-site. 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. Nope, its just Beyond Meat. The following table, covering Q2 2020, shows how drastically this dynamic has changed, as management has leaned into winning customers at the grocery shelf during a near-cessation in dining-out activities: Beyond Meat is now incentivizing potential retail customers to try its products via a limited-time offering it dubs the "Cookout Classic" burger value pack. Instead Beyond Meat fought for placement within the meat section of grocery stores. 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. 2 1 Comment. 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. 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. Consensus estimates expect revenue will grow 61% YoY in 2020, and just 17% YoY by 2025, per Figure 1. For non-personal use or to order multiple copies, please contact In 2020, they even signed a deal to open another production facility in Shanghai! Eat What You Love How Beyond Meat's Marketing Strategy Set it Apart . The superior scale of Beyond Meats peers will also challenge what the firm believes to be a critical competitive advantage its innovation. 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. 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. The number of shares sold short has increased by 10% since last month. Why? Therefore, they have a lot of time and competitive advantage before others to create the most well-known category before all other competitors. Baseball player David Wright was the first celebrity to sign a contract with the brand. 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). If youre always innovating and looking towards the future, youll rarely be caught off guard. The Audacious (and Risky) Strategy That Made Beyond Meat a Billion 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. 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. 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. It may even get heavier as more people understand healthy food from non-healthy food. Your brand, too, needs the liberty to change. 3. From the beginning Beyond Meat has viewed itself as a company that could take a typical meat eater and get them to consider a tasty alternative. 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. What kind of external factors/changes do you think may have inspired the birth of Beyond Meat? 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.
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