Figure 4: Expenses as % of Revenue: Beyond Meat 2Q19 vs. 2Q20, BYND Operating Expense As Of Revenue 2Q19 Vs. 2Q20. See the math behind this reverse DCF scenario. The difference with other plant-based patties is that their name is a synonym of quality for their clients. There are currently 7 million shares sold short, which equates to 9% of shares outstanding and just over one day to cover. 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. Attracted by Beyond Meats impressive growth rates and soaring market value, multiple competitors are entering the alternative meat industry. In total, the global market for meat substitutes is set to grow to $23.4 billion by 2024, according to market research company Euromonitor. But what has allowed them to be so successful despite their setbacks? Word of . 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 . Instead of drawing attention to a product that consumers didnt love, they simply discontinued it and slowly fazed it out of supermarkets. 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.. Plant based burgers are not new but Beyond Meat has been able to capture more of the . 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. Making the world smarter, happier, and richer. They have sharply improved from -93.3% in 2016 to -4.2% in 2019. DOI: 10.2991/assehr.k.211209.003. Knowing that the meat is expired and poses a hazard to eat it. 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. We're here to help brands make better marketing decisions by delivering world-class, scalable insights. Over the past two years, the firm has burned a cumulative $179 million (2% of market cap) in FCF. Whos to say that its red meat? 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. Insider Trading and Short Interest Indicate Market Skepticism. https://www.wsj.com/articles/beyond-meat-hires-marketing-executive-revamps-retail-strategy-11675379688. Cost basis and return based on previous market day close. Beyond Meat Announces New Executive Leadership Appointments to Competitors, Serious Uphill Battle for Beyond Meat to Improve Profitability. We hope this article helped you understand how crucial a good marketing strategy is for a companys success. The following fund receives an unattractive rating and allocates significantly to BYND. They entered the restaurant market, and are currently sold to plant-based and mainstream restaurants. Low margins in an increasingly competitive industry leave Beyond Meat with less flexibility to compete on price or invest in marketing and R&D. Beyond Meats R&D in 2019 was just $21 million compared to $56 million for ConAgra and $97 million for Tyson over the same time. Concentrating on the health market, they were able to target a broad range of people seeking a better meat option than real meat. 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. The mattress. They did not service the vegan and vegetarian markets as traditional players did. Beyond Meat entered into a partnership with PepsiCo. If Beyond Meat created the healthiest plant based products that dont taste very good then it wouldnt be in business very long. You can see all the adjustments made to Beyond Meats income statementhere. For example, Kelloggs delayed the launch of itsfirst roundof Incogmeato products due to the COVID-19 pandemic. 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. Plant-based meats look like an attractive bet to play the future of food. With sharp growth in revenues, margins have increased from -89% in 2017 to -9.4% over the last twelve months. This adjustment represented 3% of reported net assets. The mission of the company is focused on plant-based meat alternatives, using pea and other plant protein isolates. The paper empirically shows that my firms data is superior to Operating Income After Depreciation and Income Before Special Items from Compustat, owned by S&P Global (SPGI). 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. Dollar figures in millions. Prior to that Mr. Oghoghomeh served as Head of Recruitment Marketing - West Zone for Amazon, an eCommerce company from 2019 to 2021. 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. Are they only for vegans? For example, Kelloggs delayed the launch of its first round of Incogmeato products due to the COVID-19 pandemic. Figure 11 shows the implied values for Beyond Meat assuming Kraft Heinz wants to achieve an ROIC on the acquisition that equals 6%. 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. In any case, I view recent moves as encouraging as Beyond makes moves to improve its footing to grow as a . Beyond Meat Stock (NASDAQ:BYND): Looking Beyond the Headwinds Letting go of your vision and plans is hard, but if its the right thing to do, you have to be willing to pivot. Beyond Meat and Impossible Foods have many common points. But keep in mind to do this, youll need data on how consumers are responding to your competitors. Balance Sheet: I made $290 million of adjustments to calculate invested capital with a net decrease of $228 million. In this scenario, Beyond Meat grows NOPAT by 36% compounded annually over the next decade and the stock is worth just $44/share a 67% downside to the current price. As we touched on earlier, not everything was easy for Beyond Meat they made their fair share of mistakes along the way. illustration, packages of Beyond Meat "The Beyond Burger" sit in a refrigerator, June 13, 2019 in the Brooklyn borough of New York City. If yes (which is the most common case), you can sell them to way more people and have an even greater impact. 2019: A Change In the Branding Strategy With the Arrival of Stun. Beyond Meats case also shows that a marketing strategy is not fixed: it has to evolve along with the companys positioning. 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. Sign up for our Newsletter to receive free, insightful tips on all things brand! Showing that meat is not necessary to enjoy the same flavors while reaping more plant-based benefits. Moral of the story? 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. They began targeting not only vegetarians and vegans, but also and mainly meat-eaters; flexitarians. This pivot on management's part is undergirded by a continuing commitment to building out manufacturing and distribution capacity -- even in the middle of a pandemic, Beyond Meat more than tripled its capital expenditures in the second quarter against the prior year, to $26 million. Beyond Meat's Competitive Advantage, Market Driver, and The - Medium Could they suit flexitarians, meat-eaters? This allows consumers to make their own informed decision. 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. And the organization continues to spill a slight amount of red ink, generating a loss of $10.2 million over the last three months versus a loss of $9.4 million in the second quarter of 2019. Beyond Meat revamps its retail strategy, hires new marketing executive Part of this shift happened without much intervention by management, as consumption in restaurants and other institutional foodservice outlets has plummeted since the spring, while at-home consumption has soared. But thats what BYNDs investors are betting will not happen! Beyond Meat burgerseven have grill marks further convincing consumers that maybe it really is like meat. However, by now its clear that plant-based meat alternatives are here to stay and theyre gaining traction every year. Beyond Meat and the Competitive Landscape | Toptal And this failure didnt break them for a few reasons most importantly, because they already had new products in the works. They both rearrange proteins to create their plant-based products. The plant-based food market will grow bigger and bigger every year. Yet Beyond Meat's management made a critical decision during the second quarter to change course on product distribution. Beyond Meat ( NASDAQ: BYND) is streamlining its sales strategy, according to internal documents reviewed by the Wall Street Journal. However, some investors have growing concerns about the companys ability to maintain these results. With insiders quick to sell their shares and a large and growing short interest forming, it seems that others in the market are also unwilling to bet on the future hurdles Beyond Meat must clear. 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. 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. Rising beef prices, coupled with the overwhelming at-home food consumption trend, present an unforeseen opportunity for the company to entice new customers by doubling down on grocery sales. While I chose Kraft Heinz, analysts can use just about any company to do the same analysis. Things Are Only Getting Worse for Beyond Meat Stock. Data by YCharts Kellogg ( K ) and Conagra ( CAG ) are already big established brands, that . What Could Beyond Meat Look Like In 2023? - Forbes 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. Beyond Meat, the company that is making eating plant-based protein mainstream continues to grow at a fast pace. By 2015, even Walmart was selling Beyond Meats plant-based products! This adjustment represents 7% of Beyond Meats market cap. Figure 7: Current Valuation Implies Drastic Profit Growth. This makes a lot of sense since only2.7%of packaged meat sales in the United States are plant based. One of the most notable adjustments was $11 million inoperating leases. What can you learn from this? 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. Per Figure 5, Beyond Meat saw significant improvement in profitability in 2018, but the improvement was short lived. How Beyond Meat's Marketing Strategy Set it Apart - Indigo9 Digital Inc. Plant based meats are not filled with dead animals which include bacteria growth and can contain other substances such as feces. Like Comment Share . 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 additional expense, one that is much lower for many competitors (as they already have profitable business lines to offset any marketing of new products), makes it even more difficult for Beyond Meat to improve its profitability in such a competitive market. Additionally, when their Chicken-Free Strips were finally taken off the market in 2019, they did so quietly. As in all markets, there are leaders. Does this make the stock expensive considering the recent volatility in the stock price? Stun is a creative branding agency. In order to get ahead of the competition, never stop innovating. 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". 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. Continue reading your article witha WSJ subscription, Already a member? However, the fundamentals reveal this stock is more style than substance. Expand the definition of your target market. This is one of the biggest first-day pop-ups in recent history. 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. Find out how 3 brands use customer data to find success! Figure 7 compares the firms implied future NOPAT in this scenario to its historical NOPAT. Heres a quick summary for noise traders when analyzing BYND: Executive Compensation Adds Additional Risk. 3. Should Kellogg continue to push the marketing of Incogmeato and swiftly gain customers, investors may kiss the ultra-high expectations baked into BYND goodbye. Over the TTM, Beyond Meat removed $23.7 million (6% of revenue) in share-based compensation and $7.5 million in restructuring expenses (2% of revenue) when calculating adjusted EBITDA. 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 Hires Marketing Executive, Revamps Retail Strategy 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 . Here's how KFC is marketing its updated Beyond Meat faux - Ad Age Beyond Meat, therefore, accomplished something huge: its name is enough to make people reassured about the quality and taste. Beyond Meat in midst of sales strategy revamp - WSJ Do you like this content? In 2020, they even signed a deal to open another production facility in Shanghai! 2 1 Comment. .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.
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