We recently reported that Beyond Meat – the plant-based meat substitutes upstart – was in financial peril. And we noted predictions by industry observers that the whole meat alternatives sector may be crashing. Has the bubble burst?
Beyond Meat’s Plant-based ‘Beef-substitute’ patties: Single and Double McPlant burgers featured…
Now, it appears Beyond Meat is in worse shape than they admitted back in the summer. The company says it’s ‘conducting a strategic review of its global operations’, as sales continue to weaken.
Another earnings forecast revision
Last week, the company again revised its full-year financial outlook, and said it was cutting its administrative workforce by 19 percent.
“We anticipated a modest return to growth in the third quarter of 2023 that did not occur, reflecting further sector-specific and consumer headwinds,” said Ethan Brown, Beyond’s President and CEO. “Even as we implement measures to address those headwinds that are within our sphere of influence, we intend to pursue a further, sizable reduction of operating expenses to improve our cost structure.”
In plain English, Brown admitted that the situation is worse than Beyond first feared.
According to Food Business News, “This past August, Beyond Meat forecast full-year net revenues would be in a range of (US)$360 million to $380 million. The company is now forecasting net sales for the year will be between $330 million and $340 million.” And that’s no ‘small adjustment’.
Due to a number of factors
Beyond lists a whole slew of reasons (excuses?) for its crippled performance, not the least of which was described as, “softness for plant-based meat alternatives in US retail and foodservice channels.” They also cited , “lower-than-expected promotional effectiveness,” and, “unfavorable changes in the product sales mix, primarily reflecting weaker-than-expected sales of the company’s core products.”
Even a lay-person like me can see, those sound like fundamental corporate weaknesses.
What can they do?
Food Business News says Beyond is slating an in-depth review its business model: “With the goal of reducing operating expenses, the strategic review may include narrowing the company’s focus to certain growth opportunities and accelerating activities that prioritize gross margin expansion and cash generation, according to the company.”
Major product-line and structural changes have not been ruled out: “The efforts may include the potential exit of select product lines; changes to the company’s pricing architecture within certain channels; accelerated, cash-accretive inventory reduction initiatives; further optimization of the company’s manufacturing capacity and real estate footprint; and a review and potential restructuring of the company’s operations in China.”
Beyond Meat started the meat substitutes ball rolling a few years back. The upstart quickly distinguished itself as the first brand to go into supermarkets and snag major Fast Food clients.
Now, it’s taken over the status of ‘prime indicator’ as to where the plant-based and lab meat substitutes sectors are heading.
In the face of the current world food price crisis, Beyond has not managed to significantly reduce its retail prices. Now, it’s about level with real meat. In some cases, it’s products cost a little less. But the consuming masses can no longer afford either real meat or substitutes.
Not to mention sluggish consumer adoption of alternatives in the first place. And the recent weakening of faith among commercial and industrial users.
A glance at the stock market ticker might actually show that the decline of the meat alternatives sector started a year ago last summer. A July, 2022, story in Barron’s business magazine revealed that McDonald’s had quietly ended its McPlant pilot program and dropped the plant-based burger it had co-developed with Beyond. Game over. Case closed.
“Beyond Meat stock fell 5.2 percent in recent trading to $30.75,” The Barron’s report stated. “The shares have lost about half their value this year.”
And the situation – at least for Beyond – has gotten nothing but worse since then.
~ Maggie J.