beyond meat marketing strategy

Over the TTM period, FCF is -$164 million. Moral of the story? this also includes knowledge of every product that comes in contact with your body on a daily basis. Furthermore, Don Lee alleged significant concerns about food safety protocols concerning the raw materials that Beyond Meat sent. Per Figure 6, Beyond Meat's TTM adjusted EBITDA of $45 million is well above core earnings of $4 million. I assume revenue grows 47% in years four and five, the same as year three. To do so, employees need to very clearly understand the companys priority: is it safety, profits, brand fidelity? 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. Making the world smarter, happier, and richer. 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 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. illustration, packages of Beyond Meat "The Beyond Burger" sit in a refrigerator, June 13, 2019 in the Brooklyn borough of New York City. 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. . We're here to help brands make better marketing decisions by delivering world-class, scalable insights. Having the largest natural and organic food retailer in the United States take a chance on this relatively unknown brand gave other grocery retailers an incentive to try the same product placement in their stores. 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. 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. Figure 1: Consensus Revenue Growth Estimates: 2020-2025, 2020-2025 revenue growth rates based on consensus estimates, Competition is Plentiful and Has Competitive Advantages. Since going public, four of its six quarters have shown improvement from. Beyond Meat ( NASDAQ: BYND) is streamlining its sales strategy, according to internal documents reviewed by the Wall Street Journal. And if youre looking to follow in this impressive brands footsteps, keep our above tips in mind and consider adding brand tracking software to your lineup because, without insight into how consumers feel about your brand, you wont know where to grow next. Investors are beginning to worry whether or not Beyond Meat will be able to sustain the $4 billion valuation in stock it currently has. Option grants and RSUs directly align executives interests with the price of the companys shares and not necessarily with creating shareholder value. Beyond Meat had originally been sold in retail shops across the USA, then worldwide. 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. 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. 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 . Stun is a creative branding agency. The company has a culture of accountability among its employees: they are all responsible for driving up performances by making suggestions, pointing out what is not working. For this analysis, I choseKraft Heinz as a potential acquirer of Beyond Meat since it doesnt have a pea-protein based product like Beyond Meats and has a history of acquisitions. 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. 2 1 Comment. 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 Meat Has Completely Altered Its Go-to-Market Strategy The mattress. Such high spending is not only unsustainable, but it also means Beyond Meats product must be more expensive than competitors products for the firm to turn a profit. In 2019, they partnered up with Dunkin Donuts to supply their Meatless Sausage for the breakfast chains sandwiches nationwide. Therefore, restaurant owners tend to put the Beyond Meat logo on the menu when featuring their products. Eating meat is associated with strength and power while a plant based diet is not, at least not for now. Sign up for our Newsletter to receive free, insightful tips on all things brand! If Beyond Meat created the healthiest plant based products that dont taste very good then it wouldnt be in business very long. How Beyond Meat's Marketing Strategy Set it Apart - Indigo9 Digital Inc. 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. But at this stage of Beyond Meat's growth, converting new customers remains the utmost priority. As of 2020, the Beyond Meat company sells: Cookout Classic (10 plant-based burgers). 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%. The original packaging did not display vegetables, and the words meat and best in the products names were not chosen randomly. What Could Beyond Meat Look Like In 2023? - Forbes Why did it work for them? Furthermore, Beyond Meat has a history of significant free cash flow (FCF) burn that is unlikely to change anytime soon. Beyond Meat founder, Ethan Brown, understood the place of meat in the collective perception very early on. We can perceive more confidence from the company, in line with its media and advertising strategy. 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. Youre reading a free article with opinions that may differ from The Motley Fools Premium Investing Services. 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. 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. There are countless advertisements with men barbequing burgers or hanging out with their friends as they bond over their favourite protein, read meat. See the math behind this reverse DCF scenario. 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. 2019: A Change In the Branding Strategy With the Arrival of Stun. Asit Sharma has no position in any of the stocks mentioned. As of December 31, 2020, Beyond Meat had products available at approximately 122,000 retail and foodservice outlets in over 80 countries worldwide. Continue reading your article witha WSJ subscription, Already a member? Problem Recognition- Consumers did not know about the conditions of the animals that are actively being slaughtered to create 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. Beyond Meat will face difficulty maintaining an innovative edge over its peers, who already spend much more on research and development (R&D). While I chose Kraft Heinz, analysts can use just about any company to do the same analysis. 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. This assumption is highly unlikely but allows us to create best-case scenarios that demonstrate how high expectations embedded in the current valuation are. Beyond Meats successes have inspired the giants to create new categories. But how they handled it is what makes them a successful brand. Instead, they persevered. To illustrate, the company repackaged a portion of its slow-moving food service inventory for retail consumption. From the beginning Beyond Meat had a vision for its business that was much broader than any of its predecessors. 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. 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. One of the ways it did this was by creating burgers that look like meat burgers down to the meat actually bleeding. Beyond Meat: Analysis of a Successful Marketing Strategy 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%. Entrepreneur, retail expert, strategy consultant and author. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services. If yes (which is the most common case), you can sell them to way more people and have an even greater impact. Beyond Meat's Branding Helped Take Plant-Based Mainstream 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". 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. These days, fewer investors pay attention to fundamentals and the red flags buried in financial filings. 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. When grocery stores resisted this in the beginning Beyond Meat declined to place its product in those stores and decided to wait until a grocery store embraced its vision. Beyond Meat: Changing Consumers' Meat Preference | Harvard Business After tying up with Dunkin soon after its IPO, Beyond Meat entered China in 2020. Are they only for vegans? See all adjustments to Beyond Meats valuationhere. Its stock value gained 163% on the day of its stock introduction. We visited . Competition- Beyond Meat has created competition by completing innovating meat and how meat is viewed. Michelle Amador - Sr. Director, Global Strategic Partnerships - Beyond Plant-based foods are more than a fad, they are a huge economic trend. 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. Each implied price is based on a goal ROIC assuming different levels of revenue growth. We believe there's a better way to feed our future. Beyond Meat might be the pioneer in this segment, but now it faces fierce competition. 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. However, Beyond Meat staunchly defended itself and its food safety protocols, turning the tables on Don Lee and saying: We simply couldnt get Don Lee Farms to meet our standards. Even in 2021, the dispute is still going on, though both sides seem to have claimed victory. She has also held senior leadership roles across PepsiCo's North America business during her more than 15-year career at the food . Competitors. Fiduciaries should avoid Beyond Meat Inc. (BYND). Invest better with The Motley Fool. This is rather than Beyond Meat actually creating a meat brand that is real meat. By Christopher Lombardo. Full Year 2020 Financial Highlights1. Beyond Meat Announces New Executive Leadership Appointments to Accelerate and Support the Company's Vision for Strategic Growth. Beyond Meats success comes partially from the fact that it has been able to evolve alongside or prior to consumer demand. However, by now its clear that plant-based meat alternatives are here to stay and theyre gaining traction every year. . Beyond Meat Stock (NASDAQ:BYND): Looking Beyond the Headwinds The superior scale of Beyond Meats peers will also challenge what the firm believes to be a critical competitive advantage its innovation. 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. 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. This copy is for your personal, non-commercial use only. Links: https://zaap.bio/lillytalavera. Figure 7 compares the firms implied future NOPAT in this scenario to its historical NOPAT. Meditation apps have seen a boom in popularity over the past few years in the US but does their growth extend to Europe? Plant-based eaters now account for 8% of the global population. The QSR is looking to get the lion's share of the meat substitute market with Beyond Meat. 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. 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. Beyond Meat stated that its mission is to push boundaries and disrupt. Though the stock is likely to remain volatile in the near term, the strong growth outlook will help it once again reach the $200 level once the current crisis abates. First, consumers expectations for new products and innovation will rise over time. In 2020, they even signed a deal to open another production facility in Shanghai! 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. As in all markets, there are leaders. Looking ahead to 2021, consensus earnings estimates are a much higher $0.47/share. It looks like meat, tastes like meat, and even feels like meatbut its made entirely of plants. Market Drivers- Market drives come from the availability of knowledge on healthy products vs. mass marketing for bad products. This makes a lot of sense since only2.7%of packaged meat sales in the United States are plant based. What can you learn from this? Also, these meat products are offered by themselves at the grocery stores. 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. With a sound marketing strategy, Beyond Meat may be able to make its product cool again. Beyond Meat has been working with them since February 2019. Measuring Brand Awareness As Told By Marketing Experts, journalists who actually tasted the chicken reported. And if this happens, you need to have others you can roll out. Critical Details Found in Financial Filings by My Firms Robo-Analyst Technology. Koshy has 29.5 million followers on TikTok and 17.5 million fans on YouTube. While Beyond Meat could continue to rally, it faces four challenges that. Over 2Q20, Beyond Meat removed $1.5 million (1% of revenue) in other expenses when calculating adjusted EBITDA. The alternative meat producer is reportedly focusing its retail . Creating effective ad campaigns is every marketers struggle but thats where customer data comes in. https://www.wsj.com/articles/beyond-meat-hires-marketing-executive-revamps-retail-strategy-11675379688. 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. Firstly, the gradual lifting of lockdowns in recent months will help the restaurant segment register strong growth along with sales from retail chains. 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. Published May 20, 2021. Beyond Meat's Price Approaches That of Real Beef Extensive background in CPG . Valuation: I made $757 million of adjustments with a net effect of decreasing shareholder value by $513 million. How Beyond Meat's Marketing Strategy Set it Apart - LinkedIn Beyond Meats profitability ranks at the bottom of this peer group. For example, Tyson Food, one of the biggest and earliest investors in Beyond Meat, which had a 5% stake in 2016 exited in 2019. In 2014 they developed their first simulated beef product and expanded their presence from 1,500 to 6,000 stores in the US. It may even get heavier as more people understand healthy food from non-healthy food. Whos to say that its red meat? This all ended with Beyond Meats new look. word of mouth. 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. These features also convince consumers that Beyond Meat burgers are not your average veggie burgers which were never popular with mainstream consumers. After adjusting for this liability, I can model multiple purchase price scenarios. This indicates an extremely successful uptake by consumers. 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. This new knowledge of healthy vs. unhealthy created a new market drive for healthy products. This would make growth in Beyond Meats stock price a real possibility in the next two years, taking its stock price to $200. See Figure 8 for details. Beyond Meat also has big contracts with fast-food chains, as mentioned before, which is a distribution canal bringing lots of cash flow. In 2021 Beyond Meat's revenue increased by 14.2% to reach $464.7 million. 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. Brown. Eat What You Love They only get anxious when they realize that they havent eaten something theyve come to believe they need., Beyond Meat believes that protein is protein and consumers shouldnt care if it comes from a plant or an animal. 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). Plant based meats are not filled with dead animals which include bacteria growth and can contain other substances such as feces. And this failure didnt break them for a few reasons most importantly, because they already had new products in the works. 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. 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. Insider Trading and Short Interest Indicate Market Skepticism. 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. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. This created the need for healthy products. Now, lets proudly assume what they are: a plant-based burger, extracting plant proteins to make a tasty and healthy burger. 1. the stock is worth just $30/share today - a 57% . Especially when competitors will try to introduce products that may be better than the original. Beyond Meat: The Keys To Disrupting An Enormous Market - Forbes Beyond Meat: No more mystery for the plant-meat brand - BMB 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. 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. This would be unreadable! Beyond Meat Has Completely Altered Its Go-to-Market Strategy Beyond Meat's Competitive Advantage, Market Driver, and The - Medium However, the poultry producer exited earlier this year . Theres no actual blood,instead beet juice isused but it does the trick. Therefore, they have a lot of time and competitive advantage before others to create the most well-known category before all other competitors. They clearly prioritize innovation. Beyond Meat, a producer of plant-based meat substitutes, was founded in 2009 in Los Angeles, California. Your brand, too, needs the liberty to change. Remember the man-ish look of the burger boxes, the focus on the amounts of protein? Do you like this content? It began trading at $25/share on the Nasdaq stock exchange and ended the day at $65.75. Fourth Quarter 2021. 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. In this scenario, Beyond Meat grows revenue by 37% compounded annually (which results in NOPAT growing 42% compounded annually) for the next 12 years. Beyond Meat: Focus List: Short Winner That Will Fall Further 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. Dont become so attached to a product that you arent willing to see when it no longer serves you. Changes that have inspired the birth of Beyond Meat is the increased demand on plant-based products. DOI: 10.2991/assehr.k.211209.003. What kind of external factors/changes do you think may have inspired the birth of Beyond Meat? Should Kellogg continue to push the marketing of Incogmeato and swiftly gain customers, investors may kiss the ultra-high expectations baked into BYND goodbye. 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. The California-based company is orienting its retail business around Kroger Co., Walmart Inc., Publix Super Markets Inc., Costco Wholesale Corp. and Whole Foods Market, according to internal company presentations and documents. 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. Beyond Meat stock has staged a dramatic recovery in January, rising by more than 50% since the end of last year. They entered the restaurant market, and are currently sold to plant-based and mainstream restaurants. Furthermore, Beyond Meats current valuation implies it will generate sales equal to 29% of Tysons 2019 revenue a level that places it as thesixth largestmeat and poultry processor in the world in 2019. Prior to that Mr. Oghoghomeh served as Head of Recruitment Marketing - West Zone for Amazon, an eCommerce company from 2019 to 2021. This would, in turn, take BYNDs market cap to about $14 billion by 2023, from $9.6 billion currently. 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.