Plant based options are the obvious choice. When vegan meat alternatives first started to appear on the market, many people saw them as a fad. 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. To fight this incorrect belief, Ethan Brown launched a campaign featuring famous athletes. Highlighted by Beyond Meat 's stunning public debutwhich recorded a jaw-dropping 163% gain in its first daythe vegetarian alternatives category of foodtech is blowing up. Before joining Beyond Meat, Mr. Oghoghomeh served as Senior Vice President, Brand Marketing at Red Bull from 2021 to February 2023. The organizational goals have to be settled and explained. First of all, think of the big picture when it comes to segmentation: who will really buy your products? . Plant-based foods are more than a fad, they are a huge economic trend. A lot of people are trading so I know a lot of people are interested in the future of this company. Beyond Meat entered into a partnership with PepsiCo. After tying up with Dunkin soon after its IPO, Beyond Meat entered China in 2020. In any case, I view recent moves as encouraging as Beyond makes moves to improve its footing to grow as a . Their products are now sold in 17,000 grocery stores and 12,000 eateries. Create a great product. In 2021 Beyond Meats revenue increased by14.2%to reach $464.7 million. In 2014 they developed their first simulated beef product and expanded their presence from 1,500 to 6,000 stores in the US. . 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. Figure 7: Current Valuation Implies Drastic Profit Growth. Tackle stereotypes about who your customers should be. 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%. 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. strategy uncovers and shares the "bold vision, . Economic earnings, which account for the unusual items on the income statement and changes to the balance sheet, are negative $6 million and declining over the TTM, even as adjusted EBITDA is positive and rising. You can see all the adjustments made to Beyond Meats income statementhere. How Beyond Meat's Marketing Strategy Set it Apart . Many undercover operations are conducted to get footage and investigate what is really going on inside the slaughter houses. She has also held senior leadership roles across PepsiCo's North America business during her more than 15-year career at the food . Per Figure 5, Beyond Meat saw significant improvement in profitability in 2018, but the improvement was short lived. Balance Sheet: I made $290 million of adjustments to calculate invested capital with a net decrease of $228 million. revenue grows at consensus rates in 2021, 2022, and 2023, and. Net revenues decreased 1.2% to $100.7 million in the fourth quarter of 2021, compared to $101.9 million in the year-ago period. The first six months of 2020 have visibly transformed Beyond Meat 's ( BYND -0.58%) approach to marketing its plant-based, meat substitute products. 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. What kind of external factors/changes do you think may have inspired the birth of Beyond Meat? 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.. word of mouth. The QSR is looking to get the lion's share of the meat substitute market with Beyond Meat. Also, seeing that a lot of slaughter houses will absolutely not let anyone come see the inside conditions that animals are facing. Attracted by Beyond Meats impressive growth rates and soaring market value, multiple competitors are entering the alternative meat industry. 2. 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. See all adjustments to Beyond Meats valuationhere. With these headwinds Beyond Meat had to convince meat lovers that its products passed the test. 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. This copy is for your personal, non-commercial use only. However, the poultry producer exited earlier this year . It doesnt matter what industry your brand is in theres always a chance consumers wont take to your product or service. Landing in Whole Foods which takes the brands it allows in its doors seriously was a signal to both consumers and retail customers that Beyond Meat was a brand worth giving a chance. Since its high-flying IPO at $46, this stock has soared to $135. Sustainable Competitive Advantage- Beyond Meats formula for the perfect flavoring to taste just like a real burger. 2 1 Comment. Dont be afraid to really study the competition and pay attention to all the little details that have made them successful. Concentrating on the health market, they were able to target a broad range of people seeking a better meat option than real meat. About 70% of the global population is cutting down its meat consumption. If youre always innovating and looking towards the future, youll rarely be caught off guard. illustration, packages of Beyond Meat "The Beyond Burger" sit in a refrigerator, June 13, 2019 in the Brooklyn borough of New York City. Additionally, the companys new partnerships will also drive impressive top line growth. 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. 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. Competition- Beyond Meat has created competition by completing innovating meat and how meat is viewed. 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. Sign up for our Newsletter to receive free, insightful tips on all things brand! This adjustment represents 7% of Beyond Meats market cap. Beyond Meat has been working with them since February 2019. 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. To make the world smarter, happier, and richer. According to the company, this package of 10 plant-based patties reduces the price of its burgers from nearly twice that of conventional burgers to a 20% premium. By Christopher Lombardo. 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. But thats what BYNDs investors are betting will not happen! Now, if Beyond Meats revenues grow 2.7x, the P/S multiple will shrink by more than 60% from its current level, assuming the stock price stays the same, correct? 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. I believe this drive will continue and not stop. From the beginning Beyond Meat had a vision for its business that was much broader than any of its predecessors. Beyond Meat might be the pioneer in this segment, but now it faces fierce competition. Along with continued marketing investment, the plant-based company strikes partnerships with McDonald's and Yum! Of course, this is wrong, and our body adapts to whatever we give it. 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. 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 is, in fact, after BYND partnered with Starbucks, Yum Brands, and Sinodis. 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. Entrepreneur, retail expert, strategy consultant and author. Beyond Meat was one of the most successful IPOs (Initial Public Offerings) of 2019. I assume revenue grows 47% in years four and five, the same as year three. Youre reading a free article with opinions that may differ from The Motley Fools Premium Investing Services. Especially when competitors will try to introduce products that may be better than the original. 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. If you do subscribe to our retail trends newsletter to get the latest retail insights & trends delivered to your inbox. 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. Beyond Meat is Wasting Its Advertising The company's strategy promotes plant-based meat as a category, not as a brand, which is ideal for its competitors Hermes Rivera via Unsplash From one perspective, Beyond Meat could hardly be in a better position. The mission of the company is focused on plant-based meat alternatives, using pea and other plant protein isolates. 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. Lets take a look at data from Germany. The superior scale of Beyond Meats peers will also challenge what the firm believes to be a critical competitive advantage its innovation. Eating plants is the best thing you can do for your diet. 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. 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. Plant based burgers are not new but Beyond Meat has been able to capture more of the . Also, these meat products are offered by themselves at the grocery stores. But what if youre looking for a more balanced portfolio instead? To do so, employees need to very clearly understand the companys priority: is it safety, profits, brand fidelity? 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. Plus, they created a new category by being one of the first to do it and do it right. Eating meat has long been associated with masculinity. According to the Partners In Leadership Happiness at Work survey, when employees are happier at work, 85% take more initiative. 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. 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. 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. Valuation: I made $757 million of adjustments with a net effect of decreasing shareholder value by $513 million. Making the world smarter, happier, and richer. Opinions expressed by Forbes Contributors are their own. 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. Beyond Meat stock has staged a dramatic recovery in January, rising by more than 50% since the end of last year. 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. Impossible Foods sells slightly different products: Impossible Burger, Impossible Pork, Impossible Sausage. Back in 1988 when John Mackey, co-founder of Whole Foodstried to get funding to expand his companyhe was rejected by many venture capitalists. 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. So, what can you learn from Beyond Meat's marketing strategy? Conference: 2021 3rd International Conference on Economic Management and Cultural . Figure 9: BYND Has Large Downside Risk: DCF Valuation Scenario. 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. 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. Nope, its just Beyond Meat. Data by YCharts Kellogg ( K ) and Conagra ( CAG ) are already big established brands, that . 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. Beyond Meatis one of them for the plant-based segment. the stock is worth just $30/share today - a 57% . 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. 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. In any case, I view recent moves as encouraging as Beyond makes moves to improve its footing to grow as a . These launches create a lot of buzz and put Beyond the Meat on the map. By Tricia McKinnon. 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.. By 2015, even Walmart was selling Beyond Meats plant-based products! Previously, people were limited to information they see on television which is in the best interests of companies that can afford those ad campaigns. Learn More. Total revenue jumped by 69% against the prior-year quarter to $113.3 million. on July 4th, eating a hot dog with your family. 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 with nutritional benefits of plant-based products has seen its stock rise by over 160% from the lows seen in March 2020. This would, in turn, take BYNDs market cap to about $14 billion by 2023, from $9.6 billion currently. BYND entered into a partnership with Alibaba Group, whereby its products will be available in Freshippo stores (Alibabas supermarkets) in Shanghai. The first six months of 2020 have visibly transformed Beyond Meat's(BYND 5.83%) approach to marketing its plant-based, meat substitute products. 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. (Photo by Smith Collection/Gado/Getty Images), BYND Operating Expense As Of Revenue Beyond Meat, BYND Current Valuation Implies Massive Revenue, BYND Implied Acquisition Prices For Value Neutral, BYND Implied Acquisition Prices For Value, See the math behind this reverse DCF scenario, directly correlated with creating shareholder value, The lack of competitive advantages that nearly all competitors possess, Doing the math: stock price implies huge increase in revenue/profits, Incogmeato by Morningstar Farms, owned by Kellogg Co. (K), Simply Plant-Based Meatless Burger, a SYSCO Corp. (SYY) exclusive product, Simple Truth plant-based meat, owned by The Kroger Co. (KR), Sweet Earth Brand, owned by Nestle (NSRGY), Happy Little Plants, owned by Hormel (HRL), Lightlife Foods, owned by Maple Leaf Foods, Shelf space large amounts of space, which can be very difficult to acquire, especially from firms like Kroger who directly control shelf space allocation, Marketing and advertising capacity existing businesses generate lots of cash flow that enables these firms to spend much more on marketing and advertising than Beyond Meat, Strong brand decades-long relationships with consumers across multiple brands that engender the trust that enables quicker adoption of newer products, Valuation implies massive improvement in profitability with sustained revenue growth rates, Domini Sustainable Solutions Fund (LIFEX) 3.4% allocation and unattractive rating. Now, lets proudly assume what they are: a plant-based burger, extracting plant proteins to make a tasty and healthy burger. Competitors, Serious Uphill Battle for Beyond Meat to Improve Profitability. At its TTM FCF burn rate, the firm has enough cash to operate for just over 16 months before needing additional capital. 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. Beyond Meat, the company that is making eating plant-based protein mainstream continues to grow at a fast pace. 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. Further, consensus estimates for Beyond Meats 2020 earnings are now $0.07/share. 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. Apart fromtotal debtwhich includes the operating leases noted above, the most notable adjustment to shareholder value was $572 million inoutstanding employee stock options. In total, the global market for meat substitutes is set to grow to $23.4 billion by 2024, according to market research company Euromonitor. 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. But just how do these brands fare when it comes to brand awareness and consideration. 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. 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. Then, followed by J.J. Redick, Maya Moore, April Ross, Eric Bledsoe, Maggie Vessey, and Tia Blanco. Could they suit flexitarians, meat-eaters? These days, fewer investors pay attention to fundamentals and the red flags buried in financial filings. 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. We hope this article helped you understand how crucial a good marketing strategy is for a companys success. Placing its hamburgers and breakfast proteins in major quick-service restaurant chains was a logical approach to igniting brand awareness. If yes (which is the most common case), you can sell them to way more people and have an even greater impact. 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. Organic growth along with benefits from the recent partnerships are expected to support continued healthy growth in retail as well as the restaurant segments of Beyond Meat, potentially taking the companys revenues to almost $1.1 billion by 2023. Baseball player David Wright was the first celebrity to sign a contract with the brand. Each implied price is based on a goal ROIC assuming different levels of revenue growth. Ads like this are created to convert the masses instead of targeting a niche market. 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. 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 created a need for plant-based foods to replace the broken system of meats. Since going public, four of its six quarters have shown improvement from. Your brand, too, needs the liberty to change. Brown. 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. For comparison, this scenario implies Beyond Meat would generate more sales than incumbent competitors such as Pilgrims Pride (PPC), ConAgra Foods (CAG), and Hormel Foods (HRL) in their last fiscal years. Even with that success, Brown continues to think big . With a sound marketing strategy, Beyond Meat may be able to make its product cool again. However, one of the biggest deal breakers for potential. 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. Catalyst: Others Success Could Come at Beyond Meats Expense. + Follow. Market Drivers- Market drives come from the availability of knowledge on healthy products vs. mass marketing for bad products. Plant-based meats look like an attractive bet to play the future of food. 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. With such strong momentum and triple-digit year-over-year revenue growth, traders may push this stock higher. 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. 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. People tend to associate meat with strength, with muscles. Weve previously shown how linking executive compensation to faulty metrics such asadjusted EBITDAcan lead to the destruction of shareholder value. In 2021 Beyond Meat's revenue increased by 14.2% to reach $464.7 million. Heres a high-quality portfolio to beat the market, with over 100% return since 2016, versus 55% for the S&P 500. Firstly, the gradual lifting of lockdowns in recent months will help the restaurant segment register strong growth along with sales from retail chains. Figure 8: Current Valuation Implies Massive Revenue Growth, Significant Downside in a More Realistic Scenario. When Beyond Meat was met with the failure of their Chicken-Free Strips their first real product they didnt fold. 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. Beyond Meat uses a robot to imitate the process of chewing. Beyond Meat Inc. 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. BYND revenues saw a rise of 36.6% y-o-y in 2020, which was sharply lower than historical growth rates. 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. Figure 3 shows Beyond Meat spends 37% of its revenue on operating expenses (SG&A, R&D, and restructuring costs), which is well above peers. Additionally, when their Chicken-Free Strips were finally taken off the market in 2019, they did so quietly. This is rather than Beyond Meat actually creating a meat brand that is real meat. 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. Published May 20, 2021. 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. People are able to do extensive research on problems after recognizing that there is an issue. As in all markets, there are leaders. If you want to stay up-to-date on the latest news in the plant-based market, to learn about the most recent innovations as they come out, do not hesitate tofollow us. 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. 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. February 1, 2022 . At the end of 2Q20, Beyond Meat had $222 million of cash and cash equivalents on its balance sheet. Moral of the story? Low margins in an increasingly competitive industry leave Beyond Meat with less flexibility to compete on price or invest in marketing and R&D. They clearly prioritize innovation. 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). Success of any of Beyond Meats competitors could also further threaten future profit growth for Beyond Meat. 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. They entered the restaurant market, and are currently sold to plant-based and mainstream restaurants. 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 . In fact, it has been shown that heart disease, cancer, and diabetes, three of the top ten causes of death, are linked to eating too much meat. Digital Marketing @ Beyond Meat | Award-Winning Author | Driving Success Through Tech, Creativity, & Strategy Pittsburgh, Pennsylvania, United States 631 followers 500+ connections But consumers shop there because the low price points allow them to have a constant rotation of outfits. One of the most notable adjustments was $11 million inoperating leases. Eat What You Love Measuring Brand Awareness As Told By Marketing Experts, journalists who actually tasted the chicken reported. This does not boil down to just knowledge on slaughter houses, animal conditions, bacteria etc. 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. BEYOND MEAT ANNOUNCES NEW .
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