Here's how KFC is marketing its updated Beyond Meat faux - Ad Age 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. You can see all the adjustments made to Beyond Meats balance sheethere. However, the fundamentals reveal this stock is more style than substance. Acquisitions completed at these prices would be truly accretive to Kraft Heinzs shareholders. This adjustment represented 3% of reported net assets. Lets have a look at their most serious competitor: Impossible Foods. Beyond Meat stated that its mission is to push boundaries and disrupt. Beyond Meat founder, Ethan Brown, understood the place of meat in the collective perception very early on. See allTrefis Featured AnalysesandDownloadTrefis Datahere. In any case, I view recent moves as encouraging as Beyond makes moves to improve its footing to grow as a . 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. When vegan meat alternatives first started to appear on the market, many people saw them as a fad. 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%. A new marketing strategy will play up the health and sustainability benefits of Beyond Meat, Brown said. The first six months of 2020 have visibly transformed Beyond Meat's(BYND 5.83%) approach to marketing its plant-based, meat substitute products. Part of this shift happened without much intervention by management, as consumption in restaurants and other institutional foodservice outlets has plummeted since the spring, while at-home consumption has soared. 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. Instead, they persevered. Learn More. This all ended with Beyond Meats new look. Another key marketing vehicle for the company is its partnerships with big brands likeMcDonalds, KFCand Pizza Hut. 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. After tying up with Dunkin soon after its IPO, Beyond Meat entered China in 2020. Beyond Meat: The Keys To Disrupting An Enormous Market - Forbes Data by YCharts Kellogg ( K ) and Conagra ( CAG ) are already big established brands, that . Beyond Meat Narrows Its Losses. Dont be afraid to really study the competition and pay attention to all the little details that have made them successful. Beyond Meat strategy Sounds too good to be true, right? Dont become so attached to a product that you arent willing to see when it no longer serves you. The company's second-quarter 2020 earnings report, released Tuesday after the markets closed, revealed that it's still experiencing rampant growth. This would make growth in Beyond Meats stock price a real possibility in the next two years, taking its stock price to $200. Dollar figures in millions. As of December 31, 2020, Beyond Meat had products available at approximately 122,000 retail and foodservice outlets in over 80 countries worldwide. Since its high-flying IPO at $46, this stock has soared to $135. Things Are Only Getting Worse for Beyond Meat Stock. Resourceful, strategic, and self-directed leader with a proven record of achievement in global account management, business development and sales strategy leadership. Create a great product. 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. With such high expectations, nearly any negative news could place Beyond Meats future earnings in doubt and cause shares to fall. Continue reading your article witha WSJ subscription, Already a member? Beyond Meats profitability ranks at the bottom of this peer group. 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. Even more impressive is that Beyond Meat is, well, a food company (it develops plant-based meat products) and the sales for 2018 were only $87.9 million (and yes, the company has yet to post a . Apply. However, we can define the general key aspects: Targeting meat-eaters as well, not only vegans/vegetarians, Identifying the collective reputation of plant-based products, and changing it, Relying on its reputation to appear on restaurant menus and get cheap advertising. .css-16c7pto-SnippetSignInLink{-webkit-text-decoration:underline;text-decoration:underline;cursor:pointer;}Sign In, Copyright 2023 Dow Jones & Company, Inc. All Rights Reserved, adidas Promo Code - $30 Off 1000s of Best-Sellers + Free Shipping, 60% off running shoes and apparel at Nike without a promo code, Michael Kors promo code First Order: sign up for KORSVIP + Get 10% off. this also includes knowledge of every product that comes in contact with your body on a daily basis. The organizational goals have to be settled and explained. 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. But just how do these brands fare when it comes to brand awareness and consideration. Making the world smarter, happier, and richer. Fiduciaries should avoid Beyond Meat Inc. (BYND). What kind of external factors/changes do you think may have inspired the birth of Beyond Meat? Beyond Meat has earned a premium name thanks to its marketing strategies, but this premium is too much. 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. Success of any of Beyond Meats competitors could also further threaten future profit growth for Beyond Meat. Learn how you can use Latana to improve your brand marketing and grow faster. Beyond Meats success comes partially from the fact that it has been able to evolve alongside or prior to consumer demand. (Photo Illustration by Drew Angerer/Getty Images). 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. Figure 7 compares the firms implied future NOPAT in this scenario to its historical NOPAT. Beyond Meat Stock (NASDAQ:BYND): Looking Beyond the Headwinds Leverage partners with larger platforms to expand reach. How did Beyond Meat become the leader it is today? While Beyond Meat could continue to rally, it faces four challenges that. Opinions expressed by Forbes Contributors are their own. It looks like meat, tastes like meat, and even feels like meatbut its made entirely of plants. The design softened. What can you learn from this? . For example, without any existing shelf space, and only recently announcing an e-commerce platform, Beyond Meat must spend more on not only convincing consumers to try their products, but also on retailers to display their products. These sales represent 5% of shares outstanding. the stock is worth just $30/share today - a 57% . 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. 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. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services. Over 2Q20, Beyond Meat removed $1.5 million (1% of revenue) in other expenses when calculating adjusted EBITDA. Time to Buy? 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. 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. It provided Beyond Meat with one of the best forms of advertising, credibility. Catalyst: Others Success Could Come at Beyond Meats Expense. Eating plants is the best thing you can do for your diet. Beyond Meat: No more mystery for the plant-meat brand - BMB While many consumers are not willing to pay an average of $3 more a pound for a. Corporate Governance | Beyond Meat, Inc. Since going public, four of its six quarters have shown improvement from. But at this stage of Beyond Meat's growth, converting new customers remains the utmost priority. Despite less transparency, I know that Beyond Meats executive compensation plan consists of a cash bonus, option grants, and restricted share units (RSUs). One of the ways it did this was by creating burgers that look like meat burgers down to the meat actually bleeding. 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. Beyond Meat and the Competitive Landscape | Toptal But how they handled it is what makes them a successful brand. *Average returns of all recommendations since inception. A vegan burger that bleeds. This article will take a deep dive into Beyond Meats journey to success and provide some tips other brands can use to fuel their own growth stories. Moral of the story? Beyond Meat is seeking a marketing, advertising, regulatory, and trademark attorney with 10-12 years of experience. Additionally, the companys new partnerships will also drive impressive top line growth. Figure 1: Consensus Revenue Growth Estimates: 2020-2025, 2020-2025 revenue growth rates based on consensus estimates, Competition is Plentiful and Has Competitive Advantages. In2016 Whole Foods decided to give the company a chance by placing Beyond Meat in its meat section. The plant-based food market will grow bigger and bigger every year. 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. You can see all the adjustments made to Beyond Meats income statementhere. Beyond Meats massive revenue growth cannot last forever. 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. Impossible Foods, Beyond Meat battle to achieve price parity - CNBC While this may seem like a minor detail using beetroot juice to mimic blood it helped the Beyond Burger get one step close to winning over non-vegans. However, the poultry producer exited earlier this year . Then, followed by J.J. Redick, Maya Moore, April Ross, Eric Bledsoe, Maggie Vessey, and Tia Blanco. https://www.wsj.com/articles/beyond-meat-hires-marketing-executive-revamps-retail-strategy-11675379688. Devault, PA Operations - DEPA Production On-site. Figure 9: BYND Has Large Downside Risk: DCF Valuation Scenario. Expand the definition of your target market. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. The main difference is that Impossible Foods takes its proteins from soy whereas Beyond Meat extracts it from peas. Beyond Meat ( NASDAQ: BYND) is streamlining its sales strategy, according to internal documents reviewed by the Wall Street Journal. 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. For reference, Beyond Meats TTM NOPAT margin is 2% and the TTM NOPAT margin of one of the largest food producers in the world, Tyson Foods, is 5%. Recent Improvement in Profitability Was Short-Lived. Competition Will Eat Beyond Meat Alive - Forbes Brands. Disclosure: David Trainer, Kyle Guske II, and Matt Shuler receive no compensation to write about any specific stock, sector, style, or theme. 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. The following fund receives an unattractive rating and allocates significantly to BYND. Plant-based burgers have existed for decades before Beyond Meat. Even though the number of vegans and vegetarians was increasing in 2013 when the company launched its first products, the market for plant-based burgers was small: only 0.5% growth in this category. Placing its hamburgers and breakfast proteins in major quick-service restaurant chains was a logical approach to igniting brand awareness. Although its products are plant based Beyond Meats marketing does not explicitly call that out. This copy is for your personal, non-commercial use only. Yet Beyond Meat's management made a critical decision during the second quarter to change course on product distribution. 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. 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. Consensus estimates expect revenue will grow 61% YoY in 2020, and just 17% YoY by 2025, per Figure 1. Heres a quick summary for noise traders when analyzing BYND: Executive Compensation Adds Additional Risk. Balance Sheet: I made $290 million of adjustments to calculate invested capital with a net decrease of $228 million. It has put them in a competitive sustainable advantage position because others will have to spend a lot of money on research and development to get their plant-based burger to taste like theirs. First of all, think of the big picture when it comes to segmentation: who will really buy your products? Beyond Meat Announces New Executive Leadership Appointments to Competitors, Serious Uphill Battle for Beyond Meat to Improve Profitability. Instead Beyond Meat fought for placement within the meat section of grocery stores. It may even get heavier as more people understand healthy food from non-healthy food. Also, these meat products are offered by themselves at the grocery stores. Full Year 2020 Financial Highlights1. Beyond Meat in midst of sales strategy revamp - WSJ Our goal is to give you the key to understanding Beyond Meats rapid success, to show you the hidden reasons for their success. 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. Figure 11: Implied Acquisition Prices to Create Value. If you do subscribe to our retail trends newsletter to get the latest retail insights & trends delivered to your inbox. Per Figure 5, Beyond Meat saw significant improvement in profitability in 2018, but the improvement was short lived. While I think a plethora of competitors have already developed a competing product, its plausible that a competitor could decide to buy Beyond Meat rather than continue building its own plant-based protein brand. The Motley Fool has a disclosure policy. Dow Jones Reprints at 1-800-843-0008 or visit www.djreprints.com. They entered the restaurant market, and are currently sold to plant-based and mainstream restaurants. See all adjustments to Beyond Meats valuationhere. Figure 7: Current Valuation Implies Drastic Profit Growth. Why? Stun is a creative branding agency. This year also saw Beyond Meat join forces with Mcdonalds to develop their McPlant option. Critical Details Found in Financial Filings by My Firms Robo-Analyst Technology. The emphasis on the grocery channel will now almost certainly evolve into a long-term focal point for Beyond Meat. At the end of 2Q20, Beyond Meat had $222 million of cash and cash equivalents on its balance sheet. Considering our revenue projections of roughly $1.1 billion and 6% margins, almost $66 million in net income is possible by 2023. Over the past two years, the firm has burned a cumulative $179 million (2% of market cap) in FCF. Get the latest information and insights into the world of brand. How? 4 Challenges That Could Hurt Beyond Meat Stock | The Motley Fool Valuation: I made $757 million of adjustments with a net effect of decreasing shareholder value by $513 million. 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. 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. 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. Plus, they created a new category by being one of the first to do it and do it right. Beyond Meat Continues to Strengthen its Global Innovation Capabilities Beyond Meat's marketing strategy is to convert carnivores into occasional vegans. Research on Beyond Meat's Profitability Problems and Strategies. How it Turned an Ugly Shoe into a Hot Commodity, 10 Ways of Marketing Outside of Facebook & Instagram for Retailers, 10 Inexpensive Marketing Ideas for Retailers, Learn more about me at: www.triciamckinnon.com, Customer Experience, eCommerce, Strategy & Growth, tried to get funding to expand his company. 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. For reference, Beyond Meats invested capital has increased by an average of $84 million (28% of 2019 revenue) over the past two years. Part of Beyond Meats strategy is to redefine what the best source of protein is.