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. 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 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. Could they suit flexitarians, meat-eaters? Considering our revenue projections of roughly $1.1 billion and 6% margins, almost $66 million in net income is possible by 2023. 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. Invest better with The Motley Fool. Now, lets proudly assume what they are: a plant-based burger, extracting plant proteins to make a tasty and healthy burger. Why did it work for them? Figure 10: Implied Acquisition Prices for Value-Neutral Deal. How Beyond Meat's Marketing Strategy Set it Apart - LinkedIn Beyond Meat has been working with them since February 2019. The organizational goals have to be settled and explained. Lets have a look at their most serious competitor: Impossible Foods. 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. Beyond Meat went from very dark and meat-like packagings to a fresher and smoother look. 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. 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. In any case, I view recent moves as encouraging as Beyond makes moves to improve its footing to grow as a . Problem Recognition- Consumers did not know about the conditions of the animals that are actively being slaughtered to create meat. Beyond Meat, the company that is making eating plant-based protein mainstream continues to grow at a fast pace. Distribution and use of this material are governed by 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%). revenue grows at consensus rates in 2021, 2022, and 2023, and. We believe there's a better way to feed our future. Baseball player David Wright was the first celebrity to sign a contract with the brand. 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. This allows consumers to make their own informed decision. 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 Inc. is revamping its retail sales strategy to center on five major grocers and hiring a new marketing executive as part of .css-1h1us5y-StyledLink{color:var(--interactive-text-color);-webkit-text-decoration:underline;text-decoration:underline;}.css-1h1us5y-StyledLink:hover{-webkit-text-decoration:none;text-decoration:none;}an effort to reinvigorate the plant-based food makers business. Beyond Meat's Competitive Advantage, Market Driver, and The - Medium I assume revenue grows 47% in years four and five, the same as year three. Comprised of companies with strong revenue growth, healthy profits, lots of cash, and low risk, it has outperformed the broader market year after year, consistently. Clearly, vegan meat alternatives were no longer a fad. 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. 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%. Option grants and RSUs directly align executives interests with the price of the companys shares and not necessarily with creating shareholder value. Dollar figures in millions. 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. Fiduciaries should avoid Beyond Meat Inc. (BYND). This is one of the biggest first-day pop-ups in recent history. At the end of 2Q20, Beyond Meat had $222 million of cash and cash equivalents on its balance sheet. (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. 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. Changes that have inspired the birth of Beyond Meat is the increased demand on plant-based products. How Beyond Meat's Marketing Strategy Set it Apart - Indigo9 Digital Inc. 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. In any case, I view recent moves as encouraging as Beyond makes moves to improve its footing to grow as a . How did Beyond Meat become the leader it is today? We can spot changes in the design since their arrival. 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. Despite less transparency, I know that Beyond Meats executive compensation plan consists of a cash bonus, option grants, and restricted share units (RSUs). What Could Beyond Meat Look Like In 2023? - Forbes While many consumers are not willing to pay an average of $3 more a pound for a. 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. 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, the improvement in Beyond Meat's margins has been eye-popping. 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. The mattress. Still, disputes aside, Beyond Meat has been doing very well these past few years. They both rearrange proteins to create their plant-based products. With a sound marketing strategy, Beyond Meat may be able to make its product cool again. 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? The number of shares sold short has increased by 10% since last month. Per Figure 6, Beyond Meats TTM adjusted EBITDA of $45 million is well above core earnings of $4 million. 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. By focusing on their fresh foods, like their Beyond Burger patties which many agreed pulled off the meatless meat trick more convincingly they were able to put their time and effort into a product that was going to make them more successful in the long run. 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. Competitors. 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. 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. 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. One of the most notable adjustments was $11 million inoperating leases. 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. One of the most important pieces of furniture we own. 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. If you want to stay up-to-date on the latest news in the plant-based market, to learn about the most recent innovations as they come out, do not hesitate tofollow us. This scenario represents the minimum level of performance required not to destroy value. Should Kellogg continue to push the marketing of Incogmeato and swiftly gain customers, investors may kiss the ultra-high expectations baked into BYND goodbye. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. 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. What are your predictions for the future of this company? Opinions expressed by Forbes Contributors are their own. 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. Conference: 2021 3rd International Conference on Economic Management and Cultural . Cost basis and return based on previous market day close. 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). Firstly, the gradual lifting of lockdowns in recent months will help the restaurant segment register strong growth along with sales from retail chains. Between 2013-2016, Beyond Meat was funded by the likes of Tyson Foods, Bill Gates, and the Humane Society and by 2018, theyd raised $72 million in venture financing. 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. Fourth Quarter 2021. First, consumers expectations for new products and innovation will rise over time. Instead, due to theproliferation of noise traders, the focus tends toward technical trading tends while high-quality fundamental research is overlooked. About 70% of the global population is cutting down its meat consumption. 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. Further, consensus estimates for Beyond Meats 2020 earnings are now $0.07/share. It looks like meat, tastes like meat, and even feels like meatbut its made entirely of plants. A vegan burger that bleeds. However, the lack of fervor for their first product did nothing to stop Beyond Meat from trudging forward. Instead, they persevered. 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. 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. 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. illustration, packages of Beyond Meat "The Beyond Burger" sit in a refrigerator, June 13, 2019 in the Brooklyn borough of New York City. This assumption is highly unlikely but allows us to create best-case scenarios that demonstrate how high expectations embedded in the current valuation are. And if this happens, you need to have others you can roll out. Various trademarks held by their owners. Their products are now sold in 17,000 grocery stores and 12,000 eateries. Beyond Meat Stock (NASDAQ:BYND): Looking Beyond the Headwinds Beyond Meat might be the pioneer in this segment, but now it faces fierce competition. Youre reading a free article with opinions that may differ from The Motley Fools Premium Investing Services. In order to increase its manufacturing capacity, in June 2018, Beyond Meat opened a second production facility in Columbia, Missouri and a third in El Segundo, California. Koshy has 29.5 million followers on TikTok and 17.5 million fans on YouTube. Figure 3: Operating Expense as % of Revenue: Beyond Meat vs. Heres a post fromBeyond Meats Facebook page: There is no mention at all that the Even-Better Beyond Burger is plant based. 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. Impossible Foods sells slightly different products: Impossible Burger, Impossible Pork, Impossible Sausage. Beyond Meat was the first company to sell plant-based burgers in grocery stores meat sections. The QSR is looking to get the lion's share of the meat substitute market with Beyond Meat.
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