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How can plant-based meat get back to growth?


After a year of declines, losses, launches, disappointments, job cuts, supply chain issues and inflation, Beyond Meat CEO Ethan Brown said on last week’s earnings call it is time to pivot the company’s strategy.

Compared to a year ago, the company’s fortunes have fallen. Net revenues were down 22.5% year over year. Beyond Meat posted losses of $101.7 million — $19.2 million more than its net revenues for the quarter. Sales across the board were down by double digit margins, except for foodservice in the U.S., which saw a slight uptick.

The year-over-year declines are nothing compared to Beyond Meat’s history as a publicly traded company. In July 2019, its share price hovered above $200 and plant-based meat was a quickly growing segment. Today, Beyond Meat’s stock is worth less than a tenth of that amount. 

On the whole, plant-based category sales are stagnating, with no growth in the number of consumers who are buying it this year compared to last, according to a study from Deloitte.

Compared to the mega-growth of plant-based meat in years past, Brown said this is not what he expected.

“I think that is something that is new to our business, given the 12-plus years of pretty aggressive growth that we had enjoyed — and I think we will enjoy again in the future,” he said. “But for now, it’s really about stabilizing the business based on a more reasonable revenue growth trajectory.”

Beyond Meat isn’t alone in scrambling to turn back headwinds against plant-based meat — though as the only publicly traded company primarily in this segment, it shows the struggle much more acutely than private competitors or plant-based brands owned by larger CPG companies. 

Sliders featuring Beyond Chicken in various preparations with a flag of the company logo in a bun sit on a counter.

Sliders made with Beyond Chicken.

Courtesy of Beyond Meat

 

Many brands have seen a year that progressively has gotten worse, despite investment, new product launches and cutting edge technology. Planterra, the U.S.-based plant-based meat subsidiary of meat giant JBS, abruptly shut down in September, while Maple Leaf Foods cut about a quarter of the staff of its plant-based Greenleaf Foods division and wrote down $190.9 million in goodwill for that business. 

Peter Saleh, managing director and restaurants analyst at BTIG, said a big part of the problem is that many of these companies let their ambitions and ideas get ahead of consumers. As plant-based meat companies have grown, they have rapidly expanded into different products, different geographies, and different retail and foodservice channels.

“It feels to me like they’re doing too much all at once, and they’re not doing it profitably,” Saleh said. “And then, this theory that consumers are just going to want this. Consumers haven’t been convinced why they should be eating plant-based food.”

Considering the rising rates of inflation, the waning consumer enthusiasm for plant-based meat and companies’ cutbacks to stanch their losses, analysts say it may be an uphill climb for companies in the segment to step back and make the case for plant-based food to regular consumers.

Making fickle consumers want plant-based

In the last couple of years, Beyond Meat has rapidly innovated into new products. They started with the Beyond Burger. They created Beyond Sausage. Then Beyond Chicken, Beyond Jerky and Beyond Steak.

Brian Holland, a managing director and senior research analyst at Cowen, noted every new innovation has done worse on the market than the previous one. It’s not necessarily a matter of execution, he said. It’s more a matter of convincing consumers to try another product line in the plant-based meat segment.

“If people aren’t buying the core product, they’re certainly not inclined to move into some of these other adjacencies, where maybe they think it makes less sense,” Holland said.

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