Beyond Meat’s founder and CEO, Ethan Brown, attempted to convey a positive outlook in his recent address to investors, despite ongoing scrutiny of his company’s performance. This came on the back of the US-based plant-based meat company’s first-quarter financial results revealed last Wednesday, 8 May. Brown has declared 2024 as a “pivotal year” for Beyond Meat, which has drifted a long way from its once-celebrated status on Wall Street since its IPO five years ago.
Gone are the buoyant days of 2019, replaced by growing scepticism about the actual potential of plant-based meat. A decline in demand for alternative meat products has been noted particularly in the US and UK, both key markets in the sector. The industry’s challenges are underscored by several companies going out of business or being forced to sell under duress.
Beyond Meat reported a year-on-year decline in sales of 18%, with a 16% drop in volumes compared to the first quarter of 2023. Although these figures met Wall Street’s subdued expectations, they hardly paint a rosy picture.
Equity analysts have raised concerns about the company’s below-par gross margins and doubts linger over its ability to meet its sales forecast for the whole of 2024. According to TD Cowen’s Robert Moskow, “The midpoint of sales guidance implies a hockey-stick recovery to mid-teens growth in the second half of the year (vs. -16% in H1), fuelled by higher pricing, reduced trade discounts, and increased marketing touting the health and wellness benefits of its brands.”
In a recent presentation, Brown remained optimistic about the future, particularly with the launch of Beyond Meat’s latest burger iteration. He announced a forthcoming marketing campaign focusing on the product’s health credentials, asserting, “One of the biggest challenges our brand has faced is orchestrated misinformation regarding our product lines. We believe through the nutritionists, institutions, and dietitians standing behind Beyond IV, that we offer consumers a delicious yet powerful choice that can help them and their loved ones live healthier lives. The 2024 marketing campaign, which we are rolling out imminently, will bring this message to life.”
Brown further highlighted the product’s endorsements, including its recognition by the American Diabetes Association and its inclusion in the American Heart Association’s heart-healthy recipe collection.
Despite the initial surge in plant-based meat driven by health-conscious consumers, the category has faced criticism over the processed nature of these products and their true health benefits. This, coupled with concerns over taste and price, continues to hinder wider consumer adoption.
Moskow expressed skepticism about the focus on health and wellness in marketing, noting that taste remains a significant barrier over health concerns. Meanwhile, Beyond Meat’s recent price strategies have been viewed as potentially inadequate to attract new consumers or retain current ones.
CFO Lubi Kutua acknowledged economic challenges affecting sales in both US and UK markets, suggesting that current recessionary pressures might be temporarily impacting demand.
Mizuho Securities analyst John Baumgartner commended the launch of the new recipe, dubbed internally as Beyond 4.0, but warned that it “may be insufficient to inflect sales”, pointing out that taste preferences are subjective and higher prices might deter potential customers. Baumgartner remains cautious, stating, “We await consumers’ response but believe the breadth of usage occasions may remain too narrow to spur larger repeat sales.”