Measuring Brand Awareness As Told By Marketing Experts, journalists who actually tasted the chicken reported. Their products are now sold in 17,000 grocery stores and 12,000 eateries. Figure 9 compares the firms implied future NOPAT in this scenario to its historical NOPAT. Letting go of your vision and plans is hard, but if its the right thing to do, you have to be willing to pivot. The redistribution of cash flow to its investors is a challenge. However, the improvement in Beyond Meat's margins has been eye-popping. Figure 8: Current Valuation Implies Massive Revenue Growth, Significant Downside in a More Realistic Scenario. Beyond Meat's marketing strategy is to convert carnivores into occasional vegans. We hope this article helped you understand how crucial a good marketing strategy is for a companys success. Management's flexibility and willingness to alter the company's go-to-market strategy during the era of COVID-19 has the potential to pay off handsomely over a multiyear horizon. Digital Marketing @ Beyond Meat | Award-Winning Author | Driving Success Through Tech, Creativity, & Strategy Pittsburgh, Pennsylvania, United States 631 followers 500+ connections Prior to that Mr. Oghoghomeh served as Head of Recruitment Marketing - West Zone for Amazon, an eCommerce company from 2019 to 2021. These launches create a lot of buzz and put Beyond the Meat on the map. Without having that partnership in the beginning Beyond Meat may have floundered for many years trying to build a customer base on its own. Ads like this are created to convert the masses instead of targeting a niche market. All rights reserved. But beneath these numbers, the dynamics of Beyond Meat's business model have been radically altered by its response to the COVID-19 pandemic. Apart fromtotal debtwhich includes the operating leases noted above, the most notable adjustment to shareholder value was $572 million inoutstanding employee stock options. Probably not, considering that revenues are likely to grow almost 2.7x by 2023, with net income turning positive in 2022 and growing steadily thereafter, generating continued returns for shareholders. This copy is for your personal, non-commercial use only. However, one of the biggest deal breakers for potential. Attracted by Beyond Meats impressive growth rates and soaring market value, multiple competitors are entering the alternative meat industry. 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. This adjustment represents 7% of Beyond Meats market cap. 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. First of all, think of the big picture when it comes to segmentation: who will really buy your products? Showing that meat is not necessary to enjoy the same flavors while reaping more plant-based benefits. 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. Beyond Meat is seeking a marketing, advertising, regulatory, and trademark attorney with 10-12 years of experience. It looks like meat, tastes like meat, and even feels like meatbut its made entirely of plants. 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. 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 . There are several lessons to be learned from Beyond Meats story. You can see all the adjustments made to Beyond Meats income statementhere. Valuation: I made $757 million of adjustments with a net effect of decreasing shareholder value by $513 million. In 2020, they even signed a deal to open another production facility in Shanghai! 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. 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. Nowadays, certain celebrities do more than advertise for the brand, some have become ambassadors for Beyond Meat, such as Byrie Irving, from the Boston Celtics. But what if youre looking for a more balanced portfolio instead? One of the ways it did this was by creating burgers that look like meat burgers down to the meat actually bleeding. Without significant increases over the margins and revenue growth assumed in this scenario, an acquisition of Beyond Meat at its current price destroys significant shareholder value. Instead Beyond Meat fought for placement within the meat section of grocery stores. If Beyond Meat created the healthiest plant based products that dont taste very good then it wouldnt be in business very long. Concentrating on the health market, they were able to target a broad range of people seeking a better meat option than real meat. Koshy has 29.5 million followers on TikTok and 17.5 million fans on YouTube. With a market cap of over $9.6 billion, the stock now trades a little over 17x projected 2021 revenues, despite the fact that 2020 was the toughest year for the company due to the pandemic and it also missed analysts expectations for Q1 2021. Stun is a creative branding agency. Heres a quick summary for noise traders when analyzing BYND: Executive Compensation Adds Additional Risk. This all ended with Beyond Meats new look. Beyond Meat is a Los Angeles-based producer of plant-based meat substitutes, including vegan versions of burgers and sausages. strategy uncovers and shares the "bold vision, . 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. 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%. Economic earnings, which account for the unusual items on the income statement and . Many people do not know that eating meat is not only eating meat, but eating the history in which the meat came from. Tackle stereotypes about who your customers should be. 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. Even with that success, Brown continues to think big . Low margins in an increasingly competitive industry leave Beyond Meat with less flexibility to compete on price or invest in marketing and R&D. Figure 1: Consensus Revenue Growth Estimates: 2020-2025, 2020-2025 revenue growth rates based on consensus estimates, Competition is Plentiful and Has Competitive Advantages. Things Are Only Getting Worse for Beyond Meat Stock. Market Drivers- Market drives come from the availability of knowledge on healthy products vs. mass marketing for bad products. Net revenues were $406.8 million, an increase of 36.6% year-over-year. Instead, it avoids labelling its products as vegan even though they are. Why? Furthermore, Don Lee alleged significant concerns about food safety protocols concerning the raw materials that Beyond Meat sent. Acquisitions completed at these prices would be truly accretive to Kraft Heinzs shareholders. Knowing that the meat is expired and poses a hazard to eat it. 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%). This has come from the increased consumer-knowledge on healthy products, plant-based diets,. Data by YCharts Kellogg ( K ) and Conagra ( CAG ) are already big established brands, that . Considering these competitors are already supplying plant-based protein products, Beyond Meat faces an increasingly uphill battle to reach the size it needs to match the cost efficiencies of larger competitors like these two established firms. 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. Eating meat is associated with strength and power while a plant based diet is not, at least not for now. At the end of 2Q20, Beyond Meat had $222 million of cash and cash equivalents on its balance sheet. Whos to say that its red meat? The first six months of 2020 have visibly transformed Beyond Meat 's ( BYND -0.58%) approach to marketing its plant-based, meat substitute products. Moreover, the existing plant-based burgers had a disastrous reputation, they were ironically said to have as much flavor as the box they were in. Beyond Meat had to position itself as different from them as possible. How Beyond Meat's Marketing Strategy Set it Apart . 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. Engineered plant-based burger patties from food, company Beyond Meat are visible on shelves among other meat alternatives at a grocery store in San Ramon, California, August 28, 2019. 2. This competitive disadvantage only makes Beyond Meats path to sustainable profitability that much more difficult. Though BYNDs margins remained negative at close to -13% in 2020 (due to the impact of the pandemic), the companys operations are expected to improve and turn profitable in 2022, with projected margins of 3%. The QSR is looking to get the lion's share of the meat substitute market with Beyond Meat. 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. See the math behind this reverse DCF scenario. 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 any case, I view recent moves as encouraging as Beyond makes moves to improve its footing to grow as a . Gross profit was $122.3 million, or gross margin of 30.1% of net revenues; Adjusted gross profit was $133.7 million, or Adjusted gross margin of 32.9% of net revenues, reflecting exclusion of expenses attributable to COVID-19. 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. 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. 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. I assume revenue grows 47% in years four and five, the same as year three. Beyond Meats successes have inspired the giants to create new categories. After tying up with Dunkin soon after its IPO, Beyond Meat entered China in 2020. See all adjustments to Beyond Meats valuationhere. [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. The difference with other plant-based patties is that their name is a synonym of quality for their clients. However, the lack of fervor for their first product did nothing to stop Beyond Meat from trudging forward. 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. Beyond Meat has earned a premium name thanks to its marketing strategies, but this premium is too much. Plant-based meat alternatives are on the rise and not just with vegans. This is the market drive for Beyond Meat. While Beyond Meat could continue to rally, it faces four challenges that. Beyond Meat, therefore, accomplished something huge: its name is enough to make people reassured about the quality and taste. 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. Catalyst: Others Success Could Come at Beyond Meats Expense. Previously, people were limited to information they see on television which is in the best interests of companies that can afford those ad campaigns. Dont become so attached to a product that you arent willing to see when it no longer serves you. BYND entered into a partnership with Alibaba Group, whereby its products will be available in Freshippo stores (Alibabas supermarkets) in Shanghai. Why did it work for them? The first campaign, The Future of Protein, was launched in 2015. 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. The number of shares sold short has increased by 10% since last month. This is rather than Beyond Meat actually creating a meat brand that is real meat. This would make growth in Beyond Meats stock price a real possibility in the next two years, taking its stock price to $200. To illustrate, the company repackaged a portion of its slow-moving food service inventory for retail consumption. With sharp growth in revenues, margins have increased from -89% in 2017 to -9.4% over the last twelve months. The main difference is that Impossible Foods takes its proteins from soy whereas Beyond Meat extracts it from peas. They clearly prioritize innovation. KFC and Beyond Meat are partnering with YouTube star and influencer Liza Koshy to help reveal the debut. People are perfectly happy eating vegan food as long as they dont know thats what theyre doing,saysCarol J. Adams, author ofThe Sexual Politics of Meat. Figure 3: Operating Expense as % of Revenue: Beyond Meat vs. There was also a long standing view which only recently has begun to change that veganism or vegetarianism will only be embraced by a narrow part of society. Some of the largest consumer food brands have followed suit. Beyond Meat, the company that is making eating plant-based protein mainstream continues to grow at a fast pace. The organizational goals have to be settled and explained. Plant-based foods are more than a fad, they are a huge economic trend. The larger the firm gets, the more difficult it becomes to achieve large year-over-year (YoY) growth rates. 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. Option grants and RSUs directly align executives interests with the price of the companys shares and not necessarily with creating shareholder value. For reference, Beyond Meats invested capital has increased by an average of $84 million (28% of 2019 revenue) over the past two years. 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. Plus, they created a new category by being one of the first to do it and do it right. 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. Distribution and use of this material are governed by By constantly innovating, pivoting when necessary, and having a real eye for detail, in just under 10 years, Beyond Meat has become one of the biggest names in a previously unheard-of industry. There are currently 7 million shares sold short, which equates to 9% of shares outstanding and just over one day to cover. 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. Beyond Meat has been working with them since February 2019. However, the fundamentals reveal this stock is more style than substance. This vision can be found throughout Beyond Meats marketing collateral. We believe there's a better way to feed our future. Our goal is to give you the key to understanding Beyond Meats rapid success, to show you the hidden reasons for their success. In 2021 Beyond Meat's revenue increased by 14.2% to reach $464.7 million. 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. We can spot changes in the design since their arrival. With low margins and little control over the majority of distribution, I think shares can fall sharply from current levels. Many undercover operations are conducted to get footage and investigate what is really going on inside the slaughter houses. This created a need for plant-based foods to replace the broken system of meats. What kind of external factors/changes do you think may have inspired the birth of Beyond Meat? Between 2013-2016, Beyond Meat was funded by the likes of Tyson Foods, Bill Gates, and the Humane Society and by 2018, theyd raised $72 million in venture financing. Additionally, Beyond Meat is introducing its plant-based meatballs in Coles, the second largest supermarket chain in Australia with over 2,500 stores. 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. Recent Improvement in Profitability Was Short-Lived. The ideal candidate must have substantial knowledge and experience in counseling on marketing and advertising matters for food and/or beverage companies, including review of packaging, labeling, and promotional . 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. I believe this drive will continue and not stop. Various trademarks held by their owners. If you do subscribe to our retail trends newsletter to get the latest retail insights & trends delivered to your inbox. For non-personal use or to order multiple copies, please contact One of Beyond Meat's biggest and earliest investors was Tyson Foods, which had a 5 percent stake in 2016, later raised to 6.52 percent. We can perceive more confidence from the company, in line with its media and advertising strategy. 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. But thats what BYNDs investors are betting will not happen! The first six months of 2020 have visibly transformed Beyond Meat's(BYND 5.83%) approach to marketing its plant-based, meat substitute products. 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. When vegan meat alternatives first started to appear on the market, many people saw them as a fad. Problem Recognition- Consumers did not know about the conditions of the animals that are actively being slaughtered to create meat. Beyond Meat founder, Ethan Brown, understood the place of meat in the collective perception very early on. 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. 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. 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". Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services. We're here to help brands make better marketing decisions by delivering world-class, scalable insights. 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. 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. Word of . 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. Although its products are plant based Beyond Meats marketing does not explicitly call that out. Is It Time to Buy? 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. Along with continued marketing investment, the plant-based company strikes partnerships with McDonald's and Yum! Since its high-flying IPO at $46, this stock has soared to $135. Beyond Meat was the first company to sell plant-based burgers in grocery stores meat sections. After all, the positive choices we make every day - no matter how small - can have a great impact on our world. 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. They entered the restaurant market, and are currently sold to plant-based and mainstream restaurants. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Stage of Market Lifestyle- The stage of the market lifestyle will influence the company on a few different categories. Its stock value gained 163% on the day of its stock introduction. In any case, I view recent moves as encouraging as Beyond makes moves to improve its footing to grow as a . Youre reading a free article with opinions that may differ from The Motley Fools Premium Investing Services. Learn how you can use Latana to improve your brand marketing and grow faster. As an emerging growth company, Beyond Meat has opted to comply with the executive compensation disclosure rules applicable to smaller reporting companies, which require less stringent disclosures regarding compensation. (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. The company launched the Impossible Burger in 2016. Fourth Quarter 2021. Looking ahead to 2021, consensus earnings estimates are a much higher $0.47/share. As in all markets, there are leaders. Each of the above scenarios also assumes Beyond Meat is able to grow revenue, NOPAT, and FCF without increasing working capital or fixed assets. This would be unreadable! Beyond Meat, the company that is making eating plant-based protein mainstream continues to grow at a fast pace. 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. revenue grows at consensus rates in 2021, 2022, and 2023, and. What are your predictions for the future of this company? Leverage partners with larger platforms to expand reach. Insider Trading and Short Interest Indicate Market Skepticism. By Tricia McKinnon. BYND revenues saw a rise of 36.6% y-o-y in 2020, which was sharply lower than historical growth rates. 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. From the beginning Beyond Meat had a vision for its business that was much broader than any of its predecessors. 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. It may even get heavier as more people understand healthy food from non-healthy food. And if this happens, you need to have others you can roll out. this also includes knowledge of every product that comes in contact with your body on a daily basis. In2016 Whole Foods decided to give the company a chance by placing Beyond Meat in its meat section. 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. 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. Per Figure 6, Beyond Meat's TTM adjusted EBITDA of $45 million is well above core earnings of $4 million. Evaluation of Options- Evaluating the options of Beyond Meat vs. regular meat. Full Year 2020 Financial Highlights1. They both rearrange proteins to create their plant-based products. 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. These days, fewer investors pay attention to fundamentals and the red flags buried in financial filings. 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? Sign up for our Newsletter to receive free, insightful tips on all things brand! As the industry becomes more commoditized, economies of scale will be even more important for firms seeking profitability, which doesnt bode well for smaller firms such as Beyond Meat. This is very rare: imagine if menus displayed all the product brands they use to cook the dishes you eat. 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. To do so, employees need to very clearly understand the companys priority: is it safety, profits, brand fidelity? From the Beyond Burger to Beyond Sausage, and their latest Beyond Meatballs this brand is really on a roll. Changes that have inspired the birth of Beyond Meat is the increased demand on plant-based products. While many consumers are not willing to pay an average of $3 more a pound for a. Considering our revenue projections of roughly $1.1 billion and 6% margins, almost $66 million in net income is possible by 2023. Therefore, they have a lot of time and competitive advantage before others to create the most well-known category before all other competitors. You can find Beyond Meat in many places from small restaurants to national chains but what really accelerated its growth in the beginning was its partnership with Whole Foods. Beyond Meats case also shows that a marketing strategy is not fixed: it has to evolve along with the companys positioning. 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.
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