beyond meat marketing strategy

See all adjustments to Beyond Meats valuationhere. The Motley Fool has a disclosure policy. While comprising only 5% of its total revenue, Tyson outspent Beyond Meats SG&A by 20 times over the TTM. Further, consensus estimates for Beyond Meats 2020 earnings are now $0.07/share. Evaluation of Options- Evaluating the options of Beyond Meat vs. regular meat. But consumers shop there because the low price points allow them to have a constant rotation of outfits. The main difference is that Impossible Foods takes its proteins from soy whereas Beyond Meat extracts it from peas. This is a full-time position, reporting to the Chief Legal Officer. By Christopher Lombardo. Sign up for our Newsletter to receive free, insightful tips on all things brand! Instead, they persevered. Acquisitions completed at these prices would be truly accretive to Kraft Heinzs shareholders. 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. While Tyson Foods posted almost 5% margin in FY2020 (ending 3rd Oct, 2020), the company is a dominant force in the market with its size being significantly larger in comparison, which makes it probably unreasonable to expect similar margins for Beyond Meat, which has still not made any profits. These launches create a lot of buzz and put Beyond the Meat on the map. 3. Whos to say that its red meat? Before joining Beyond Meat, Mr. Oghoghomeh served as Senior Vice President, Brand Marketing at Red Bull from 2021 to February 2023. 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. Low margins in an increasingly competitive industry leave Beyond Meat with less flexibility to compete on price or invest in marketing and R&D. The QSR is looking to get the lion's share of the meat substitute market with Beyond Meat. Showing that meat is not necessary to enjoy the same flavors while reaping more plant-based benefits. 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 heavily on foodservice penetration. Despite less transparency, I know that Beyond Meats executive compensation plan consists of a cash bonus, option grants, and restricted share units (RSUs). 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. Beyond Meat is a Los Angeles-based producer of plant-based meat substitutes, including vegan versions of burgers and sausages. Purchase Decision- When consumers are informed of the evaluation of options, information is readily available, and they have recognized a problem, it is so easy for consumers to make a newly informed decision. Per Figure 6, Beyond Meats TTM adjusted EBITDA of $45 million is well above core earnings of $4 million. Figure 9 compares the firms implied future NOPAT in this scenario to its historical NOPAT. You can see all the adjustments made to Beyond Meats balance sheethere. Success of any of Beyond Meats competitors could also further threaten future profit growth for Beyond Meat. Dollar figures in millions. 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. They clearly prioritize innovation. The difference with other plant-based patties is that their name is a synonym of quality for their clients. I would prefer Beyond Meat align executives interests with shareholders interests and link executive compensation with improving ROIC, which isdirectly correlated with creating shareholder value. Beyond Meat might be the pioneer in this segment, but now it faces fierce competition. A new marketing strategy will play up the health and sustainability benefits of Beyond Meat, Brown said. See Figure 8 for details. For example. 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. In 2021 Beyond Meat's revenue increased by 14.2% to reach $464.7 million. 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. 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. 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, the poultry producer exited earlier this year . And if this happens, you need to have others you can roll out. There are several lessons to be learned from Beyond Meats story. With a sound marketing strategy, Beyond Meat may be able to make its product cool again. See the math behind this reverse DCF scenario. Such high spending is not only unsustainable, but it also means Beyond Meats product must be more expensive than competitors products for the firm to turn a profit. Nestl, JBS, and Tyson have all recently launched plant-based burgers. Competitors. Impossible Foods sells slightly different products: Impossible Burger, Impossible Pork, Impossible Sausage. However, one of the biggest deal breakers for potential. 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. If you are wondering how Beyond Meat has been able to make strides where others havent consider these four elements of its marketing strategy. + Follow. This is the market drive for Beyond Meat. If you do subscribe to our retail trends newsletter to get the latest retail insights & trends delivered to your inbox. Stage of Market Lifestyle- The stage of the market lifestyle will influence the company on a few different categories. 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. As we touched on earlier, not everything was easy for Beyond Meat they made their fair share of mistakes along the way. Though the stock is likely to remain volatile in the near term, the strong growth outlook will help it once again reach the $200 level once the current crisis abates. Beyond Meat Announces New Executive Leadership Appointments to Accelerate and Support the Company's Vision for Strategic Growth. strategy uncovers and shares the "bold vision, . They did not service the vegan and vegetarian markets as traditional players did. 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. Considering our revenue projections of roughly $1.1 billion and 6% margins, almost $66 million in net income is possible by 2023. 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.. We hope this article helped you understand how crucial a good marketing strategy is for a companys success. A lot of people are trading so I know a lot of people are interested in the future of this company. The emphasis on the grocery channel will now almost certainly evolve into a long-term focal point for Beyond Meat. 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. 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. Now, lets proudly assume what they are: a plant-based burger, extracting plant proteins to make a tasty and healthy burger. And if youre looking to follow in this impressive brands footsteps, keep our above tips in mind and consider adding brand tracking software to your lineup because, without insight into how consumers feel about your brand, you wont know where to grow next. Koshy has 29.5 million followers on TikTok and 17.5 million fans on YouTube. 1. These features also convince consumers that Beyond Meat burgers are not your average veggie burgers which were never popular with mainstream consumers. As of December 31, 2020, Beyond Meat had products available at approximately 122,000 retail and foodservice outlets in over 80 countries worldwide. For example, evaluating the conditions of the animals before death, the process in which the meat is processed, the drugs and antibiotics that the animals were treated with before getting slaughtered. 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. The redistribution of cash flow to its investors is a challenge. 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. In this scenario, Beyond Meat would earn ~$12.5 billion (slightly more thanMarketsandMarkets2019 estimated global plant-based meat market size of $12.1 billion) in revenue in 2031, compared to $401 million TTM. revenue grows at consensus rates in 2021, 2022, and 2023, and. 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. In the second scenario, I use 61% growth (2020 consensus estimate) for all years to illustrate a best-case scenario where I assume Beyond Meat could grow revenue faster within the larger distribution network, resources, and customer base of Kraft Heinz. Then, followed by J.J. Redick, Maya Moore, April Ross, Eric Bledsoe, Maggie Vessey, and Tia Blanco. It provided Beyond Meat with one of the best forms of advertising, credibility. 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. https://www.wsj.com/articles/beyond-meat-hires-marketing-executive-revamps-retail-strategy-11675379688. Beyond Meat burgerseven have grill marks further convincing consumers that maybe it really is like meat. Figure 9: BYND Has Large Downside Risk: DCF Valuation Scenario. Learn how you can use Latana to improve your brand marketing and grow faster. Many people can not even tell the difference between real meat and Beyond Meat. Their products are now sold in 17,000 grocery stores and 12,000 eateries. Baseball player David Wright was the first celebrity to sign a contract with the brand. Beyond Meat, a producer of plant-based meat substitutes, was founded in 2009 in Los Angeles, California. Plant based options are the obvious choice. 4. Its worth noting that any deal that only achieves a 4.4% ROIC would not be accretive to shareholder value, as the return on the deal would equal Kraft Heinzs WACC. Instead, it avoids labelling its products as vegan even though they are. Could they suit flexitarians, meat-eaters? Beyond Meat stock has staged a dramatic recovery in January, rising by more than 50% since the end of last year. It doesnt matter what industry your brand is in theres always a chance consumers wont take to your product or service. This does not boil down to just knowledge on slaughter houses, animal conditions, bacteria etc. 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 Meatis one of them for the plant-based segment. Knowing that the meat is expired and poses a hazard to eat it. The number of shares sold short has increased by 10% since last month. 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. Their main rival is the company Impossible Foods. One of the most notable adjustments was $11 million inoperating leases. Furthermore, Don Lee alleged significant concerns about food safety protocols concerning the raw materials that Beyond Meat sent. Beyond Meats success comes partially from the fact that it has been able to evolve alongside or prior to consumer demand. 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 mattress. 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. For example, Tyson Food, one of the biggest and earliest investors in Beyond Meat, which had a 5% stake in 2016 exited in 2019. BYND entered into a partnership with Alibaba Group, whereby its products will be available in Freshippo stores (Alibabas supermarkets) in Shanghai. Beyond Meat has been working with them since February 2019. Beyond Meats profitability ranks at the bottom of this peer group. 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 a sound marketing strategy, Beyond Meat may be able to make its product cool again. Information Search- Consumers using this new information to do their own research on the history of slaughter houses and the conditions in which animals are being tortured and killed to create meat. Beyond Meat went from very dark and meat-like packagings to a fresher and smoother look. A staff member at Business Insider that cooked and reviewed a Beyond Meat burger at homesaidthis about it: overall, it was tasty and juicy, unlike most veggie burgers which can often taste closer to cardboard than beef. Marketing is always easier when you have a great product because you dont have to try quite as hard to get people to try it as consumption spreads more organically over time via. 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%). Beyond Meat was one of the most successful IPOs (Initial Public Offerings) of 2019. Why? Expand the definition of your target market. Measuring Brand Awareness As Told By Marketing Experts, journalists who actually tasted the chicken reported. Research on Beyond Meat's Profitability Problems and Strategies. At the end of 2Q20, Beyond Meat had $222 million of cash and cash equivalents on its balance sheet. When I use myreverse discounted cash flow (DCF) modelto analyze the expectations implied by the stock price, BYND appears significantly overvalued. Beyond Meat Narrows Its Losses. We believe there's a better way to feed our future. In 2019, they partnered up with Dunkin Donuts to supply their Meatless Sausage for the breakfast chains sandwiches nationwide. Remember the man-ish look of the burger boxes, the focus on the amounts of protein? 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. Nope, its just Beyond Meat. With low margins and little control over the majority of distribution, I think shares can fall sharply from current levels. 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. Beyond Meat constantly reinvests their earnings in further research and development, as well as in marketing, and in scaling up production and distribution. Especially when competitors will try to introduce products that may be better than the original. Word of . Disclosure: David Trainer, Kyle Guske II, and Matt Shuler receive no compensation to write about any specific stock, sector, style, or theme. 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. 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. 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. Many people do not know that eating meat is not only eating meat, but eating the history in which the meat came from. However, by now its clear that plant-based meat alternatives are here to stay and theyre gaining traction every year. 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. 2 1 Comment. 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. Option grants and RSUs directly align executives interests with the price of the companys shares and not necessarily with creating shareholder value. They both rearrange proteins to create their plant-based products. DOI: 10.2991/assehr.k.211209.003. We believe Beyond Meat Revenues have the potential to rise close to 2.7x from the level of $407 million in 2020 to $1.1 billion by 2023, representing a growth rate of roughly 40% per year (for context, the compounded annual growth rate was a very healthy at 164% between 2016 and 2019). Back in 1988 when John Mackey, co-founder of Whole Foodstried to get funding to expand his companyhe was rejected by many venture capitalists. But thats what BYNDs investors are betting will not happen! 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. Brown. This makes a lot of sense since only2.7%of packaged meat sales in the United States are plant based. 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. Beyond Meat Inc. BYND, -7.36% 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 . Opinions expressed by Forbes Contributors are their own. The Double Distribution Canal: A Major Strength. Plant-based burgers have existed for decades before Beyond Meat. Instead Beyond Meat fought for placement within the meat section of grocery stores. Some of the largest consumer food brands have followed suit. word of mouth. Figure 7: Current Valuation Implies Drastic Profit Growth. 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". And now the ravenous race for market share begins, with Beyond Meat and Impossible Foods (which has raised nearly $500 million in debt and equity) in prime position to . Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Fourth Quarter 2021. 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. If Beyond Meat can improve its NOPAT margin to 5% (equal to Tysons TTM margin) and grow revenue at 61% in 2020, 55% in 2021, and 47% in 2022 (consensus estimates) and by 20% compounded annually thereafter, the stock has significant downside risk. 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. Things Are Only Getting Worse for Beyond Meat Stock. [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. Dow Jones Reprints at 1-800-843-0008 or visit www.djreprints.com. In the first scenario, the estimated revenue growth rate is 61% in year one, 55% in year two, and 47% in year three, or equal to consensus. Like Comment Share . Digital Marketing @ Beyond Meat | Award-Winning Author | Driving Success Through Tech, Creativity, & Strategy Pittsburgh, Pennsylvania, United States 631 followers 500+ connections This is the first time a vegan meat alternative has been merchandised in the meat department at Whole Foods Market.After that Beyond Meatstarted calling itself:the worldsfirst plant-based burger sold in the meat case of U.S. grocery stores.. We visited . 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. 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. 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. Even in the most optimistic of scenarios, Beyond Meat is worth less than its current share price. This scenario represents the minimum level of performance required not to destroy value. Investors are beginning to worry whether or not Beyond Meat will be able to sustain the $4 billion valuation in stock it currently has. Figure 4: Expenses as % of Revenue: Beyond Meat 2Q19 vs. 2Q20, BYND Operating Expense As Of Revenue 2Q19 Vs. 2Q20. 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. Since its high-flying IPO at $46, this stock has soared to $135. 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. Per Figure 6, Beyond Meat's TTM adjusted EBITDA of $45 million is well above core earnings of $4 million. Find out how 3 brands use customer data to find success! This created the need for healthy products. Beyond Meat Is Down 93% From Its High. Plant-based eaters now account for 8% of the global population. According to the Partners In Leadership Happiness at Work survey, when employees are happier at work, 85% take more initiative. What is Beyond Meats marketing strategy? 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. Success of any of Beyond Meats competitors could also further threaten future profit growth for Beyond Meat. First, investors need to know that Beyond Meat has a large liability that makes it more expensive than the accounting numbers would initially suggest. Over 2Q20, Beyond Meat removed $1.5 million (1% of revenue) in other expenses when calculating adjusted EBITDA. 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. People are able to do extensive research on problems after recognizing that there is an issue. In 2014 they developed their first simulated beef product and expanded their presence from 1,500 to 6,000 stores in the US. The first six months of 2020 have visibly transformed Beyond Meat's(BYND 5.83%) approach to marketing its plant-based, meat substitute products. One of the ways it did this was by creating burgers that look like meat burgers down to the meat actually bleeding. 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. Get the latest information and insights into the world of brand. So, what can you learn from Beyond Meat's marketing strategy? 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. The founder, Ethan Brown, said in June that the companys objective is to make plant-based meat cheaper than animal protein. Beyond Meat, the company that is making eating plant-based protein mainstream continues to grow at a fast pace. While many consumers are not willing to pay an average of $3 more a pound for a. Combine revenue growth with the fact that Beyond Meats net income margins (net income, or profits after all expenses and taxes, calculated as a percent of revenues) are on an improving trajectory. 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. 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. Sustainable Competitive Advantage- Beyond Meats formula for the perfect flavoring to taste just like a real burger. Beyond Meats massive revenue growth cannot last forever. Catalyst: Others Success Could Come at Beyond Meats Expense. 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. Also, seeing that a lot of slaughter houses will absolutely not let anyone come see the inside conditions that animals are facing. Beyond Meat also has big contracts with fast-food chains, as mentioned before, which is a distribution canal bringing lots of cash flow. Ads like this are created to convert the masses instead of targeting a niche market. Plus, they created a new category by being one of the first to do it and do it right. This adjustment represents 7% of Beyond Meats market cap. . 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. When it comes to social causes brands still need to remember if the product isnt good no social cause, no matter how important can save it. 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. 2023 Latana GmbH. Eating meat has long been associated with masculinity. Changes that have inspired the birth of Beyond Meat is the increased demand on plant-based products. Links: https://zaap.bio/lillytalavera. Market Drivers- Market drives come from the availability of knowledge on healthy products vs. mass marketing for bad products. *Average returns of all recommendations since inception. Beyond Meats successes have inspired the giants to create new categories.

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