We hope this article helped you understand how crucial a good marketing strategy is for a companys success. Why did it work for them? The company's second-quarter 2020 earnings report, released Tuesday after the markets closed, revealed that it's still experiencing rampant growth. 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. 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. Beyond Meat uses a robot to imitate the process of chewing. Its stock value gained 163% on the day of its stock introduction. Lets have a look at their most serious competitor: Impossible Foods.
Figure 6: Beyond Meats Adjusted EBITDA Misleads on Profitability, BYND Adjusted EBITDA Misleads On Profitability, Doing the Math: Valuation Implies Significant Disruption of the Entire Meat Industry. 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. However, one of the biggest deal breakers for potential. 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. A lot of people are trading so I know a lot of people are interested in the future of this company. See allTrefis Featured AnalysesandDownloadTrefis Datahere. Furthermore, Beyond Meat has a history of significant free cash flow (FCF) burn that is unlikely to change anytime soon. Apart fromtotal debtwhich includes the operating leases noted above, the most notable adjustment to shareholder value was $572 million inoutstanding employee stock options. Considering our revenue projections of roughly $1.1 billion and 6% margins, almost $66 million in net income is possible by 2023. 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. Their products are now sold in 17,000 grocery stores and 12,000 eateries. Though BYNDs margins remained negative at close to -13% in 2020 (due to the impact of the pandemic), the companys operations are expected to improve and turn profitable in 2022, with projected margins of 3%. Many undercover operations are conducted to get footage and investigate what is really going on inside the slaughter houses. February 1, 2022 . 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. It doesnt matter what industry your brand is in theres always a chance consumers wont take to your product or service. 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. Beyond Meat was one of the most successful IPOs (Initial Public Offerings) of 2019. 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. For non-personal use or to order multiple copies, please contact This year also saw Beyond Meat break into the international market partnering with the likes of Tesco in the UK to A&W in Canada). For reference, Beyond Meats invested capital has increased by an average of $84 million (28% of 2019 revenue) over the past two years. (Photo Illustration by Drew Angerer/Getty Images). Weve previously shown how linking executive compensation to faulty metrics such asadjusted EBITDAcan lead to the destruction of shareholder value. Changes that have inspired the birth of Beyond Meat is the increased demand on plant-based products. Figure 11 shows the implied values for Beyond Meat assuming Kraft Heinz wants to achieve an ROIC on the acquisition that equals 6%. In 2020, they even signed a deal to open another production facility in Shanghai! This is rather than Beyond Meat actually creating a meat brand that is real meat. In order to get ahead of the competition, never stop innovating. These expenses, and the need to maintain them to support Beyond Meats already declining growth, illustrate that the firm is not approaching economies of scale anytime soon. This new knowledge of healthy vs. unhealthy created a new market drive for healthy products. Each of the above scenarios also assumes Beyond Meat is able to grow revenue, NOPAT, and FCF without increasing working capital or fixed assets. While many consumers are not willing to pay an average of $3 more a pound for a. Figure 2: Beyond Meats Profitability vs. Beyond Meat also has big contracts with fast-food chains, as mentioned before, which is a distribution canal bringing lots of cash flow. Is It Time to Buy? Success of any of Beyond Meats competitors could also further threaten future profit growth for Beyond Meat. 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. Another key marketing vehicle for the company is its partnerships with big brands likeMcDonalds, KFCand Pizza Hut. Instead, it avoids labelling its products as vegan even though they are. Beyond Meat and Impossible Foods have many common points. The emphasis on the grocery channel will now almost certainly evolve into a long-term focal point for Beyond Meat. Figure 1: Consensus Revenue Growth Estimates: 2020-2025, 2020-2025 revenue growth rates based on consensus estimates, Competition is Plentiful and Has Competitive Advantages. How did Beyond Meat become the leader it is today? This copy is for your personal, non-commercial use only. KFC and Beyond Meat are partnering with YouTube star and influencer Liza Koshy to help reveal the debut. Heres a post fromBeyond Meats Facebook page: There is no mention at all that the Even-Better Beyond Burger is plant based. According to the company, this package of 10 plant-based patties reduces the price of its burgers from nearly twice that of conventional burgers to a 20% premium. 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. However, by now its clear that plant-based meat alternatives are here to stay and theyre gaining traction every year. After adjusting for this liability, I can model multiple purchase price scenarios.
Beyond Meat revamps its retail strategy, hires new marketing executive Letting go of your vision and plans is hard, but if its the right thing to do, you have to be willing to pivot. This allows consumers to make their own informed decision. Production Supervisor - 2nd Shift. Figure 11: Implied Acquisition Prices to Create Value. But what has allowed them to be so successful despite their setbacks? Plant based meats are not filled with dead animals which include bacteria growth and can contain other substances such as feces. For example, Kelloggs delayed the launch of its first round of Incogmeato products due to the COVID-19 pandemic. (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. 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. DOI: 10.2991/assehr.k.211209.003. Figure 4: Expenses as % of Revenue: Beyond Meat 2Q19 vs. 2Q20, BYND Operating Expense As Of Revenue 2Q19 Vs. 2Q20. This scenario represents the minimum level of performance required not to destroy value. This is a full-time position, reporting to the Chief Legal Officer. BYND revenues saw a rise of 36.6% y-o-y in 2020, which was sharply lower than historical growth rates. 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. After all, nothing could replace a real burger, could it? For example, Tyson Food, one of the biggest and earliest investors in Beyond Meat, which had a 5% stake in 2016 exited in 2019. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. They did not service the vegan and vegetarian markets as traditional players did. 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. This all ended with Beyond Meats new look. Nestl, JBS, and Tyson have all recently launched plant-based burgers. Like Comment Share . 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. 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 9: BYND Has Large Downside Risk: DCF Valuation Scenario.
Beyond Meat: No more mystery for the plant-meat brand - BMB 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. See the math behind this reverse DCF scenario. 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. Yet Beyond Meat's management made a critical decision during the second quarter to change course on product distribution. revenue grows 24% a year from 2023-2027 (continuation of 2023 consensus), then. 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 . Per Figure 6, Beyond Meats TTM adjusted EBITDA of $45 million is well above core earnings of $4 million. However, Beyond Meat staunchly defended itself and its food safety protocols, turning the tables on Don Lee and saying: We simply couldnt get Don Lee Farms to meet our standards. Even in 2021, the dispute is still going on, though both sides seem to have claimed victory. Even with that success, Brown continues to think big . Why? 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. 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. 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. Of course, this is wrong, and our body adapts to whatever we give it. 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 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. The organizational goals have to be settled and explained. This competitive disadvantage only makes Beyond Meats path to sustainable profitability that much more difficult. Competitors. Data by YCharts Kellogg ( K ) and Conagra ( CAG ) are already big established brands, that . this also includes knowledge of every product that comes in contact with your body on a daily basis. Moral of the story? Acquisitions completed at these prices would be truly accretive to Kraft Heinzs shareholders. Dollar figures in millions. Plant based options are the obvious choice. This assumption is highly unlikely but allows us to create best-case scenarios that demonstrate how high expectations embedded in the current valuation are. Balance Sheet: I made $290 million of adjustments to calculate invested capital with a net decrease of $228 million.
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