Beyond Meat lost almost $10 million in its second quarter, but it beat expectations on revenues.
Regardless, Beyond Meat is now worth $14 billion US and is Wall Street’s best-performing IPO so far this year. Its stock price has increased by more than 800 per cent.
Mixed results did not shock markets as the stock price quickly rebounded. So, no need to panic if you are a Beyond Meat shareholder — at least not yet. The company expects revenues to exceed $240 million US and to be profitable by year-end.
What’s priced into Beyond Meat’s evaluation are its partnerships with several key players. Beyond Meat is in more than 35,000 retail outlets around the world and has proven that protein-based manufacturing can be scaled up.
Beyond Meat has announced plans to sell more than three million additional shares, which is likely why the stock price dropped more than 10 per cent. But capacity will be an issue, given how much product is out there. The company is now 11 years old and has gone through a few expansion periods, but nothing like this.
In the U.S., Dunkin’ Donuts recently committed to carrying the company’s products. By going with Dunkin’, democratizing a plant-based diet is clearly on Beyond Meat’s radar.
However, in many stores and restaurants, the product is often more expensive than beef. Most consumers will opt for the product purely based on curiosity, but this won’t last.
Still considered a premium product, Beyond Meat is showing signs that it wants to market a product to the masses. It’s an interesting move, and an important one.
Beyond Meat is not only masterful at marketing, but it clearly appreciates the power of distribution and the pull effect. That’s why the company is worth so much.
In Canada, A&W, which acted as Beyond Meat’s ambassador last year, set the tone for what was to come. Unlike other major food trends that we have seen before, this time the food service sector was the catalyst and got grocers on the vegetable protein bandwagon. Most grocers in Canada carry the product now.
And with Tim Hortons making its Beyond Meat move, its brand awareness can only grow.
But Tim Hortons also knows that its rival, McDonald’s, needs to stay put for a while, and not venture into plant-based territory. McDonald’s has been Beef Canada’s chief cheerleader for decades and a key partner in the Canadian RoundTable for Sustainable Beef since 2016.
The idea of the roundtable is to counter the overpowering plant-based narrative, so to speak. Awkward times for McDonald’s.
Both Arby’s and Chipotle have issued statements suggesting they are committed to “real meat” and do not intend to carry any plant-based products any time soon. Some smaller, regional chains in Canada have done the same. These companies are essentially catering to their meat-loving customer base.
Beyond Meat’s fixation on replicating the taste and texture of natural products such as beef has become the company’s greatest weakness. It wanted its products right next to natural meat products, at the meat counter. The market is constantly comparing both natural and plant-based versions.
Beyond Meat was caught at its own game when it suggested that its product is healthier than beef. That was a strategic no-no, even if some evidence would suggest this is the case.
Beef is a natural product and remains the most densely packed source of proteins with fewer calories. It’s a fact, and the product is known and enjoyed by many people. The plant-based market is emerging but still highly undeveloped.
Until other companies provide some decent competition, anything Beyond Meat does will affect many. Beyond Meat products are good, but far from perfect, since a lot of science is needed to replicate what meat does on our grill and in our mouths.
As the plant-based market matures and channels settle, the market will also come to expect a true plant-based offering, not just a me-too product. In a few years, given that Beyond Meat is such a research and development driven company, the protein wars will cease and will give way to a peaceful relationship between the meat counter and the plant-based section at the grocery store.
Over time, beef, pork, chicken and all other animal proteins out there will define themselves as a natural, but different product.
Until then, Beyond Meat should carry on doing what it does well and leave the meat industry alone.
Dr. Sylvain Charlebois is director of the Agri-Food Analytics Lab and a professor in food distribution and policy at Dalhousie University.
