How much does it cost a company that is no longer in the zeitgeist? For Beyond Meat shareholders, perhaps up to 99% of their money, if they bought at the top of the market.
Shares of the El Segundo plant-based meat maker, an investor favorite a few years ago, plummeted this week to less than $1 after the company closed a deal to reduce its debt load. The deal involves the issuance of up to 326 million new shares to bondholders.
The stock dilution deal was prompted by declining sales at the company, which makes pea-based foods that mimic the taste of beef, chicken and pork.
It's a marked shift for Beyond Meat, whose products were in high demand at the start of the COVID-19 pandemic but are now in less demand as consumer tastes have shifted back toward animal meats amid a surge in interest in protein.
“Animal meats are in the true cyclical fashion of consumer trends, going through a moment that currently leaves less room for our products and our brand,” founder and CEO Ethan Brown told analysts during the company's August conference call. “There are cultural moments that occur. And we happen to be on the other side of that particular moment.”
Beyond Meat went public in 2019 in an initial stock offering that saw its share price nearly triple and then hit nearly $235 within months, as the public, restaurant chains and media became captivated by the new food technology, which made plant-based burgers more than just craveable.
However, after that initial wave of interest, several of its high-profile restaurant offerings sold out and the company saw a steady decline in sales from a high of $465 million in 2021 to $326 million last year, all without ever turning a profit. Second-quarter sales fell 20%, causing the company to lose $29.2 million.
Shares closed Wednesday at 67 cents, down 14%.
Beyond Meat also faces competition from main rival Impossible Foods in Redwood City, California, which has seen gains in supermarket sales and is available as a Whopper at Burger King.
Beyond Meat has not been alone in its struggles. The entire U.S. plant-based meat and seafood industry saw a 28% drop in unit sales and an 18% drop in revenue to $1.17 billion over the past two years, according to a report from the Good Food Institute, a nonprofit that advocates for alternative proteins. The crisis also affected markets outside the United States.
Supermarket inflation has made American consumers less willing to buy premium-priced products, including plant-based proteins. That led some markets to move products from refrigerated displays along with animal meats to the freezer, where they are harder to find, according to the report.
Emma Ignaszewski, associate vice president of corporate engagement at the institute, said that while there may be a “protein boom,” she believes plant-based companies can succeed if their products are positioned correctly.
“Plant-based proteins really need more investment, more innovation to match conventional meat on the factors that matter most to consumers, which are taste, price and accessibility,” he said.
“These products… often cost two, three and four times more than their conventional counterparts,” he added. “So when the wallet is hurting, people don't go there. Plus, many products still fall behind consumer expectations in terms of taste.”
Beyond Meat did not respond to emails seeking comment, but Brown laid out his plan to boost sales and turn a profit during the latest conference call.
The company has been reducing its workforce and in August laid off 44 more employees, or about 6% of its total global workforce. It also hired a “chief transformation officer” who will focus on reducing operating expenses and increasing efficiency.
However, the key to the company's comeback is new product offerings, amid a growing consumer aversion to processed foods, a label that has stuck with plant-based meats after a public relations campaign by the meat lobby. Brown calls it a “misinformation headwind.”
U.S. Health Secretary Robert F. Kennedy Jr.'s Make America Healthy Again movement has also focused on processed foods.
Last year, the company launched a new version of its flagship Beyond Burger product that reduced its saturated fat content and a line of products called Beyond Sun Sausage with fewer, less processed ingredients.
He's also tried a new product called Beyond Ground that has just a handful of ingredients, including fava beans and potato protein. Brown told analysts that the test went well on the company's social channels. And it has launched a steak in select restaurants.
The company wants to reduce prices as well as “counter misinformation about our products,” Brown said. Last year, its new burger earned the endorsement of the American Diabetes Association. and good cleaning. The American Heart Association. has included the product in his recipe collection.
“We know that the extreme nature of the current renaissance around animal protein will moderate, as do consumer trends,” Brown told analysts. “This moderation may occur solely with time, new information or new trends, or it may be driven by a set of related factors, including price pressure, droughts and outbreaks of genetic diseases.”
Bloomberg contributed to this report.
