Like Comment Share . But what if youre looking for a more balanced portfolio instead? This would make growth in Beyond Meats stock price a real possibility in the next two years, taking its stock price to $200. Beyond Meat, a producer of plant-based meat substitutes, was founded in 2009 in Los Angeles, California. Find out how 3 brands use customer data to find success! Several of Beyond Meats competitors, including Hormel, Nestle, Kellogg, Tyson, Kroger, ConAgra, and Kraft Heinz, enjoy key competitive advantages: These advantages are very important and very difficult, if not impossible, for new entrants like Beyond Meat to match or overcome in the near term, if ever. Figure 10 shows the implied values for BYND assuming Kraft Heinz wants to achieve an ROIC on the acquisition that equals its WACC of 4.4%. Disclosure: David Trainer, Kyle Guske II, and Matt Shuler receive no compensation to write about any specific stock, sector, style, or theme. 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. Plant-based meat alternatives are on the rise and not just with vegans. Our goal is to give you the key to understanding Beyond Meats rapid success, to show you the hidden reasons for their success. 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. 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. After much anticipation, Beyond Meat announced a three-year partnership with McDonalds in February 2021, under which BYND will be McDonalds preferred supplier for the patty in the McPlant, a new plant-based burger being tested in select McDonalds markets globally. This is rather than Beyond Meat actually creating a meat brand that is real meat. So, what can you learn from Beyond Meat's marketing strategy? But for a young organization that wants to leapfrog rivals in gaining plant-based mindshare, the shift isn't illogical, and it may result in a durable competitive advantage. Over the TTM period, FCF is -$164 million. 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. In total, the global market for meat substitutes is set to grow to $23.4 billion by 2024, according to market research company Euromonitor. Are they only for vegans? 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. 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. 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. Beyond Meat burgerseven have grill marks further convincing consumers that maybe it really is like meat. on July 4th, eating a hot dog with your family. Get the latest information and insights into the world of brand. 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. Instead of drawing attention to a product that consumers didnt love, they simply discontinued it and slowly fazed it out of supermarkets. In 2014 they developed their first simulated beef product and expanded their presence from 1,500 to 6,000 stores in the US. February 1, 2022 . Then, followed by J.J. Redick, Maya Moore, April Ross, Eric Bledsoe, Maggie Vessey, and Tia Blanco. Beyond Meat, the company that is making eating plant-based protein mainstream continues to grow at a fast pace. 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. Plant based options are the obvious choice. Learn how you can use Latana to improve your brand marketing and grow faster. 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. The company's vision is for consumers to enjoy a meat-like taste and texture in their favourite dishes while avoiding the many chemicals used in processed meat and reducing the number of animals killed every year. After all, the positive choices we make every day - no matter how small - can have a great impact on our world. Investors should note that maximizing customer acquisition through the retail channel will probably crimp the company's admirable growth rate, as future promotions and new iterations of discounted value packs will reduce the amount of recorded sales (net revenue), as we've discussed above. All rights reserved. Plant based burgers are not new but Beyond Meat has been able to capture more of the mainstream market. 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. 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 was the first company to sell plant-based burgers in grocery stores meat sections. 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. Although its products are plant based Beyond Meats marketing does not explicitly call that out. 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. 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. Beyond Meat positioned its products as similar to animal meat as they could. 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. The Impossible Foods start-up was founded in 2011 in California by Patrick O. Sign up for our Newsletter to receive free, insightful tips on all things brand! Beyond Meat was one of the most successful IPOs (Initial Public Offerings) of 2019. Beyond Meat entered into a partnership with PepsiCo. Impossible Foods sells slightly different products: Impossible Burger, Impossible Pork, Impossible Sausage. Lets have a look at their most serious competitor: Impossible Foods. This all ended with Beyond Meats new look. Heres a quick summary for noise traders when analyzing BYND: Executive Compensation Adds Additional Risk. They did not service the vegan and vegetarian markets as traditional players did. 3. Beyond Meat is seeking a marketing, advertising, regulatory, and trademark attorney with 10-12 years of experience. 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. Leverage partners with larger platforms to expand reach. Plant-based burgers have existed for decades before Beyond Meat. 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. When the Chicken-Free Strips failed, it wasnt only about the taste something was just off. Figure 8: Current Valuation Implies Massive Revenue Growth, Significant Downside in a More Realistic Scenario. After tying up with Dunkin soon after its IPO, Beyond Meat entered China in 2020. It may even get heavier as more people understand healthy food from non-healthy food. If youre always innovating and looking towards the future, youll rarely be caught off guard. They began targeting not only vegetarians and vegans, but also and mainly meat-eaters; flexitarians. 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. Beyond Meat has earned a premium name thanks to its marketing strategies, but this premium is too much. 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. However, the poultry producer exited earlier this year . Published May 20, 2021. The design softened. Brown. Critical Details Found in Financial Filings by My Firms Robo-Analyst Technology. By Christopher Lombardo. Instead, they persevered. While vegans and vegetarians are less picky when it comes to whether or not meat substitutes really taste and feel like meat, regular meat-eaters are much more tricky to convince. Ads like this are created to convert the masses instead of targeting a niche market. Showing that meat is not necessary to enjoy the same flavors while reaping more plant-based benefits. We believe there's a better way to feed our future. Beyond Meat's marketing strategy is to convert carnivores into occasional vegans. Therefore, restaurant owners tend to put the Beyond Meat logo on the menu when featuring their products. Its difficult to imagine the product or service that got your brand on the map might not be the one that helps you achieve further growth. 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. 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.. Word of . We hope this article helped you understand how crucial a good marketing strategy is for a companys success. . People are able to do extensive research on problems after recognizing that there is an issue. 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. She has also held senior leadership roles across PepsiCo's North America business during her more than 15-year career at the food . While comprising only 5% of its total revenue, Tyson outspent Beyond Meats SG&A by 20 times over the TTM. You can see all the adjustments made to Beyond Meats balance sheethere. A year ago, the consumer discretionary upstart's top line reflected the depth of its marketing and supply chain investment in the restaurant business: These sales were nearly identical to their retail counterpart: Source: Beyond Meat. Eat What You Love A new marketing strategy will play up the health and sustainability benefits of Beyond Meat, Brown said. Another key marketing vehicle for the company is its partnerships with big brands likeMcDonalds, KFCand Pizza Hut. We can spot changes in the design since their arrival. 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. 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. Cost basis and return based on previous market day close. More and more meat-eaters and flexitarians are looking to plant-based products to offset their carbon footprints and help them live a more sustainable lifestyle. Plant-based foods are more than a fad, they are a huge economic trend. But just how do these brands fare when it comes to brand awareness and consideration. 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. 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. This is, in fact, after BYND partnered with Starbucks, Yum Brands, and Sinodis. 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. Also, seeing that a lot of slaughter houses will absolutely not let anyone come see the inside conditions that animals are facing. Before joining Beyond Meat, Mr. Oghoghomeh served as Senior Vice President, Brand Marketing at Red Bull from 2021 to February 2023. While many consumers are not willing to pay an average of $3 more a pound for a. 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. 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. This is a full-time position, reporting to the Chief Legal Officer. This is a major strength: a high speed-to-market. Per Figure 4, Beyond Meats operating expenses as a percent of revenue have actually increased over the past twelve months from 97% in 2Q19 to 107% in 2Q20. There are currently 7 million shares sold short, which equates to 9% of shares outstanding and just over one day to cover. revenue grows 24% a year from 2023-2027 (continuation of 2023 consensus), then. Furthermore, many of the firms in Figure 2 have other key advantages multi-year relationships and existing distribution networks with grocery stores and quick-serve restaurants such asTyson, or in the case of Kroger, direct control of distribution and the end-consumer relationship. See the math behind this reverse DCF scenario. 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 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. This pivot on management's part is undergirded by a continuing commitment to building out manufacturing and distribution capacity -- even in the middle of a pandemic, Beyond Meat more than tripled its capital expenditures in the second quarter against the prior year, to $26 million. 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 . Made from "soy powder, gluten-free flour, carrot fiber and other ingredients", they used a food extrusion machine to create a chicken-like texture. What is Beyond Meats marketing strategy? 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. This is very rare: imagine if menus displayed all the product brands they use to cook the dishes you eat. 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. Extensive background in CPG . 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.. Should Kellogg continue to push the marketing of Incogmeato and swiftly gain customers, investors may kiss the ultra-high expectations baked into BYND goodbye. 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. Many undercover operations are conducted to get footage and investigate what is really going on inside the slaughter houses. Beyond Meats profitability ranks at the bottom of this peer group. Tyson Foods (TSN), the largest meat producer in the U.S., sold its stake in Beyond Meat in April 2019 and just a few months laterannouncedthe launch of its plant-based protein brand, Raised & Rooted. By 2015, even Walmart was selling Beyond Meats plant-based products! In order to increase its manufacturing capacity, in June 2018, Beyond Meat opened a second production facility in Columbia, Missouri and a third in El Segundo, California. Links: https://zaap.bio/lillytalavera. Looking ahead to 2021, consensus earnings estimates are a much higher $0.47/share.