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Tackle stereotypes about who your customers should be. What are your predictions for the future of this company? But what has allowed them to be so successful despite their setbacks? Cost basis and return based on previous market day close. Previously, people were limited to information they see on television which is in the best interests of companies that can afford those ad campaigns. This competitive disadvantage only makes Beyond Meats path to sustainable profitability that much more difficult. This is one of the biggest first-day pop-ups in recent history. This assumption is highly unlikely but allows us to create best-case scenarios that demonstrate how high expectations embedded in the current valuation are. 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 . Brands. Plant based options are the obvious choice. 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. Beyond Meat and Impossible Foods have many common points. 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. These launches create a lot of buzz and put Beyond the Meat on the map. Evaluation of Options- Evaluating the options of Beyond Meat vs. regular meat. Competitors. 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. Beyond Meat Stock (NASDAQ:BYND): Looking Beyond the Headwinds Since going public in early May, Beyond Meat's stock has soared more than 450 percent and its market value is over $8 billion. 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. They both rearrange proteins to create their plant-based products. 4. But just how do these brands fare when it comes to brand awareness and consideration. Beyond Meat, therefore, accomplished something huge: its name is enough to make people reassured about the quality and taste. Beyond Meat entered into a partnership with PepsiCo. Beyond Meat burgerseven have grill marks further convincing consumers that maybe it really is like 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. 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. This all ended with Beyond Meats new look. 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. This would be unreadable! Your brand, too, needs the liberty to change. Among the items Beyond Meat excludes when calculating its adjusted EBITDA are equity-based compensation, restructuring expenses, and a vague line item labeled other. 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. Beyond Meat has earned a premium name thanks to its marketing strategies, but this premium is too much. 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. Purchase Decision- When consumers are informed of the evaluation of options, information is readily available, and they have recognized a problem, it is so easy for consumers to make a newly informed decision. First, consumers expectations for new products and innovation will rise over time. 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. Beyond Meat Announces Global Strategic Partnership with Yum! Brands to 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. Furthermore, Don Lee alleged significant concerns about food safety protocols concerning the raw materials that Beyond Meat sent. This Beyond Meat Burger in particular cooks like a burger and looks like one,saidJoe Wood, who was the mid-Atlantic meat coordinator for Whole Foods Market at the time. Beyond Meat had originally been sold in retail shops across the USA, then 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. Beyond Meat uses a robot to imitate the process of chewing. Attracted by Beyond Meats impressive growth rates and soaring market value, multiple competitors are entering the alternative meat industry. 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. When I use myreverse discounted cash flow (DCF) modelto analyze the expectations implied by the stock price, BYND appears significantly overvalued. However, the fundamentals reveal this stock is more style than substance. When Beyond Meat was met with the failure of their Chicken-Free Strips their first real product they didnt fold. Therefore, the future will be bright, but they need to continuously gain market share by introducing new products and innovation within the plant-based space. The number of shares sold short has increased by 10% since last month. Beyond Meat Hires Marketing Executive, Revamps Retail Strategy Therefore, they have a lot of time and competitive advantage before others to create the most well-known category before all other competitors. Weve tried to run straight at the question: is a plant-based meat sufficient for humans to be vital and robust,saysBrown. How Beyond Meat's Marketing Strategy Set it Apart - Indigo9 Digital Inc. You can see all the adjustments made to Beyond Meats income statementhere. 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. If youre always innovating and looking towards the future, youll rarely be caught off guard. We visited . *Average returns of all recommendations since inception. Eating plants is the best thing you can do for your diet. If, however, McDonalds chooses to not continue on with the PLT or finds another supplier for its plant-based protein items, BYND could fall even further. Over the TTM period, FCF is -$164 million. Moral of the story? 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. This is the market drive for Beyond Meat. In2016 Whole Foods decided to give the company a chance by placing Beyond Meat in its meat section. 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 24% a year from 2023-2027 (continuation of 2023 consensus), then. There was also a long standing view which only recently has begun to change that veganism or vegetarianism will only be embraced by a narrow part of society. 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. Shares have fallen 10% since news onJune 25, 2020that McDonalds was discontinuing testing of a plant-based burger it dubbed the PLT made with a Beyond Meat patty in several Canadian markets. Figure 3: Operating Expense as % of Revenue: Beyond Meat vs. Even more impressive is that Beyond Meat is, well, a food company (it develops plant-based meat products) and the sales for 2018 were only $87.9 million (and yes, the company has yet to post a . Figure 5: Beyond Meats Revenue & Core Earnings Since 2017. 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. This would make growth in Beyond Meats stock price a real possibility in the next two years, taking its stock price to $200. Part of Beyond Meats strategy is to redefine what the best source of protein is. From the beginning Beyond Meat had a vision for its business that was much broader than any of its predecessors. According to the Partners In Leadership Happiness at Work survey, when employees are happier at work, 85% take more initiative. Beyond Meat - Corporate Counsel - IP, Marketing & Brand Management Beyond Meat is Wasting Its Advertising - Better Marketing As we touched on earlier, not everything was easy for Beyond Meat they made their fair share of mistakes along the way. Measuring Brand Awareness As Told By Marketing Experts, journalists who actually tasted the chicken reported. Figure 10: Implied Acquisition Prices for Value-Neutral Deal. KFC, Beyond Meat ready nationwide plant-based chicken rollout Instead, they persevered. 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. Learn how you can use Latana to improve your brand marketing and grow faster. Plant-based foods are more than a fad, they are a huge economic trend. About 70% of the global population is cutting down its meat consumption. 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. In any case, I view recent moves as encouraging as Beyond makes moves to improve its footing to grow as a . It looks like meat, tastes like meat, and even feels like meatbut its made entirely of plants. Performance goals for cash bonuses could be determined by achievement of GAAP or non-GAAP financial measures and may be adjusted by the compensation committee for any reason. 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. The company launched the Impossible Burger in 2016. Over the past two years, the firm has burned a cumulative $179 million (2% of market cap) in FCF. Plant-based burgers have existed for decades before Beyond Meat. It doesnt matter what industry your brand is in theres always a chance consumers wont take to your product or service. Concentrating on the health market, they were able to target a broad range of people seeking a better meat option than real meat. One of the ways it did this was by creating burgers that look like meat burgers down to the meat actually bleeding. Beyond Meat founder, Ethan Brown, understood the place of meat in the collective perception very early on. This vision can be found throughout Beyond Meats marketing collateral. The company has a culture of accountability among its employees: they are all responsible for driving up performances by making suggestions, pointing out what is not working. Plant based meats are not filled with dead animals which include bacteria growth and can contain other substances such as feces. This allows consumers to make their own informed decision. 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. on July 4th, eating a hot dog with your family. Its stock value gained 163% on the day of its stock introduction. People are able to do extensive research on problems after recognizing that there is an issue. 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. The mattress. 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. Knowing that the meat is expired and poses a hazard to eat it. More and more meat-eaters and flexitarians are looking to plant-based products to offset their carbon footprints and help them live a more sustainable lifestyle. February 1, 2022 . The key variables are the weighted average cost of capital (WACC) and ROIC for assessing different hurdle rates for a deal to create value. If yes (which is the most common case), you can sell them to way more people and have an even greater impact. The companys marketing strategy is multiple layers one and has evolved over time, to keep up with the market trend. Plant-based eaters now account for 8% of the global population. Some of the largest retailers in the world including Zara and H&M are in the fast fashion business which is not environmentally friendly. 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. Then, followed by J.J. Redick, Maya Moore, April Ross, Eric Bledsoe, Maggie Vessey, and Tia Blanco. For example, Kelloggs delayed the launch of its first round of Incogmeato products due to the COVID-19 pandemic. Considering these competitors are already supplying plant-based protein products, Beyond Meat faces an increasingly uphill battle to reach the size it needs to match the cost efficiencies of larger competitors like these two established firms. This adjustment represents 7% of Beyond Meats market cap. Each of the above scenarios also assumes Beyond Meat is able to grow revenue, NOPAT, and FCF without increasing working capital or fixed assets. our Subscriber Agreement and by copyright law. 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. Their products are now sold in 17,000 grocery stores and 12,000 eateries. Their main rival is the company Impossible Foods. Koshy has 29.5 million followers on TikTok and 17.5 million fans on YouTube. Additionally, when their Chicken-Free Strips were finally taken off the market in 2019, they did so quietly. While consumer interest in protecting the environment or having a healthier lifestyle continues to grow it doesnt always mean consumption follows. Per Figure 6, Beyond Meats TTM adjusted EBITDA of $45 million is well above core earnings of $4 million. 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. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Plant based burgers are not new but Beyond Meat has been able to capture more of the . These days, fewer investors pay attention to fundamentals and the red flags buried in financial filings. Continue reading your article witha WSJ subscription, Already a member? Now, lets proudly assume what they are: a plant-based burger, extracting plant proteins to make a tasty and healthy burger. .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. For reference, Beyond Meats invested capital has increased by an average of $84 million (28% of 2019 revenue) over the past two years. June 4, 2021 . This is rather than Beyond Meat actually creating a meat brand that is real meat. Mission | Beyond Meat this also includes knowledge of every product that comes in contact with your body on a daily basis. For instance, over the TTM, ConAgra spent 15 times more on SG&A than Beyond Meat. Beyond Meat Continues to Strengthen its Global Innovation Capabilities With such high expectations, nearly any negative news could place Beyond Meats future earnings in doubt and cause shares to fall. What is Beyond Meats marketing strategy? The Double Distribution Canal: A Major Strength. 2. Figure 7 compares the firms implied future NOPAT in this scenario to its historical NOPAT. Figure 9 compares the firms implied future NOPAT in this scenario to its historical NOPAT. The Motley Fool has a disclosure policy. First of all, think of the big picture when it comes to segmentation: who will really buy your products? Beyond Meat Announces New Executive Leadership Appointments to Accelerate and Support the Company's Vision for Strategic Growth. The founder, Ethan Brown, said in June that the companys objective is to make plant-based meat cheaper than animal protein. Option grants and RSUs directly align executives interests with the price of the companys shares and not necessarily with creating shareholder value.