Beyond Meat: fake steak maker benefits from cost controls and trimmed ambitions


How would you like your burger? Plant-based, cultivated in a vat or swapped out for a salad?

Beyond Meat was hoping to entice carbon-conscious carnivores with the first option, creating a massive new market in the process. That has spectacularly failed to occur. As a result, even after Friday’s bump in the stock on the back of better than feared fourth-quarter results, the fake-steak provider is trading some 90 per cent below 2019 highs.

Beyond Meat is having to adjust to a whole new reality. It started life as a tech-style disrupter, with a mission to upend the $1.2tn meat industry. Its concept — vegetarian “meat” for the meat eater — looked plausible enough.

After all, many steak lovers have an environmental conscience. Cows and other livestock contribute about 14 per cent of global emissions. If a plant-based alternative could be engineered to taste the same, what is not to like?

Plenty, if Beyond Meat’s dwindling revenues are anything to go by. They fell about a fifth in the fourth quarter, compared to the previous year. It had to cut prices, meaning revenues per pound fell from $5.5 in 2021 to $4.9 in 2022. And the cost of goods sold rose from $4.1 to $5.2.

That has made mincemeat of the company’s growth strategy, and left it on a mission to cut costs, halt the cash burn, and find its feet as a niche consumer brand instead. Encouragingly, Beyond Meat expects to turn cash flow positive in the second half of 2023. That is important for a company which has $1.2bn of debt on its balance sheet and some $322mn of cash.

Even assuming Beyond Meat stabilises its business, the basic premise of the company has changed. Taste, cost, plain old conservatism: whatever the reason, its chances of disrupting the meat industry now look low. That is going to warrant a small consumer brand valuation, rather than a tech growth multiple. And the carbon-conscious carnivore might end up with a salad after all.

Articles You May Like

CNHC stablecoin issuer detained by Chinese police: Report
Munis find strength on heels of potential debt deal
Munis mixed as inflation, Fed hang over
Typhoon’s hit to Guam tourism likely to last at least two years
15 Swing Charts to Practice Your Technical Analysis Skills (Members Preview)