Marketing News & Strategy Here's how KFC is marketing its updated Beyond Meat faux chicken in two markets Beyond Fried Chicken could go national if strong results are seen in Charlotte and. This makes a lot of sense since only2.7%of packaged meat sales in the United States are plant based. This adjustment represents 7% of Beyond Meats market cap. They both rearrange proteins to create their plant-based products. For example. Success of any of Beyond Meats competitors could also further threaten future profit growth for Beyond Meat. Beyond Meat stock has staged a dramatic recovery in January, rising by more than 50% since the end of last year. Figure 5: Beyond Meats Revenue & Core Earnings Since 2017. 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%. 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. The implied stock values in this scenario are significantly below Beyond Meats current price. Beyond Meat's Price Approaches That of Real Beef 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. Making the world smarter, happier, and richer. Especially when competitors will try to introduce products that may be better than the original. 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. In any case, I view recent moves as encouraging as Beyond makes moves to improve its footing to grow as a . With a sound marketing strategy, Beyond Meat may be able to make its product cool again. Many undercover operations are conducted to get footage and investigate what is really going on inside the slaughter houses. 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%). By Tricia McKinnon. The difference with other plant-based patties is that their name is a synonym of quality for their clients. 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. 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. Sign up for our Newsletter to receive free, insightful tips on all things brand! And while their Chicken-Free Strips were sold at big-name stores like Whole Foods all across the US, they were later discontinued in 2019. 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. Beyond Meat burgerseven have grill marks further convincing consumers that maybe it really is like meat. For non-personal use or to order multiple copies, please contact KFC, Beyond Meat ready nationwide plant-based chicken rollout Along with continued marketing investment, the plant-based company strikes partnerships with McDonald's and Yum! This is very rare: imagine if menus displayed all the product brands they use to cook the dishes you eat. 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. 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. The first six months of 2020 have visibly transformed Beyond Meat 's ( BYND -0.58%) approach to marketing its plant-based, meat substitute products. Figure 3: Operating Expense as % of Revenue: Beyond Meat vs. How Beyond Meat's Marketing Strategy Set it Apart - LinkedIn Beyond Meat: The Keys To Disrupting An Enormous Market - Forbes Although its products are plant based Beyond Meats marketing does not explicitly call that out. I believe this drive will continue and not stop. Beyond Meat went from very dark and meat-like packagings to a fresher and smoother look. Youre reading a free article with opinions that may differ from The Motley Fools Premium Investing Services. Beyond Meats massive revenue growth cannot last forever. It doesnt matter what industry your brand is in theres always a chance consumers wont take to your product or service. Their products are now sold in 17,000 grocery stores and 12,000 eateries. Beyond Meat is seeking a marketing, advertising, regulatory, and trademark attorney with 10-12 years of experience. The redistribution of cash flow to its investors is a challenge. First, investors need to know that Beyond Meat has a large liability that makes it more expensive than the accounting numbers would initially suggest. Mission | Beyond Meat They knew that vegans and vegetarians would use and love the product regardless if they targetted them because the products were so superior to what they were used to. Should Kellogg continue to push the marketing of Incogmeato and swiftly gain customers, investors may kiss the ultra-high expectations baked into BYND goodbye. Disclosure: David Trainer, Kyle Guske II, and Matt Shuler receive no compensation to write about any specific stock, sector, style, or theme. Instead, it avoids labelling its products as vegan even though they are. 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. To make the world smarter, happier, and richer. 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. Lets take a look at data from Germany. Learn More. revenue grows at consensus rates in 2021, 2022, and 2023, and. 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 . 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. The following fund receives an unattractive rating and allocates significantly to BYND. People tend to associate meat with strength, with muscles. Invest better with The Motley Fool. To fight this incorrect belief, Ethan Brown launched a campaign featuring famous athletes. Beyond Meats profitability ranks at the bottom of this peer group. Vegans and vegetarians, on the contrary, are often perceived as struggling to get enough protein and iron daily, as unhealthy weaklings. 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. The organizational goals have to be settled and explained. Beyond Meat - Corporate Counsel - IP, Marketing & Brand Management .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. Figure 1: Consensus Revenue Growth Estimates: 2020-2025, 2020-2025 revenue growth rates based on consensus estimates, Competition is Plentiful and Has Competitive Advantages. Investors are beginning to worry whether or not Beyond Meat will be able to sustain the $4 billion valuation in stock it currently has. Beyond Meat Announces Global Strategic Partnership with Yum! Brands to 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. It's unfortunately difficult for investors to gauge the impact of this promotion on profits, since Beyond Meat books the discount as a reduction in sales to arrive at net revenue, rather than a reduction in gross profit margin. First, consumers expectations for new products and innovation will rise over time. With these headwinds Beyond Meat had to convince meat lovers that its products passed the test. There are several lessons to be learned from Beyond Meats story. The mission of the company is focused on plant-based meat alternatives, using pea and other plant protein isolates. Then, followed by J.J. Redick, Maya Moore, April Ross, Eric Bledsoe, Maggie Vessey, and Tia Blanco. Beyond Meat Announces New Executive Leadership Appointments to Accelerate and Support the Company's Vision for Strategic Growth. While consumer interest in protecting the environment or having a healthier lifestyle continues to grow it doesnt always mean consumption follows. The Double Distribution Canal: A Major Strength. 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. 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. Changes that have inspired the birth of Beyond Meat is the increased demand on plant-based products. Cost basis and return based on previous market day close. Balance Sheet: I made $290 million of adjustments to calculate invested capital with a net decrease of $228 million. This is one of the biggest first-day pop-ups in recent history. Beyond Meat was the first company to sell plant-based burgers in grocery stores meat sections. Beyond Meat might be the pioneer in this segment, but now it faces fierce competition. One of the most notable adjustments was $11 million inoperating leases. January 2021. 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. Still, it's clear that Brown's idea has caught on: The 10-year old company went public earlier this month at a $1.5 billion valuation. Beyond Meat has been working with them since February 2019. 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. As revenue slides, Beyond Meat CEO outlines strategy to improve Whos to say that its red meat? Beyond Meat was one of the most successful IPOs (Initial Public Offerings) of 2019. 2023 Latana GmbH. In order to get ahead of the competition, never stop innovating. In 2014 they developed their first simulated beef product and expanded their presence from 1,500 to 6,000 stores in the US. However, it hasnt always been smooth sailing for Beyond Meat in March 2019, Don Lee Farms filed a civil suit against its former business partner. Before joining Beyond Meat, Mr. Oghoghomeh served as Senior Vice President, Brand Marketing at Red Bull from 2021 to February 2023. 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. 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. Beyond Meat Lab Where It Develops Plant-Based "Meat" - Business Insider After all, the positive choices we make every day - no matter how small - can have a great impact on our world. Remember the man-ish look of the burger boxes, the focus on the amounts of protein? Sounds too good to be true, right? 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. Opinions expressed by Forbes Contributors are their own. Impossible Foods, Beyond Meat battle to achieve price parity - CNBC Beyond Meat revamps its retail strategy, hires new marketing executive Resourceful, strategic, and self-directed leader with a proven record of achievement in global account management, business development and sales strategy leadership. . Marketing for meat is just showing the happy times with your family eating meat. Placing its hamburgers and breakfast proteins in major quick-service restaurant chains was a logical approach to igniting brand awareness. The company's second-quarter 2020 earnings report, released Tuesday after the markets closed, revealed that it's still experiencing rampant growth. Competition- Beyond Meat has created competition by completing innovating meat and how meat is viewed. We visited . Does this make the stock expensive considering the recent volatility in the stock price? In any case, I view recent moves as encouraging as Beyond makes moves to improve its footing to grow as a . Insider Trading and Short Interest Indicate Market Skepticism. 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. Over the past twelve months, insiders have purchased 700 thousand shares and sold 4 million shares for a net effect of 3.3 million shares sold. Each implied price is based on a goal ROIC assuming different levels of revenue growth. 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. Create a great product. 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 is a major strength: a high speed-to-market. 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. Looking ahead to 2021, consensus earnings estimates are a much higher $0.47/share. 8 Facts About Pelotons Marketing Strategy You Need to Know, Dirty Lemons Marketing & Growth Strategy, How it Became a Success, Crocs Marketing Strategy. Inside Beyond Meat's lab, where the company transforms plants into faux meat with microscopic analysis and robot mouths. Beyond Meat will face difficulty maintaining an innovative edge over its peers, who already spend much more on research and development (R&D). Heres a high-quality portfolio to beat the market, with over 100% return since 2016, versus 55% for the S&P 500. 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. 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. 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. [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. Acquisitions completed at these prices would be truly accretive to Kraft Heinzs shareholders. In fact, it has been shown that heart disease, cancer, and diabetes, three of the top ten causes of death, are linked to eating too much meat. 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. This would make growth in Beyond Meats stock price a real possibility in the next two years, taking its stock price to $200. With the high expectations of consumers and the competition they were about to create, knowing that they got in during the right time when consumers would take it as a positive and embrace this new way to eating meat, or meat substitute.. 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. 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. 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. Per Figure 5, Beyond Meat saw significant improvement in profitability in 2018, but the improvement was short lived. 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. For example, Tyson Food, one of the biggest and earliest investors in Beyond Meat, which had a 5% stake in 2016 exited in 2019. Low margins in an increasingly competitive industry leave Beyond Meat with less flexibility to compete on price or invest in marketing and R&D. Plant-based foods are more than a fad, they are a huge economic trend. Part of Beyond Meats strategy is to redefine what the best source of protein is. In this scenario, Beyond Meat grows revenue by 37% compounded annually (which results in NOPAT growing 42% compounded annually) for the next 12 years. In2016 Whole Foods decided to give the company a chance by placing Beyond Meat in its meat section. Each of the above scenarios also assumes Beyond Meat is able to grow revenue, NOPAT, and FCF without increasing working capital or fixed assets. One of the ways it did this was by creating burgers that look like meat burgers down to the meat actually bleeding. 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. 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. Despite less transparency, I know that Beyond Meats executive compensation plan consists of a cash bonus, option grants, and restricted share units (RSUs). 2 Reasons to Avoid a Roth 401(k) for Your Retirement Savings, Warren Buffett's Latest $2.9 Billion Buy Brings His Total Investment in This Stock to $66 Billion in 4 Years, Want $1 Million in Retirement? 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. 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. Apply. Over the past two years, the firm has burned a cumulative $179 million (2% of market cap) in FCF. 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. Your brand, too, needs the liberty to change. Entrepreneur, retail expert, strategy consultant and author. Instead of drawing attention to a product that consumers didnt love, they simply discontinued it and slowly fazed it out of supermarkets. This competitive disadvantage only makes Beyond Meats path to sustainable profitability that much more difficult. Time to Buy? Read the full post on my retail trends blog by clicking here. Beyond Meat Announces New Executive Leadership Appointments to If Beyond Meat created the healthiest plant based products that dont taste very good then it wouldnt be in business very long. One of the most important pieces of furniture we own. It began trading at $25/share on the Nasdaq stock exchange and ended the day at $65.75. https://www.wsj.com/articles/beyond-meat-hires-marketing-executive-revamps-retail-strategy-11675379688. Impossible Foods sells slightly different products: Impossible Burger, Impossible Pork, Impossible Sausage. This report helps investors of all types see just how extreme the risk in BYND is based on: Growth Will Slow Down, but Competitors Wont. The main difference is that Impossible Foods takes its proteins from soy whereas Beyond Meat extracts it from peas. 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. 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. 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. 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. 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. 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. Evaluation of Options- Evaluating the options of Beyond Meat vs. regular meat. The Audacious (and Risky) Strategy That Made Beyond Meat a Billion These launches create a lot of buzz and put Beyond the Meat on the map. Figure 2: Beyond Meats Profitability vs. Plant-based meats look like an attractive bet to play the future of food. So, what can you learn from Beyond Meat's marketing strategy? In the first quarter of 2019, Beyond Meat's first as a public company, its gross profit was just 26.8% of net revenue. Beyond Meat Hires Marketing Executive, Revamps Retail Strategy I assume revenue grows 47% in years four and five, the same as year three. Weve tried to run straight at the question: is a plant-based meat sufficient for humans to be vital and robust,saysBrown. When I use myreverse discounted cash flow (DCF) modelto analyze the expectations implied by the stock price, BYND appears significantly overvalued. Information Search- Consumers using this new information to do their own research on the history of slaughter houses and the conditions in which animals are being tortured and killed to create meat. Figure 9: BYND Has Large Downside Risk: DCF Valuation Scenario. (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. This copy is for your personal, non-commercial use only. Apart fromtotal debtwhich includes the operating leases noted above, the most notable adjustment to shareholder value was $572 million inoutstanding employee stock options. 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. Published May 20, 2021. 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. With a sound marketing strategy, Beyond Meat may be able to make its product cool again. Why? Another key marketing vehicle for the company is its partnerships with big brands likeMcDonalds, KFCand Pizza Hut. These days, fewer investors pay attention to fundamentals and the red flags buried in financial filings. Clearly, vegan meat alternatives were no longer a fad. 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. These expenses, and the need to maintain them to support Beyond Meats already declining growth, illustrate that the firm is not approaching economies of scale anytime soon. 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. If youre always innovating and looking towards the future, youll rarely be caught off guard. Beyond Meat had originally been sold in retail shops across the USA, then worldwide.

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