But keep in mind to do this, youll need data on how consumers are responding to your competitors. 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. 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. Plant-based burgers have existed for decades before Beyond Meat. Attracted by Beyond Meats impressive growth rates and soaring market value, multiple competitors are entering the alternative meat industry. this also includes knowledge of every product that comes in contact with your body on a daily basis. KFC and Beyond Meat are partnering with YouTube star and influencer Liza Koshy to help reveal the debut. But thats what BYNDs investors are betting will not happen! 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. In 2014 they developed their first simulated beef product and expanded their presence from 1,500 to 6,000 stores in the US. 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. Competitors, Serious Uphill Battle for Beyond Meat to Improve Profitability. 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. Instead, due to theproliferation of noise traders, the focus tends toward technical trading tends while high-quality fundamental research is overlooked. Back in 1988 when John Mackey, co-founder of Whole Foodstried to get funding to expand his companyhe was rejected by many venture capitalists. This is one of the biggest first-day pop-ups in recent history. See all adjustments to Beyond Meats valuationhere. 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. 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. And if this happens, you need to have others you can roll out. Knowing that the meat is expired and poses a hazard to eat it. 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. 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. Each implied price is based on a goal ROIC assuming different levels of revenue growth. When I use myreverse discounted cash flow (DCF) modelto analyze the expectations implied by the stock price, BYND appears significantly overvalued. Beyond Meat constantly reinvests their earnings in further research and development, as well as in marketing, and in scaling up production and distribution. Competitive Advantage- Because Beyond Meat was one of the first to actually create a meat patty from plant proteins, they were able to turn it into the now known Beyond Burger. A year later, Beyond Meat developed its first beef product made from plant proteins, which later morphed into its now-famous Beyond Burger in 2016. This is introducing the category and it was picked up by Burger King. Is It Time to Buy? 2 1 Comment. 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. With a sound marketing strategy, Beyond Meat may be able to make its product cool again. Beyond Meats profitability ranks at the bottom of this peer group. Learn More. 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. 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. Beyond Meat founder, Ethan Brown, understood the place of meat in the collective perception very early on. Conference: 2021 3rd International Conference on Economic Management and Cultural . Distribution and use of this material are governed by 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 company's second-quarter 2020 earnings report, released Tuesday after the markets closed, revealed that it's still experiencing rampant growth. Beyond Meats successes have inspired the giants to create new categories. Extensive background in CPG . By Tricia McKinnon. Remember the man-ish look of the burger boxes, the focus on the amounts of protein? In the first quarter of 2019, Beyond Meat's first as a public company, its gross profit was just 26.8% of net revenue. Are they only for vegans? 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. Increased U.S. foodservice and international channel net revenues were more than offset by reduced U.S. retail channel net revenues, which decreased 19.5% compared to the year-ago period. We're here to help brands make better marketing decisions by delivering world-class, scalable insights. Time to Buy? 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.. Apply. Now, lets proudly assume what they are: a plant-based burger, extracting plant proteins to make a tasty and healthy burger. What is Beyond Meats marketing strategy? Even in the most optimistic of scenarios, Beyond Meat is worth less than its current share price. Investors are beginning to worry whether or not Beyond Meat will be able to sustain the $4 billion valuation in stock it currently has. However, given the low margins and overvalued stock price, I think it would be unwise for a larger firm to acquire Beyond Meat at current levels. By shifting from animal to plant-based meat, we can positively affect the planet, the environment, the climate and even ourselves. Plant-based eaters now account for 8% of the global population. From the beginning Beyond Meat had a vision for its business that was much broader than any of its predecessors. 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? Instead Beyond Meat fought for placement within the meat section of grocery stores. In order to get ahead of the competition, never stop innovating. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. 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 superior scale of Beyond Meats peers will also challenge what the firm believes to be a critical competitive advantage its innovation. These launches create a lot of buzz and put Beyond the Meat on the map. Links: https://zaap.bio/lillytalavera. The emphasis on the grocery channel will now almost certainly evolve into a long-term focal point for Beyond Meat. 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. 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. strategy uncovers and shares the "bold vision, . From the Beyond Burger to Beyond Sausage, and their latest Beyond Meatballs this brand is really on a roll. This is very rare: imagine if menus displayed all the product brands they use to cook the dishes you eat. Some of the largest retailers in the world including Zara and H&M are in the fast fashion business which is not environmentally friendly. Another key marketing vehicle for the company is its partnerships with big brands likeMcDonalds, KFCand Pizza Hut. Beyond is working to streamline its operations and reverse declining sales. Figures 10 and 11 show what I think Kraft Heinz should pay for Beyond Meat to ensure it does not destroy shareholder value. 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. . But what has allowed them to be so successful despite their setbacks? This competitive disadvantage only makes Beyond Meats path to sustainable profitability that much more difficult. Dont be afraid to really study the competition and pay attention to all the little details that have made them successful. This scenario represents the minimum level of performance required not to destroy value. Beyond Meats success comes partially from the fact that it has been able to evolve alongside or prior to consumer demand. Beyond Meat Narrows Its Losses. 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. Figure 5: Beyond Meats Revenue & Core Earnings Since 2017. 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). 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. Therefore, restaurant owners tend to put the Beyond Meat logo on the menu when featuring their products. Critical Details Found in Financial Filings by My Firms Robo-Analyst Technology. A lot of that clothing ends up in landfills which proves that the product often matters more than the social cause a customer is interested in. 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. Many people do not know that eating meat is not only eating meat, but eating the history in which the meat came from. 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. There are several lessons to be learned from Beyond Meats story. 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. Figure 11 shows the implied values for Beyond Meat assuming Kraft Heinz wants to achieve an ROIC on the acquisition that equals 6%. This assumption is highly unlikely but allows us to create best-case scenarios that demonstrate how high expectations embedded in the current valuation are. June 4, 2021 . If Beyond Meat created the healthiest plant based products that dont taste very good then it wouldnt be in business very long. It began trading at $25/share on the Nasdaq stock exchange and ended the day at $65.75. Heres a quick summary for noise traders when analyzing BYND: Executive Compensation Adds Additional Risk. Its an era of growth for the still young start-up. Dont become so attached to a product that you arent willing to see when it no longer serves you. Vegans and vegetarians, on the contrary, are often perceived as struggling to get enough protein and iron daily, as unhealthy weaklings. This has come from the increased consumer-knowledge on healthy products, plant-based diets,. It looks like meat, tastes like meat, and even feels like meatbut its made entirely of plants. Especially when competitors will try to introduce products that may be better than the original. There are countless advertisements with men barbequing burgers or hanging out with their friends as they bond over their favourite protein, read meat. Success of any of Beyond Meats competitors could also further threaten future profit growth for Beyond Meat. With such high expectations, nearly any negative news could place Beyond Meats future earnings in doubt and cause shares to fall. However, the fundamentals reveal this stock is more style than substance. 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. 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. 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. Over 2Q20, Beyond Meat removed $1.5 million (1% of revenue) in other expenses when calculating adjusted EBITDA. BYND entered into a partnership with Alibaba Group, whereby its products will be available in Freshippo stores (Alibabas supermarkets) in Shanghai. How did Beyond Meat become the leader it is today? We hope this article helped you understand how crucial a good marketing strategy is for a companys success. By Christopher Lombardo. Your brand, too, needs the liberty to change. Learn how you can use Latana to improve your brand marketing and grow faster.

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