beyond meat marketing strategy

Find out how 3 brands use customer data to find success! But just how do these brands fare when it comes to brand awareness and consideration. The Double Distribution Canal: A Major Strength. The alternative meat producer is reportedly focusing its retail . Devault, PA Operations - DEPA Production On-site. It began trading at $25/share on the Nasdaq stock exchange and ended the day at $65.75. 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. Figure 3: Operating Expense as % of Revenue: Beyond Meat vs. 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 superior scale of Beyond Meats peers will also challenge what the firm believes to be a critical competitive advantage its innovation. Eating plants is the best thing you can do for your diet. 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. The company's vision is for consumers to enjoy a meat-like taste and texture in their favourite dishes while avoiding the many chemicals used in processed meat and reducing the number of animals killed every year. Beyond Meat burgerseven have grill marks further convincing consumers that maybe it really is like meat. Also, because of technology, people are becoming more and more informed about problems with big brands and the cancerous chemicals used in products for decades. Firstly, the gradual lifting of lockdowns in recent months will help the restaurant segment register strong growth along with sales from retail chains. The Impossible Foods start-up was founded in 2011 in California by Patrick O. 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). 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. The implied stock values in this scenario are significantly below Beyond Meats current price. 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. For example, Kelloggs delayed the launch of its first round of Incogmeato products due to the COVID-19 pandemic. Its difficult to imagine the product or service that got your brand on the map might not be the one that helps you achieve further growth. Instead, it avoids labelling its products as vegan even though they are. Figure 11: Implied Acquisition Prices to Create Value. 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. Instead Beyond Meat fought for placement within the meat section of grocery stores. There are currently 7 million shares sold short, which equates to 9% of shares outstanding and just over one day to cover. And this failure didnt break them for a few reasons most importantly, because they already had new products in the works. First of all, think of the big picture when it comes to segmentation: who will really buy your products? Catalyst: Others Success Could Come at Beyond Meats Expense. The Motley Fool has a disclosure policy. 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. Beyond Meat would rather investors focus onflawed non-GAAP metricssuch as adjusted EBITDA, which allow management to remove real costs of the business and to paint a rosier view of profits. Plant-based meat alternatives are on the rise and not just with vegans. 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 . Increased U.S. foodservice and international channel net revenues were more than offset by reduced U.S. retail channel net revenues, which decreased 19.5% compared to the year-ago period. While there are numerous brands that have popped up over the years whove thrown their metaphorical hats into the meat alternatives ring such as Impossible Foods and Quorn Beyond Meat is still one of the most successful and well-known. In the first quarter of 2019, Beyond Meat's first as a public company, its gross profit was just 26.8% of net revenue. This is the market drive for Beyond Meat. Fourth Quarter 2021. our Subscriber Agreement and by copyright law. 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. At the end of 2Q20, Beyond Meat had $222 million of cash and cash equivalents on its balance sheet. Beyond Meat has been working with them since February 2019. Links: https://zaap.bio/lillytalavera. Continue reading your article witha WSJ subscription, Already a member? In order to get ahead of the competition, never stop innovating. Figure 1: Consensus Revenue Growth Estimates: 2020-2025, 2020-2025 revenue growth rates based on consensus estimates, Competition is Plentiful and Has Competitive Advantages. 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. Entrepreneur, retail expert, strategy consultant and author. Do you like this content? Plant based burgers are not new but Beyond Meat has been able to capture more of the mainstream market. It is better to create a plant-based meat product, not only because of meat expiration issues, but bacterial issues with animals, mad cow disease, and so many other factors that clearly make eating plants natural to humans and such a better option. The design softened. 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. Showing that meat is not necessary to enjoy the same flavors while reaping more plant-based benefits. As Kroger invests further in its Simple Truth brand, wed expect the firm to allocate more shelf space to its own in-house brands, rather than a competitor such as Beyond Meat. For example, Tyson Food, one of the biggest and earliest investors in Beyond Meat, which had a 5% stake in 2016 exited in 2019. As investorsfocus moreon fundamental research, research automation technology is needed to analyze all the critical financialdetails in financial filingsas shown in the Harvard Business School and MIT Sloan paper,Core Earnings: New Data and Evidence. They entered the restaurant market, and are currently sold to plant-based and mainstream restaurants. strategy uncovers and shares the "bold vision, . Beyond Meat is a Los Angeles-based producer of plant-based meat substitutes, including vegan versions of burgers and sausages. The key variables are the weighted average cost of capital (WACC) and ROIC for assessing different hurdle rates for a deal to create value. Get the latest information and insights into the world of brand. Should Kellogg continue to push the marketing of Incogmeato and swiftly gain customers, investors may kiss the ultra-high expectations baked into BYND goodbye. Additionally, Beyond Meat is introducing its plant-based meatballs in Coles, the second largest supermarket chain in Australia with over 2,500 stores. Plant-based meats look like an attractive bet to play the future of food. Beyond Meat was the first company to sell plant-based burgers in grocery stores meat sections. The following table, covering Q2 2020, shows how drastically this dynamic has changed, as management has leaned into winning customers at the grocery shelf during a near-cessation in dining-out activities: Beyond Meat is now incentivizing potential retail customers to try its products via a limited-time offering it dubs the "Cookout Classic" burger value pack. The original packaging did not display vegetables, and the words meat and best in the products names were not chosen randomly. Extensive background in CPG . Invest better with The Motley Fool. Things Are Only Getting Worse for Beyond Meat Stock. Still, disputes aside, Beyond Meat has been doing very well these past few years. 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. However, we can define the general key aspects: Targeting meat-eaters as well, not only vegans/vegetarians, Identifying the collective reputation of plant-based products, and changing it, Relying on its reputation to appear on restaurant menus and get cheap advertising. From the Beyond Burger to Beyond Sausage, and their latest Beyond Meatballs this brand is really on a roll. Plant-based burgers have existed for decades before Beyond Meat. With such high expectations, nearly any negative news could place Beyond Meats future earnings in doubt and cause shares to fall. Instead of drawing attention to a product that consumers didnt love, they simply discontinued it and slowly fazed it out of supermarkets. Its stock value gained 163% on the day of its stock introduction. Weve previously shown how linking executive compensation to faulty metrics such asadjusted EBITDAcan lead to the destruction of shareholder value. The company launched the Impossible Burger in 2016. There have been many stories of grocery story employees getting told by their bosses to take the expired meat and mix it with regular meat and put it back out there on the shelf. The plant-based food market will grow bigger and bigger every year. 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. Additionally, the companys new partnerships will also drive impressive top line growth. + Follow. Beyond Meats case also shows that a marketing strategy is not fixed: it has to evolve along with the companys positioning. 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. Eating meat has long been associated with masculinity. 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. While the market hasnt liked this news, both the CEOs of Beyond Meat and McDonalds have stated that there isno changein the relationship between the two companies. 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. 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. Vegans and vegetarians, on the contrary, are often perceived as struggling to get enough protein and iron daily, as unhealthy weaklings. Some of the largest retailers in the world including Zara and H&M are in the fast fashion business which is not environmentally friendly. 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. And if this happens, you need to have others you can roll out. You can find Beyond Meat in many places from small restaurants to national chains but what really accelerated its growth in the beginning was its partnership with Whole Foods. 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. A vegan burger that bleeds. Changes that have inspired the birth of Beyond Meat is the increased demand on plant-based products. 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. Highlighted by Beyond Meat 's stunning public debutwhich recorded a jaw-dropping 163% gain in its first daythe vegetarian alternatives category of foodtech is blowing up. This is rather than Beyond Meat actually creating a meat brand that is real meat. Beyond Meat stated that its mission is to push boundaries and disrupt. Therefore, restaurant owners tend to put the Beyond Meat logo on the menu when featuring their products. Beyond Meat also has big contracts with fast-food chains, as mentioned before, which is a distribution canal bringing lots of cash flow. The mission of the company is focused on plant-based meat alternatives, using pea and other plant protein isolates. 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. Figure 7: Current Valuation Implies Drastic Profit Growth. In 2021 Beyond Meat's revenue increased by 14.2% to reach $464.7 million. Tackle stereotypes about who your customers should be. But what has allowed them to be so successful despite their setbacks? Each implied price is based on a goal ROIC assuming different levels of revenue growth. 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.. Attracted by Beyond Meats impressive growth rates and soaring market value, multiple competitors are entering the alternative meat industry. To do so, employees need to very clearly understand the companys priority: is it safety, profits, brand fidelity? Per Figure 6, Beyond Meats TTM adjusted EBITDA of $45 million is well above core earnings of $4 million. [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. 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? Lets take a look at data from Germany. 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. The first six months of 2020 have visibly transformed Beyond Meat 's ( BYND -0.58%) approach to marketing its plant-based, meat substitute products. We can spot changes in the design since their arrival. January 2021. 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. Apply. Plant-based foods are more than a fad, they are a huge economic trend. 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. Meditation apps have seen a boom in popularity over the past few years in the US but does their growth extend to Europe? last yearwhere it will: develop, produce and market snacks and beverages made from plant-based protein bringing together Beyond Meats innovation expertise with PepsiCos marketing and commercial capabilities. PepsiCo is known for its marketing prowess and just working with PepsiCo will expand Beyond Meats reach. But consumers shop there because the low price points allow them to have a constant rotation of outfits. This would make growth in Beyond Meats stock price a real possibility in the next two years, taking its stock price to $200. Eat What You Love 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. 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. 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. Among the items Beyond Meat excludes when calculating its adjusted EBITDA are equity-based compensation, restructuring expenses, and a vague line item labeled other. 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. All rights reserved. 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. Placing its hamburgers and breakfast proteins in major quick-service restaurant chains was a logical approach to igniting brand awareness. For example. 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. Going forward, Beyond Meat will find it even more difficult to grow revenue and profits as competitors flood the market. For instance, over the TTM, ConAgra spent 15 times more on SG&A than Beyond Meat. Plant based meats are not filled with dead animals which include bacteria growth and can contain other substances such as feces. BYND entered into a partnership with Alibaba Group, whereby its products will be available in Freshippo stores (Alibabas supermarkets) in Shanghai. 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. Option grants and RSUs directly align executives interests with the price of the companys shares and not necessarily with creating 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. Beyond Meat (NASDAQ: BYND) was founded in 2009 by Ethan Brown, a Californian entrepreneur with an interest in environmental topics, who is also a vegan. For example, Kelloggs delayed the launch of itsfirst roundof Incogmeato products due to the COVID-19 pandemic. However, one of the biggest deal breakers for potential. Looking ahead to 2021, consensus earnings estimates are a much higher $0.47/share. While I think a plethora of competitors have already developed a competing product, its plausible that a competitor could decide to buy Beyond Meat rather than continue building its own plant-based protein brand. 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. The first campaign, The Future of Protein, was launched in 2015. By July 2019, Beyond Meat could claim a market value of $11.7 billion which was a huge increase from its pre-IPO valuation of $3.8 billion. Per Figure 6, Beyond Meat's TTM adjusted EBITDA of $45 million is well above core earnings of $4 million. Over the TTM period, FCF is -$164 million. 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. Founder and Tech Inventor at Princess Technologies. According to the Partners In Leadership Happiness at Work survey, when employees are happier at work, 85% take more initiative. Despite less transparency, I know that Beyond Meats executive compensation plan consists of a cash bonus, option grants, and restricted share units (RSUs). What can you learn from this? If you are wondering how Beyond Meat has been able to make strides where others havent consider these four elements of its marketing strategy. With these headwinds Beyond Meat had to convince meat lovers that its products passed the test. Our goal is to give you the key to understanding Beyond Meats rapid success, to show you the hidden reasons for their success. Sustainable Competitive Advantage- Beyond Meats formula for the perfect flavoring to taste just like a real burger. 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. 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. This vision can be found throughout Beyond Meats marketing collateral. 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.. The company's second-quarter 2020. Beyond Meat ( NASDAQ: BYND) is streamlining its sales strategy, according to internal documents reviewed by the Wall Street Journal. Letting go of your vision and plans is hard, but if its the right thing to do, you have to be willing to pivot. Furthermore, Beyond Meat has a history of significant free cash flow (FCF) burn that is unlikely to change anytime soon. Why? 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%. In any case, I view recent moves as encouraging as Beyond makes moves to improve its footing to grow as a . See all adjustments to Beyond Meats valuationhere. Plant based burgers are not new but Beyond Meat has been able to capture more of the . The difference with other plant-based patties is that their name is a synonym of quality for their clients. However, the poultry producer exited earlier this year . 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. To fight this incorrect belief, Ethan Brown launched a campaign featuring famous athletes. 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". Additionally, when their Chicken-Free Strips were finally taken off the market in 2019, they did so quietly. 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%). When vegan meat alternatives first started to appear on the market, many people saw them as a fad. See allTrefis Featured AnalysesandDownloadTrefis Datahere. Figure 9: BYND Has Large Downside Risk: DCF Valuation Scenario. People tend to associate meat with strength, with muscles. Expand the definition of your target market. Leverage partners with larger platforms to expand reach. Problem Recognition- Consumers did not know about the conditions of the animals that are actively being slaughtered to create meat. This competitive disadvantage only makes Beyond Meats path to sustainable profitability that much more difficult. See the math behind this reverse DCF scenario. 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. Published May 20, 2021. Many people can not even tell the difference between real meat and Beyond Meat. 2. 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. 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. But what if youre looking for a more balanced portfolio instead? Beyond Meat was one of the most successful IPOs (Initial Public Offerings) of 2019. 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. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services. But how they handled it is what makes them a successful brand. 8 Facts About Pelotons Marketing Strategy You Need to Know, Dirty Lemons Marketing & Growth Strategy, How it Became a Success, Crocs Marketing Strategy. In 2014 they developed their first simulated beef product and expanded their presence from 1,500 to 6,000 stores in the US. Dont be afraid to really study the competition and pay attention to all the little details that have made them successful. How did Beyond Meat become the leader it is today? 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. Furthermore, Beyond Meats current valuation implies it will generate sales equal to 29% of Tysons 2019 revenue a level that places it as thesixth largestmeat and poultry processor in the world in 2019. Figure 9 compares the firms implied future NOPAT in this scenario to its historical NOPAT. Plant based options are the obvious choice. 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.

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