Several of Beyond Meats competitors, including Hormel, Nestle, Kellogg, Tyson, Kroger, ConAgra, and Kraft Heinz, enjoy key competitive advantages: These advantages are very important and very difficult, if not impossible, for new entrants like Beyond Meat to match or overcome in the near term, if ever. But consumers shop there because the low price points allow them to have a constant rotation of outfits. From the beginning Beyond Meat has viewed itself as a company that could take a typical meat eater and get them to consider a tasty alternative. We are providing energy for the body and we can pull it from a lot of different places. It represents what we feel is the first product that mainstream omnivores are willing to seek out and put at the center of their plate.. 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 . 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. Strategic Windows- Beyond Meat knew that because of the health craze in the world and the expansion of knowledge surrounding healthy food has widened, that they have a short window to get in and get it done right when it comes to plant-based foods. 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. From the beginning Beyond Meat had a vision for its business that was much broader than any of its predecessors. 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%. 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". This is one of the biggest first-day pop-ups in recent history. KFC and Beyond Meat are partnering with YouTube star and influencer Liza Koshy to help reveal the debut. Therefore, the future will be bright, but they need to continuously gain market share by introducing new products and innovation within the plant-based space. In any case, I view recent moves as encouraging as Beyond makes moves to improve its footing to grow as a . Plant-based meats look like an attractive bet to play the future of food. 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. Beyond Meat's marketing strategy is to convert carnivores into occasional vegans. Previously, people were limited to information they see on television which is in the best interests of companies that can afford those ad campaigns. 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. 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. 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. This adjustment represents 7% of Beyond Meats market cap. For example. Apart fromtotal debtwhich includes the operating leases noted above, the most notable adjustment to shareholder value was $572 million inoutstanding employee stock options. Beyond Meat Stock (NASDAQ:BYND): Looking Beyond the Headwinds 4 Challenges That Could Hurt Beyond Meat Stock | The Motley Fool 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. Beyond Meat was one of the most successful IPOs (Initial Public Offerings) of 2019. See Figure 8 for details. Beyond Meatis one of them for the plant-based segment. Sign up for our Newsletter to receive free, insightful tips on all things brand! Back in 1988 when John Mackey, co-founder of Whole Foodstried to get funding to expand his companyhe was rejected by many venture capitalists. However, the improvement in Beyond Meat's margins has been eye-popping. Its an era of growth for the still young start-up. Placing its hamburgers and breakfast proteins in major quick-service restaurant chains was a logical approach to igniting brand awareness. 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%. Find out how 3 brands use customer data to find success! the stock is worth just $30/share today - a 57% . Plant based meats are not filled with dead animals which include bacteria growth and can contain other substances such as feces. 1. Beyond Meat has earned a premium name thanks to its marketing strategies, but this premium is too much. 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 had originally been sold in retail shops across the USA, then worldwide. Beyond Meat Continues to Strengthen its Global Innovation Capabilities Option grants and RSUs directly align executives interests with the price of the companys shares and not necessarily with creating shareholder value. However, one of the biggest deal breakers for potential. Here's how KFC is marketing its updated Beyond Meat faux - Ad Age Beyond Meat's Price Approaches That of Real Beef This year also saw Beyond Meat join forces with Mcdonalds to develop their McPlant option. 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. Entrepreneur, retail expert, strategy consultant and author. One of the ways it did this was by creating burgers that look like meat burgers down to the meat actually bleeding. Could they suit flexitarians, meat-eaters? Marketing for meat is just showing the happy times with your family eating meat. If revenues expand 2.7x over the next few years, instead of the P/S shrinking from around 17x presently to less than 10x, a scenario where the P/S metric falls more modestly, perhaps to about 13x looks more likely, considering the fact that profitability is also projected to see sharp improvement. They have sharply improved from -93.3% in 2016 to -4.2% in 2019. About 70% of the global population is cutting down its meat consumption. Figure 2: Beyond Meats Profitability vs. 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. Competition- Beyond Meat has created competition by completing innovating meat and how meat is viewed. Beyond Meat vs. Impossible Foods: The fight for market share in meat What is Beyond Meats marketing strategy? 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. Learn More. Disclosure: David Trainer, Kyle Guske II, and Matt Shuler receive no compensation to write about any specific stock, sector, style, or theme. 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%). Eating meat is associated with strength and power while a plant based diet is not, at least not for now. 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 Meats profitability ranks at the bottom of this peer group. With these headwinds Beyond Meat had to convince meat lovers that its products passed the test. 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 . For example, Kelloggs delayed the launch of its first round of Incogmeato products due to the COVID-19 pandemic. 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. Competitors. They exploit their established brand engagement to build more brand equity, at a low cost, because they dont pay a cent for restaurants to make this kind of indirect advertising for them. 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). 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. 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. Is It Time to Buy? In this scenario, Beyond Meat would earn ~$12.5 billion (slightly more thanMarketsandMarkets2019 estimated global plant-based meat market size of $12.1 billion) in revenue in 2031, compared to $401 million TTM. 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. For example, Kelloggs delayed the launch of itsfirst roundof Incogmeato products due to the COVID-19 pandemic. However, the lack of fervor for their first product did nothing to stop Beyond Meat from trudging forward. 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. 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.