Read the full post on my retail trends blog by clicking here. They began targeting not only vegetarians and vegans, but also and mainly meat-eaters; flexitarians. Brown. We're here to help brands make better marketing decisions by delivering world-class, scalable insights. I would prefer Beyond Meat align executives interests with shareholders interests and link executive compensation with improving ROIC, which isdirectly correlated with creating shareholder value. Create a great product. Success of any of Beyond Meats competitors could also further threaten future profit growth for Beyond Meat. Net revenues were $406.8 million, an increase of 36.6% year-over-year. But instead of doubling down and spending millions of dollars more to try and fix a product receiving a lukewarm response at best Beyond Meat chose to pivot. While this may seem like a minor detail using beetroot juice to mimic blood it helped the Beyond Burger get one step close to winning over non-vegans. Furthermore, Don Lee alleged significant concerns about food safety protocols concerning the raw materials that Beyond Meat sent. Beyond Meat uses a robot to imitate the process of chewing. Each implied price is based on a goal ROIC assuming different levels of revenue growth. Finally, innovation is another key element of success for Beyond Meat: if they are the leaders, lets not forget that it is also because their products are great, packed with plant-based proteins. Beyond Meat ( NASDAQ: BYND) is streamlining its sales strategy, according to internal documents reviewed by the Wall Street Journal. Tackle stereotypes about who your customers should be. But how they handled it is what makes them a successful brand. 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. The design softened. Stage of Market Lifestyle- The stage of the market lifestyle will influence the company on a few different categories. Moral of the story? [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. But beneath these numbers, the dynamics of Beyond Meat's business model have been radically altered by its response to the COVID-19 pandemic. The companys marketing strategy is multiple layers one and has evolved over time, to keep up with the market trend. Figure 4: Expenses as % of Revenue: Beyond Meat 2Q19 vs. 2Q20, BYND Operating Expense As Of Revenue 2Q19 Vs. 2Q20. 2 1 Comment. 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. 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. 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. Over the TTM period, FCF is -$164 million. A lot of that clothing ends up in landfills which proves that the product often matters more than the social cause a customer is interested in. They have sharply improved from -93.3% in 2016 to -4.2% in 2019. June 4, 2021 . Firstly, the gradual lifting of lockdowns in recent months will help the restaurant segment register strong growth along with sales from retail chains. This is rather than Beyond Meat actually creating a meat brand that is real meat. In 2014 they developed their first simulated beef product and expanded their presence from 1,500 to 6,000 stores in the US. *Average returns of all recommendations since inception. Well, when Beyond Meat chose to switch suppliers, they allegedly shared details of Don Lees manufacturing process which Don Lee saw as a breach of contract. First, investors need to know that Beyond Meat has a large liability that makes it more expensive than the accounting numbers would initially suggest. What can you learn from this? 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. With a sound marketing strategy, Beyond Meat may be able to make its product cool again. Per Figure 2, Beyond Meats NOPAT margin and return on invested capital (ROIC) are below each of the competitors listed above, and well below the market-cap-weighted average of all the Food Processing firms under coverage. The larger the firm gets, the more difficult it becomes to achieve large year-over-year (YoY) growth rates. By paying attention to all the details of a real burger the taste, texture, smell, feel, and consistency Beyond Meat has been able to break into a target audience that had yet to be cracked: mainstream consumers interested in healthier forms of meat. 8 Facts About Pelotons Marketing Strategy You Need to Know, Dirty Lemons Marketing & Growth Strategy, How it Became a Success, Crocs Marketing Strategy. 2019: A Change In the Branding Strategy With the Arrival of Stun. They did not service the vegan and vegetarian markets as traditional players did. From the beginning Beyond Meat had a vision for its business that was much broader than any of its predecessors. Beyond Meat positioned its products as similar to animal meat as they could. Word of . And by 2020, Beyond Meat had launched an e-commerce site that served as a direct-to-consumers portal, allowing customers to purchase their products individually. 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. Theres no actual blood,instead beet juice isused but it does the trick. It looks like meat, tastes like meat, and even feels like meatbut its made entirely of plants. Additionally, the companys new partnerships will also drive impressive top line growth. Figure 2: Beyond Meats Profitability vs. Option grants and RSUs directly align executives interests with the price of the companys shares and not necessarily with creating shareholder value. 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. This is one of the biggest first-day pop-ups in recent history. Many undercover operations are conducted to get footage and investigate what is really going on inside the slaughter houses. The number of shares sold short has increased by 10% since last month. Learn how you can use Latana to improve your brand marketing and grow faster. 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? Before joining Beyond Meat, Mr. Oghoghomeh served as Senior Vice President, Brand Marketing at Red Bull from 2021 to February 2023. For example, Kelloggs delayed the launch of its first round of Incogmeato products due to the COVID-19 pandemic. A new marketing strategy will play up the health and sustainability benefits of Beyond Meat, Brown said. Figure 7: Current Valuation Implies Drastic Profit Growth. For non-personal use or to order multiple copies, please contact 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. This would, in turn, take BYNDs market cap to about $14 billion by 2023, from $9.6 billion currently. But what if youre looking for a more balanced portfolio instead? Beyond Meat is a Los Angeles-based producer of plant-based meat substitutes, including vegan versions of burgers and sausages. So, what can you learn from Beyond Meat's marketing strategy? 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 QSR is looking to get the lion's share of the meat substitute market with Beyond Meat. For example, evaluating the conditions of the animals before death, the process in which the meat is processed, the drugs and antibiotics that the animals were treated with before getting slaughtered. It began trading at $25/share on the Nasdaq stock exchange and ended the day at $65.75. 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. Apply. With such high expectations, nearly any negative news could place Beyond Meats future earnings in doubt and cause shares to fall. Beyond Meat, the company that is making eating plant-based protein mainstream continues to grow at a fast pace. And if this happens, you need to have others you can roll out. 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". What is Beyond Meats marketing strategy? As of December 31, 2020, Beyond Meat had products available at approximately 122,000 retail and foodservice outlets in over 80 countries worldwide. In this scenario, Beyond Meat grows revenue by 37% compounded annually (which results in NOPAT growing 42% compounded annually) for the next 12 years. 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. Though the firms revenue has improved from $298 million in 2019 to $401 million over the trailing-twelve-months, Beyond Meatscore earnings[1]have fallen from $6 million to $4 million over the same time. We visited . Plant-based eaters now account for 8% of the global population. We believe there's a better way to feed our future. 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. See all adjustments to Beyond Meats valuationhere. Clearly, vegan meat alternatives were no longer a fad. Beyond Meat was one of the most successful IPOs (Initial Public Offerings) of 2019. People are able to do extensive research on problems after recognizing that there is an issue. 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. Knowing that the meat is expired and poses a hazard to eat it. Yet Beyond Meat's management made a critical decision during the second quarter to change course on product distribution. Also, seeing that a lot of slaughter houses will absolutely not let anyone come see the inside conditions that animals are facing. 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. 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. This assumption is highly unlikely but allows us to create best-case scenarios that demonstrate how high expectations embedded in the current valuation are. As in all markets, there are leaders. This is the first time a vegan meat alternative has been merchandised in the meat department at Whole Foods Market.After that Beyond Meatstarted calling itself:the worldsfirst plant-based burger sold in the meat case of U.S. grocery stores.. It has put them in a competitive sustainable advantage position because others will have to spend a lot of money on research and development to get their plant-based burger to taste like theirs. If you are wondering how Beyond Meat has been able to make strides where others havent consider these four elements of its marketing strategy. Per Figure 6, Beyond Meat's TTM adjusted EBITDA of $45 million is well above core earnings of $4 million. The coronavirus pandemic put a halt to the companys fast-growing revenues as shutting down of restaurants due to the lockdown significantly affected the companys restaurant and foodservice business, which was the fastest growing segment for BYND until 2019. A staff member at Business Insider that cooked and reviewed a Beyond Meat burger at homesaidthis about it: overall, it was tasty and juicy, unlike most veggie burgers which can often taste closer to cardboard than beef. Marketing is always easier when you have a great product because you dont have to try quite as hard to get people to try it as consumption spreads more organically over time via. Among the items Beyond Meat excludes when calculating its adjusted EBITDA are equity-based compensation, restructuring expenses, and a vague line item labeled other. Beyond Meat has been working with them since February 2019. January 2021. This competitive disadvantage only makes Beyond Meats path to sustainable profitability that much more difficult. No more comparison with animal meat products: Beyond Meat has nothing more to prove, its products are famous, recognized as good for the palate and for our health. This adjustment represents 7% of Beyond Meats market cap. Find out how 3 brands use customer data to find success! 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. 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". But at this stage of Beyond Meat's growth, converting new customers remains the utmost priority. Low margins in an increasingly competitive industry leave Beyond Meat with less flexibility to compete on price or invest in marketing and R&D. It may even get heavier as more people understand healthy food from non-healthy food. In the second scenario, I use 61% growth (2020 consensus estimate) for all years to illustrate a best-case scenario where I assume Beyond Meat could grow revenue faster within the larger distribution network, resources, and customer base of Kraft Heinz. With such strong momentum and triple-digit year-over-year revenue growth, traders may push this stock higher. How? Could they suit flexitarians, meat-eaters? If Beyond Meat created the healthiest plant based products that dont taste very good then it wouldnt be in business very long. Beyond Meat stated that its mission is to push boundaries and disrupt. Lets have a look at their most serious competitor: Impossible Foods. Beyond Meat was the first company to sell plant-based burgers in grocery stores meat sections. 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. . Plant based options are the obvious choice. Meditation apps have seen a boom in popularity over the past few years in the US but does their growth extend to Europe? Placing its hamburgers and breakfast proteins in major quick-service restaurant chains was a logical approach to igniting brand awareness. 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. Making the world smarter, happier, and richer. There are limits on how much Kraft Heinz should pay for Beyond Meat to earn a proper return, given the NOPAT or free cash flows being acquired. The mission of the company is focused on plant-based meat alternatives, using pea and other plant protein isolates.
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