They did not service the vegan and vegetarian markets as traditional players did. Instead, it avoids labelling its products as vegan even though they are. BEYOND MEAT ANNOUNCES NEW . Word of . Attracted by Beyond Meats impressive growth rates and soaring market value, multiple competitors are entering the alternative meat industry. Koshy has 29.5 million followers on TikTok and 17.5 million fans on YouTube. 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. See the math behind this reverse DCF scenario. 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. 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. I believe this drive will continue and not stop. For example, Kelloggs delayed the launch of itsfirst roundof Incogmeato products due to the COVID-19 pandemic. Beyond Meat burgerseven have grill marks further convincing consumers that maybe it really is like meat. Then, followed by J.J. Redick, Maya Moore, April Ross, Eric Bledsoe, Maggie Vessey, and Tia Blanco. Over the TTM period, FCF is -$164 million. Competition- Beyond Meat has created competition by completing innovating meat and how meat is viewed. 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. Lets have a look at their most serious competitor: Impossible Foods. The design softened. 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 . Our goal is to give you the key to understanding Beyond Meats rapid success, to show you the hidden reasons for their success. What can you learn from this? Beyond Meat positioned its products as similar to animal meat as they could. Figure 9 compares the firms implied future NOPAT in this scenario to its historical NOPAT. Evaluation of Options- Evaluating the options of Beyond Meat vs. regular meat. revenue grows at consensus rates in 2021, 2022, and 2023, and. 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. 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. The QSR is looking to get the lion's share of the meat substitute market with Beyond Meat. For example, Tyson Food, one of the biggest and earliest investors in Beyond Meat, which had a 5% stake in 2016 exited in 2019. Things Are Only Getting Worse for Beyond Meat Stock. Digital Marketing @ Beyond Meat | Award-Winning Author | Driving Success Through Tech, Creativity, & Strategy Pittsburgh, Pennsylvania, United States 631 followers 500+ connections Stun is a creative branding agency. illustration, packages of Beyond Meat "The Beyond Burger" sit in a refrigerator, June 13, 2019 in the Brooklyn borough of New York City. The first campaign, The Future of Protein, was launched in 2015. A new marketing strategy will play up the health and sustainability benefits of Beyond Meat, Brown said. Case in point, revenue grew 239% YoY in 2019, 141% YoY in 1Q20, and 69% YoY in 2Q20. 2 1 Comment. Considering our revenue projections of roughly $1.1 billion and 6% margins, almost $66 million in net income is possible by 2023. After all, the positive choices we make every day - no matter how small - can have a great impact on our world. BYND entered into a partnership with Alibaba Group, whereby its products will be available in Freshippo stores (Alibabas supermarkets) in Shanghai. 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. Looking ahead to 2021, consensus earnings estimates are a much higher $0.47/share. But keep in mind to do this, youll need data on how consumers are responding to your competitors. 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. Although its products are plant based Beyond Meats marketing does not explicitly call that out. Competitors. 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. Devault, PA Operations - DEPA Production On-site. Catalyst: Others Success Could Come at Beyond Meats Expense. Beyond Meat was one of the most successful IPOs (Initial Public Offerings) of 2019. Theres no actual blood,instead beet juice isused but it does the trick. You can see all the adjustments made to Beyond Meats balance sheethere. Beyond Meat Is Down 93% From Its High. Dont become so attached to a product that you arent willing to see when it no longer serves you. Economic earnings, which account for the unusual items on the income statement and . When Beyond Meat was met with the failure of their Chicken-Free Strips their first real product they didnt fold. 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. The emphasis on the grocery channel will now almost certainly evolve into a long-term focal point for Beyond Meat. Even though the firm doesnt necessarily hold logistical or technological advantages over its competitors, I think it helps to quantify what, if any, acquisition hopes are priced into the stock. 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. 1. Instead Beyond Meat fought for placement within the meat section of grocery stores. When vegan meat alternatives first started to appear on the market, many people saw them as a fad. In any case, I view recent moves as encouraging as Beyond makes moves to improve its footing to grow as a . Below are specifics on the adjustments I make based on Robo-Analyst findings in Beyond Meats 10-Q and 10-K: Income Statement: I made $33 million of adjustments, with a net effect of removing $21 million innon-operating income(5% of revenue). Beyond Meat, the company that is making eating plant-based protein mainstream continues to grow at a fast pace. Also, seeing that a lot of slaughter houses will absolutely not let anyone come see the inside conditions that animals are facing. Making the world smarter, happier, and richer. This year also saw Beyond Meat break into the international market partnering with the likes of Tesco in the UK to A&W in Canada). 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. 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. 3. Instead, they persevered. The company's second-quarter 2020. 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. As investorsfocus moreon fundamental research, research automation technology is needed to analyze all the critical financialdetails in financial filingsas shown in the Harvard Business School and MIT Sloan paper,Core Earnings: New Data and Evidence. See all adjustments to Beyond Meats valuationhere. . 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. Plant based burgers are not new but Beyond Meat has been able to capture more of the . To fight this incorrect belief, Ethan Brown launched a campaign featuring famous athletes. Sustainable Competitive Advantage- Beyond Meats formula for the perfect flavoring to taste just like a real burger. 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. 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. Production Supervisor - 2nd Shift. Cost basis and return based on previous market day close. However, the improvement in Beyond Meat's margins has been eye-popping. 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 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. To illustrate, the company repackaged a portion of its slow-moving food service inventory for retail consumption. 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. 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. Not knowing what is in the hot dog, not knowing where the hot dog came from, the conditions of the animals at the house in which the meat was slaughtered. Even in the most optimistic of scenarios, Beyond Meat is worth less than its current share price. Beyond Meat, therefore, accomplished something huge: its name is enough to make people reassured about the quality and taste. Sign up for our Newsletter to receive free, insightful tips on all things brand! This new knowledge of healthy vs. unhealthy created a new market drive for healthy products. Do you like this content? Weve tried to run straight at the question: is a plant-based meat sufficient for humans to be vital and robust,saysBrown. However, the lack of fervor for their first product did nothing to stop Beyond Meat from trudging forward. This adjustment represented 3% of reported net assets. 2019: A Change In the Branding Strategy With the Arrival of Stun. Some of the largest retailers in the world including Zara and H&M are in the fast fashion business which is not environmentally friendly. Even with that success, Brown continues to think big . This copy is for your personal, non-commercial use only. People are able to do extensive research on problems after recognizing that there is an issue. This assumption is highly unlikely but allows us to create best-case scenarios that demonstrate how high expectations embedded in the current valuation are. Consensus estimates expect revenue will grow 61% YoY in 2020, and just 17% YoY by 2025, per Figure 1. At its TTM FCF burn rate, the firm has enough cash to operate for just over 16 months before needing additional capital. 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. Get the latest information and insights into the world of brand. Inside Beyond Meat's lab, where the company transforms plants into faux meat with microscopic analysis and robot mouths. The promises of Beyond Meats burgers: they produce 90% less greenhouse gas emissions and require 93% less land, 99% less water, and 46% less energy than a traditional beef patty. BYND revenues saw a rise of 36.6% y-o-y in 2020, which was sharply lower than historical growth rates. In the first quarter of 2019, Beyond Meat's first as a public company, its gross profit was just 26.8% of net revenue. There are currently 7 million shares sold short, which equates to 9% of shares outstanding and just over one day to cover. 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. Knowing that the meat is expired and poses a hazard to eat it. DOI: 10.2991/assehr.k.211209.003. The key variables are the weighted average cost of capital (WACC) and ROIC for assessing different hurdle rates for a deal to create value. Plant-based foods are more than a fad, they are a huge economic trend. 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. 4. While there are numerous brands that have popped up over the years whove thrown their metaphorical hats into the meat alternatives ring such as Impossible Foods and Quorn Beyond Meat is still one of the most successful and well-known. Back in 1988 when John Mackey, co-founder of Whole Foodstried to get funding to expand his companyhe was rejected by many venture capitalists. Of course, this is wrong, and our body adapts to whatever we give it. In 2021 Beyond Meats revenue increased by14.2%to reach $464.7 million. Figure 10: Implied Acquisition Prices for Value-Neutral Deal. 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. This is the market drive for Beyond Meat. Beyond Meats real breakthrough is not landing in the meat aisle or having celebrity endorsements but creating a plant based product people actually want to eat. The Impossible Foods start-up was founded in 2011 in California by Patrick O. Lots of small companies have also emerged and targeted the same audience, such as Purple Carrot or Sunfed Meats. Problem Recognition- Consumers did not know about the conditions of the animals that are actively being slaughtered to create meat. This created the need for healthy products. See the math behind this reverse DCF scenario. Beyond Meat founder, Ethan Brown, understood the place of meat in the collective perception very early on. In 2019, they partnered up with Dunkin Donuts to supply their Meatless Sausage for the breakfast chains sandwiches nationwide. What are your predictions for the future of this company? Its stock value gained 163% on the day of its stock introduction. .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. 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 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". Distribution and use of this material are governed by Your brand, too, needs the liberty to change. Find out how 3 brands use customer data to find success! With sharp growth in revenues, margins have increased from -89% in 2017 to -9.4% over the last twelve months. By 2015, even Walmart was selling Beyond Meats plant-based products! Some of the largest consumer food brands have followed suit. 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. Critical Details Found in Financial Filings by My Firms Robo-Analyst Technology.