Brown tried to be positive in his earnings remarks. The company just recoded its second largest quarter ever in terms of net revenues, he said. Beyond Meat is still the category leader in refrigerated plant-based meat, according to SPINS data. And there is vast potential for Beyond Meat and the entire plant-based food sector to make a real difference in what people eat.
“We simultaneously, however, recognize that progress for us and for the sector is taking longer than expected,” Brown said. “We now expect, reflecting this inflationary pressure on consumer spending, and specifically how this impacts higher-cost proteins and foods, a delay in post-COVID resumption of growth.”
In fact, he said, this quarter was the first in four years that showed a decrease in household penetration of plant-based meat in the U.S. — even as brands and SKUs have increased by 60% and 70% respectively over the past two years, according to data from Numerator. Brown said that consumers right now are looking for value. Beyond Meat’s burger analog cost about $8.35 a pound during the last quarter, while ground beef costs were about $4.90 a pound, he said. Beyond Meat’s data shows it has been losing customers to traditional meat and lower-priced private label options.
The economic situation, Brown said, is forcing Beyond Meat to do all it can to keep its internal costs down. The layoffs are one way to do that, and he said he did not plan any deeper cuts to jobs. In the last quarter, Brown said, operating expenses were down 15%, or $14 million, from the previous quarter. CFO Phil Hardin said that the company had cut down on some of its marketing and communications expenses in the last quarter. It was also looking at new ingredients agreements and changing contracts with truck drivers. The goal is to reduce capital expenditures to about $80 million this fiscal year, down from $121 million in fiscal year 2021, Hardin said.
Brown said Beyond Meat’s cost-cutting efforts and a return to normal consumer spending levels, will help the company get to a better position.
However, there’s more behind the company’s losses. Retail sales in its international segment were down nearly $5 million versus a year ago due to lower demand and having to sell soon-to-expire product at wholesale. Brown said the company is working hard to better anticipate demand so it does not find itself with a glut of unsold product.
And while the large loss attributable to the new process to create Beyond Plant-Based Jerky was largely contained to the previous quarter, Beyond Meat is now working through some disappointing news about U.S.-based restaurant partnerships. Last week, McDonald’s confirmed to analysts its test of Beyond Meat’s McPlant burger was over. Some McDonald’s employees told J.P. Morgan analysts they dropped the test because of low sales.
Brown refused to comment about the U.S. McDonald’s test on the earnings call, saying that Beyond Meat is a supplier and menu decisions are up to the restaurant chain.
With sales falling due to changes in consumer preferences and inflationary pressures, now is a bad time for Beyond Meat to have operational challenges. Analyst Shoggi Ezeizat from Third Bridge sketched out the difficulties facing the company.
“The climate for Beyond Meat is tough with a decelerating plant-based food industry, difficult pricing, and increased competition from bigger players,” Ezeizat said. “It is key for Beyond Meat to focus on product superiority and continue to push its innovation pipeline for new consumer acquisition and market share protection.”
Brown said on the earnings call that Beyond Meat is trying to do just that. The company has pushed for products that taste indistinguishable from yet healthier than meat, and cost the same. The current situation, he said, is reinforcing those maxims, especially toward wringing out any additional costs. Brown said that the company is making progress toward getting its product cost closer to parity with meat, but the larger economic situation is obscuring it.
Get the free daily newsletter read by industry experts
Topics covered: manufacturing, packaging, new products, R&D, and much more.
Investors still want to put funds toward well-established players in the sector, and M&A, partnerships and joint ventures will continue to proliferate, said panelists at the Future Food-Tech Alternative Proteins conference this week.
The beverage giant said new offerings attract younger consumers to its portfolio of brands before they transition into adult-targeted products like Coca-Cola Zero Sugar and Diet Coke.
Subscribe to Food Dive for top news, trends & analysis
Topics covered: manufacturing, packaging, new products, R&D, and much more.
Get the free daily newsletter read by industry experts
Topics covered: manufacturing, packaging, new products, R&D, and much more.
Investors still want to put funds toward well-established players in the sector, and M&A, partnerships and joint ventures will continue to proliferate, said panelists at the Future Food-Tech Alternative Proteins conference this week.
The beverage giant said new offerings attract younger consumers to its portfolio of brands before they transition into adult-targeted products like Coca-Cola Zero Sugar and Diet Coke.
The free newsletter covering the top industry headlines
Topics covered: manufacturing, packaging, new products, R&D, and much more.