Beyond Meat has earned a premium name thanks to its marketing strategies, but this premium is too much. And if this happens, you need to have others you can roll out. Eating plants is the best thing you can do for your diet. 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%. Dont become so attached to a product that you arent willing to see when it no longer serves you. 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%). If yes (which is the most common case), you can sell them to way more people and have an even greater impact. revenue grows at consensus rates in 2021, 2022, and 2023, and. In2016 Whole Foods decided to give the company a chance by placing Beyond Meat in its meat section. 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. 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. Links: https://zaap.bio/lillytalavera. These features also convince consumers that Beyond Meat burgers are not your average veggie burgers which were never popular with mainstream consumers. Figure 8: Current Valuation Implies Massive Revenue Growth, Significant Downside in a More Realistic Scenario. While I chose Kraft Heinz, analysts can use just about any company to do the same analysis. Lots of small companies have also emerged and targeted the same audience, such as Purple Carrot or Sunfed Meats. Plant based meats are not filled with dead animals which include bacteria growth and can contain other substances such as feces. Insider Trading and Short Interest Indicate Market Skepticism. There are countless advertisements with men barbequing burgers or hanging out with their friends as they bond over their favourite protein, read meat. A lot of people are trading so I know a lot of people are interested in the future of this company. Does this make the stock expensive considering the recent volatility in the stock price? They began targeting not only vegetarians and vegans, but also and mainly meat-eaters; flexitarians. This does not boil down to just knowledge on slaughter houses, animal conditions, bacteria etc. 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. They entered the restaurant market, and are currently sold to plant-based and mainstream restaurants. 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. BYND entered into a partnership with Alibaba Group, whereby its products will be available in Freshippo stores (Alibabas supermarkets) in Shanghai. 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. Plant based burgers are not new but Beyond Meat has been able to capture more of the . First, investors need to know that Beyond Meat has a large liability that makes it more expensive than the accounting numbers would initially suggest. Therefore, restaurant owners tend to put the Beyond Meat logo on the menu when featuring their products. By Tricia McKinnon. Since going public, four of its six quarters have shown improvement from. Considering our revenue projections of roughly $1.1 billion and 6% margins, almost $66 million in net income is possible by 2023. Our goal is to give you the key to understanding Beyond Meats rapid success, to show you the hidden reasons for their success. Instead Beyond Meat fought for placement within the meat section of grocery stores. The redistribution of cash flow to its investors is a challenge. With sharp growth in revenues, margins have increased from -89% in 2017 to -9.4% over the last twelve months. 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. The larger the firm gets, the more difficult it becomes to achieve large year-over-year (YoY) growth rates. DOI: 10.2991/assehr.k.211209.003. Lets have a look at their most serious competitor: Impossible Foods. 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. With such high expectations, nearly any negative news could place Beyond Meats future earnings in doubt and cause shares to fall. 8 Facts About Pelotons Marketing Strategy You Need to Know, Dirty Lemons Marketing & Growth Strategy, How it Became a Success, Crocs Marketing Strategy. 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. 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. Heres a quick summary for noise traders when analyzing BYND: Executive Compensation Adds Additional Risk. This vision can be found throughout Beyond Meats marketing collateral. With low margins and little control over the majority of distribution, I think shares can fall sharply from current levels. Each of the above scenarios also assumes Beyond Meat is able to grow revenue, NOPAT, and FCF without increasing working capital or fixed assets. Instead, due to theproliferation of noise traders, the focus tends toward technical trading tends while high-quality fundamental research is overlooked. But consumers shop there because the low price points allow them to have a constant rotation of outfits. Its an era of growth for the still young start-up. We visited . strategy uncovers and shares the "bold vision, . 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. 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. 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. See the math behind this reverse DCF scenario. Devault, PA Operations - DEPA Production On-site. Figure 9: BYND Has Large Downside Risk: DCF Valuation Scenario. Expand the definition of your target market. 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. Creating effective ad campaigns is every marketers struggle but thats where customer data comes in. Beyond Meat stock has staged a dramatic recovery in January, rising by more than 50% since the end of last year. Beyond Meat and Impossible Foods have many common points. Yet Beyond Meat's management made a critical decision during the second quarter to change course on product distribution. 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. 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. Still, disputes aside, Beyond Meat has been doing very well these past few years. For example, Kelloggs delayed the launch of its first round of Incogmeato products due to the COVID-19 pandemic. Things Are Only Getting Worse for Beyond Meat Stock. With a sound marketing strategy, Beyond Meat may be able to make its product cool again. 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. Instead of drawing attention to a product that consumers didnt love, they simply discontinued it and slowly fazed it out of supermarkets. Per Figure 5, Beyond Meat saw significant improvement in profitability in 2018, but the improvement was short lived. Founder and Tech Inventor at Princess Technologies. The implied stock values in this scenario are significantly below Beyond Meats current price. 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. We hope this article helped you understand how crucial a good marketing strategy is for a companys success. 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. Impossible Foods sells slightly different products: Impossible Burger, Impossible Pork, Impossible Sausage. The companys marketing strategy is multiple layers one and has evolved over time, to keep up with the market trend. revenue grows 24% a year from 2023-2027 (continuation of 2023 consensus), then. Plant based burgers are not new but Beyond Meat has been able to capture more of the mainstream market. When Beyond Meat was met with the failure of their Chicken-Free Strips their first real product they didnt fold. It provided Beyond Meat with one of the best forms of advertising, credibility. See the math behind this reverse DCF scenario. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. In the first quarter of 2019, Beyond Meat's first as a public company, its gross profit was just 26.8% of net revenue. Market Drivers- Market drives come from the availability of knowledge on healthy products vs. mass marketing for bad products. A year ago, the consumer discretionary upstart's top line reflected the depth of its marketing and supply chain investment in the restaurant business: These sales were nearly identical to their retail counterpart: Source: Beyond Meat. Beyond Meat constantly reinvests their earnings in further research and development, as well as in marketing, and in scaling up production and distribution. However, Kelloggs appears it is ready to launch Incogmeato and recently partnered with Postmates to deliver free Incogmeato samples to residents of Denver and Dallas. For example, Tyson Food, one of the biggest and earliest investors in Beyond Meat, which had a 5% stake in 2016 exited in 2019. 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. 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. 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. 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. 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. Baseball player David Wright was the first celebrity to sign a contract with the brand. At the end of 2Q20, Beyond Meat had $222 million of cash and cash equivalents on its balance sheet. Figure 7 compares the firms implied future NOPAT in this scenario to its historical NOPAT. 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.

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