beyond meat marketing strategy

After all, the positive choices we make every day - no matter how small - can have a great impact on our world. 2023 Latana GmbH. Plants come directly from the sun and reap the energy created from the sun. January 2021. Why did it work for them? How did Beyond Meat become the leader it is today? The first six months of 2020 have visibly transformed Beyond Meat 's ( BYND -0.58%) approach to marketing its plant-based, meat substitute products. At the end of 2Q20, Beyond Meat had $222 million of cash and cash equivalents on its balance sheet. 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. 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. DOI: 10.2991/assehr.k.211209.003. 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. This is not by accident but instead by design. 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. our Subscriber Agreement and by copyright law. This copy is for your personal, non-commercial use only. Plant based meats are not filled with dead animals which include bacteria growth and can contain other substances such as feces. Heres a quick summary for noise traders when analyzing BYND: Executive Compensation Adds Additional Risk. We're here to help brands make better marketing decisions by delivering world-class, scalable insights. Things Are Only Getting Worse for Beyond Meat Stock. 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. All rights reserved. Plant-based foods are more than a fad, they are a huge economic trend. However, the poultry producer exited earlier this year . Competitors, Serious Uphill Battle for Beyond Meat to Improve Profitability. 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. Weve previously shown how linking executive compensation to faulty metrics such asadjusted EBITDAcan lead to the destruction of shareholder value. See allTrefis Featured AnalysesandDownloadTrefis Datahere. Figure 3: Operating Expense as % of Revenue: Beyond Meat vs. Beyond Meats profitability ranks at the bottom of this peer group. 3. Entrepreneur, retail expert, strategy consultant and author. this also includes knowledge of every product that comes in contact with your body on a daily basis. 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. Invest better with The Motley Fool. This makes a lot of sense since only2.7%of packaged meat sales in the United States are plant based. Heres a high-quality portfolio to beat the market, with over 100% return since 2016, versus 55% for the S&P 500. 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. 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. 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. Furthermore, many of the firms in Figure 2 have other key advantages multi-year relationships and existing distribution networks with grocery stores and quick-serve restaurants such asTyson, or in the case of Kroger, direct control of distribution and the end-consumer relationship. Making the world smarter, happier, and richer. Acquisitions completed at these prices would be truly accretive to Kraft Heinzs shareholders. 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. 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. 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 created the need for healthy products. 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. But what has allowed them to be so successful despite their setbacks? From the beginning Beyond Meat had a vision for its business that was much broader than any of its predecessors. Below is a short list of some of Beyond Meats alternative meat competitors: This list is not exhaustive and doesnt include any of the traditional meat products that continue to garner a large share of consumer dollars. 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. This adjustment represents 7% of Beyond Meats market cap. Some of the largest consumer food brands have followed suit. Plant-based burgers have existed for decades before Beyond Meat. In the first scenario, the estimated revenue growth rate is 61% in year one, 55% in year two, and 47% in year three, or equal to consensus. Youre reading a free article with opinions that may differ from The Motley Fools Premium Investing Services. Production Supervisor - 2nd Shift. 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. 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. The key variables are the weighted average cost of capital (WACC) and ROIC for assessing different hurdle rates for a deal to create value. This all ended with Beyond Meats new look. 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. 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. 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. 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. Are they only for vegans? 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. strategy uncovers and shares the "bold vision, . While many consumers are not willing to pay an average of $3 more a pound for a. The original packaging did not display vegetables, and the words meat and best in the products names were not chosen randomly. Sustainable Competitive Advantage- Beyond Meats formula for the perfect flavoring to taste just like a real burger. 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 . And if this happens, you need to have others you can roll out. She has also held senior leadership roles across PepsiCo's North America business during her more than 15-year career at the food . Concentrating on the health market, they were able to target a broad range of people seeking a better meat option than real meat. 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. Figure 10: Implied Acquisition Prices for Value-Neutral Deal. Beyond Meat was one of the most successful IPOs (Initial Public Offerings) of 2019. 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. revenue grows 24% a year from 2023-2027 (continuation of 2023 consensus), then. Many people can not even tell the difference between real meat and Beyond Meat. This indicates an extremely successful uptake by consumers. Some of the largest retailers in the world including Zara and H&M are in the fast fashion business which is not environmentally friendly. To do so, employees need to very clearly understand the companys priority: is it safety, profits, brand fidelity? As of 2020, the Beyond Meat company sells: Cookout Classic (10 plant-based burgers). Beyond Meats success comes partially from the fact that it has been able to evolve alongside or prior to consumer demand. The design softened. However, the improvement in Beyond Meat's margins has been eye-popping. For example. Expired Meat: https://youtu.be/ZxCT_D6HBd8, https://www.forbes.com/sites/greatspeculations/2020/09/14/competition-will-eat-beyond-meat-alive/#9d646992946b, https://www.cnbc.com/2019/08/21/whole-foods-ceo-john-mackey-plant-based-meat-not-good-for-your-health.html, https://www.cnbc.com/2020/09/14/beyond-meat-is-launching-meat-free-meatballs-in-grocery-stores.html, Female Entrepreneur. on July 4th, eating a hot dog with your family. When I use myreverse discounted cash flow (DCF) modelto analyze the expectations implied by the stock price, BYND appears significantly overvalued. Impossible Foods sells slightly different products: Impossible Burger, Impossible Pork, Impossible Sausage. Probably not, considering that revenues are likely to grow almost 2.7x by 2023, with net income turning positive in 2022 and growing steadily thereafter, generating continued returns for shareholders. BYND revenues saw a rise of 36.6% y-o-y in 2020, which was sharply lower than historical growth rates. This is a full-time position, reporting to the Chief Legal Officer. 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. Do you like this content? Valuation: I made $757 million of adjustments with a net effect of decreasing shareholder value by $513 million. 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. BEYOND MEAT ANNOUNCES NEW . Placing its hamburgers and breakfast proteins in major quick-service restaurant chains was a logical approach to igniting brand awareness. 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. How Beyond Meat's Marketing Strategy Set it Apart . But just how do these brands fare when it comes to brand awareness and consideration. Fourth Quarter 2021. 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. Part of Beyond Meats strategy is to redefine what the best source of protein is. Then, followed by J.J. Redick, Maya Moore, April Ross, Eric Bledsoe, Maggie Vessey, and Tia Blanco. 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. Per Figure 6, Beyond Meats TTM adjusted EBITDA of $45 million is well above core earnings of $4 million. However, given the low margins and overvalued stock price, I think it would be unwise for a larger firm to acquire Beyond Meat at current levels. Baseball player David Wright was the first celebrity to sign a contract with the brand. Beyond Meat Announces New Executive Leadership Appointments to Accelerate and Support the Company's Vision for Strategic Growth. If yes (which is the most common case), you can sell them to way more people and have an even greater impact. Get the latest information and insights into the world of brand. A lot of people are trading so I know a lot of people are interested in the future of this company. 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. They have sharply improved from -93.3% in 2016 to -4.2% in 2019. 2019: A Change In the Branding Strategy With the Arrival of Stun. Figure 1: Consensus Revenue Growth Estimates: 2020-2025, 2020-2025 revenue growth rates based on consensus estimates, Competition is Plentiful and Has Competitive Advantages. See the math behind this reverse DCF scenario. revenue grows at consensus rates in 2021, 2022, and 2023, and. When vegan meat alternatives first started to appear on the market, many people saw them as a fad. Therefore, they have a lot of time and competitive advantage before others to create the most well-known category before all other competitors. With such strong momentum and triple-digit year-over-year revenue growth, traders may push this stock higher. It began trading at $25/share on the Nasdaq stock exchange and ended the day at $65.75. In 2014 they developed their first simulated beef product and expanded their presence from 1,500 to 6,000 stores in the US. Although its products are plant based Beyond Meats marketing does not explicitly call that out. Beyond Meats case also shows that a marketing strategy is not fixed: it has to evolve along with the companys positioning. Beyond Meat is seeking a marketing, advertising, regulatory, and trademark attorney with 10-12 years of experience. After tying up with Dunkin soon after its IPO, Beyond Meat entered China in 2020. 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. 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. 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. 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. Cost basis and return based on previous market day close. Disclosure: David Trainer, Kyle Guske II, and Matt Shuler receive no compensation to write about any specific stock, sector, style, or theme. The implied stock values in this scenario are significantly below Beyond Meats current price. In order to get ahead of the competition, never stop innovating. There are several lessons to be learned from Beyond Meats 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. Success of any of Beyond Meats competitors could also further threaten future profit growth for Beyond Meat. And this failure didnt break them for a few reasons most importantly, because they already had new products in the works. These launches create a lot of buzz and put Beyond the Meat on the map. Over the TTM period, FCF is -$164 million. Extensive background in CPG . 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. 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. But thats what BYNDs investors are betting will not happen! *Average returns of all recommendations since inception. Sign up for our Newsletter to receive free, insightful tips on all things brand! Beyond Meat ( NASDAQ: BYND) is streamlining its sales strategy, according to internal documents reviewed by the Wall Street Journal. 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 is one of the biggest first-day pop-ups in recent history. It sounds crazy, we know but its one of the reasons Beyond Meat's plant-based burgers have been so widely successful: they emulate real meat right down to the irresistible juiciness. Beyond Meat Is Down 93% From Its High. Further, consensus estimates for Beyond Meats 2020 earnings are now $0.07/share. 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. Landing in Whole Foods which takes the brands it allows in its doors seriously was a signal to both consumers and retail customers that Beyond Meat was a brand worth giving a chance. 4. These days, fewer investors pay attention to fundamentals and the red flags buried in financial filings. This adjustment represented 3% of reported net assets. Beyond is working to streamline its operations and reverse declining sales. The ideal candidate must have substantial knowledge and experience in counseling on marketing and advertising matters for food and/or beverage companies, including review of packaging, labeling, and promotional . Figure 9: BYND Has Large Downside Risk: DCF Valuation Scenario. We can perceive more confidence from the company, in line with its media and advertising strategy. 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. In any case, I view recent moves as encouraging as Beyond makes moves to improve its footing to grow as a . Learn how you can use Latana to improve your brand marketing and grow faster. Beyond Meat went from very dark and meat-like packagings to a fresher and smoother look. This is rather than Beyond Meat actually creating a meat brand that is real meat. But what if youre looking for a more balanced portfolio instead? 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. . 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. Data by YCharts Kellogg ( K ) and Conagra ( CAG ) are already big established brands, that . Showing that meat is not necessary to enjoy the same flavors while reaping more plant-based benefits. 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.

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