When Beyond Meat went public in 2019 in an initial stock offering that saw its shares nearly triple in price, it seemed to confirm that plant-based meats had arrived.
Food technology, capable of turning beans into something resembling meat in taste and appearance, captured the imagination of the public, restaurant chefs and the media. Deals with fast-food chains and skyrocketing sales during the pandemic seemed only to underscore how a once-fringe idea had gone mainstream.
But those heady days are over as industry sales have fallen amid concerns about the healthiness of plant-based meat, a sticker price that remains higher than a basic burger, and the fact that the product still only approximates the real thing.
“We thought we were going to go from our meteoric rise to the mainstream and not have to deal with this cycle that we're in,” Beyond Meat founder and CEO Ethan Brown said in an interview at the new offices of the company in El Segundo. . “Depression has been a difficult place to be in the last few years.”
Beyond Meat is El Segundo is photographed on May 30, 2024.
(Christina House/Los Angeles Times)
Now the company is betting it can change its fortunes with a newly formulated burger that it says is not only a huge leap in flavor, but has also earned seals of approval from leading health and nutrition organizations.
“I give credit where credit is due. “I think they've made some clear improvements in the ingredients and the nutritional profile, so there's clear progress there,” said John Baumgartner, an analyst at Mizuho Securities, who has given an “underweight” rating to Beyond shares. .
As the first plant-based meat company to go public, Beyond has been an industry bellwether, with its struggles documented in the media and in regulatory filings.
Although the company's growing line, which includes breakfast burgers, beef tips and chicken tenders, is sold in 130,000 retail and food service locations worldwide, some of its announced fast-food deals with Companies like Carl's Jr., Dunkin Donuts and KFC have sold out. or have not passed the testing phases.
It has also faced stiff competition from its main rival, Impossible Foods in Redwood City, California, which has achieved rapid sales increases in supermarkets and is available as a Whopper at Burger King.
Beyond's net income fell more than 25% to $343 million in 2023 compared to 2021. Sales declined another 18% in the first quarter of this year, and the company racked up $54 million in losses.
With numbers like that, investors have taken a beating. The stock is down more than 90% from its all-time highs of $200 in 2019. Shares closed Thursday at $7.35.
The drop in sales has had a strong financial impact, as the company's cash position fell from $733 million in 2021 to $190 million last year.
That led TD Cowen in a May earnings note to say the company could run out of money if it can't stop the bleeding or raise funds, an outcome Brown rules out. On Beyond's quarterly conference call, the CFO talked about raising funds through debt or equity.
“It's a challenge,” Baumgartner said. “The category is still trying to find its way.”
Sales of plant-based meat and seafood fell 12% in 2023 to $1.2 billion, and unit sales fell even further, by 19%, according to the Good Food Institute.
While the novelty of plant-based meat has worn off, what has remained are the persistent cries of “fake” or “fake” meat from critics—a diverse group that includes nutritionists, the entrenched meat industry, and whole food absolutists who proselytize eating closer foods. to the nature.
For years, the meat industry has helped fund a campaign highlighting the highly processed nature of plant-based beef products from Beyond and other manufacturers. “Fake Meat, Real Chemicals” is one such campaign sponsored by the Center for Consumer Freedom, a business-backed nonprofit.
“Our campaign simply informed the public about what is in fake meat. “Consumers have looked beyond the marketing and realized that these products are simply an ultra-processed substance that costs more and is no healthier than real meat,” he said. James Bowers, the center's executive director, in an emailed statement to the Times.
Beyond has tried to emphasize that all of its ingredients come from plant sources, but there are many nutritionists on the web who have also expressed concerns about the fat and sodium content of older burgers, and about an industrial process that creates a product that grandma would use. not having it stocked in her kitchen.
Beyond Meat products are on sale at a Los Angeles supermarket on May 30, 2024.
(Christina House/Los Angeles Times)
Baumgartner believes those voices have resonated more than any industry-backed campaign.
Brown maintains that the real culprits are the entrenched food lobbies, although he also recognizes their effectiveness.
“So if you look at 2020, 50% or more of consumers thought plant-based meat was healthy. That fell to 38% in 2022. And it will probably be lower today,” he told The Times.
Beyond is betting on the fourth version of its hamburger meat, which began to be widely distributed in May. Beyond has swapped canola and coconut oils for avocado oil, reducing saturated fat by 60% to 2 grams per serving, and reducing sodium by 20%.
Brown said the new recipe, which includes peas, red lentils, fava beans and brown rice, was developed in consultation with the company's scientific and nutritional advisors as well as leading health groups.
The new burger has earned key endorsement from the American Diabetes Association. and Good Housekeeping that Beyond plans to include in its labeling. The American Heart Association. includes the product in your collection of heart-healthy recipes.
Beyond also says its major recipe change has resulted in its “meatiest and juiciest” burger to date, citing initial taste tests to back up its claim. That's an important consideration, given the competition.
Impossible Foods, founded by a Stanford University biochemist, makes soy-based burgers, using a bean that has been manipulated by the food industry for decades to make a variety of products. The company's burgers also contain a genetically modified plant version of heme, an iron-containing molecule that is a component of beef.
In online taste tests, Impossible often beat Beyond's pea-based burgers. Brown chose peas because of alleged health concerns related to soy-based products, the vast majority of which are genetically modified.
Impossible's burgers became a favorite of food lovers and high-end restaurant chefs before the pandemic, and since then, like Beyond, the company has continued to improve them, with multiple versions available.
While both companies laid off workers amid the industry downturn, Impossible has seen strong retail sales and claims to be “the fastest growing plant-based meat brand” in the country. It also managed to keep its Impossible Whopper on Burger King's menus. As a private company, it does not publish detailed financial information.
Overseas, Beyond, which can market its product as non-GMO, sells in many more markets, and although McDonald's decided not to sell a Beyond-based burger in the United States, it does so in Europe.
Despite the high stakes with its newest burger, Beyond has raised retail prices, partly to offset higher ingredient costs but also to improve its margins.
Baumgartner questioned the move, especially after Beyond reduced the price of its previous burger.
“I think what complicates the matter now is that in 2023, when there was inflation and food prices were rising, Beyond reduced its prices. Now, as prices have generally stabilized, Beyond Meat is raising prices.”
Brown dismissed the concerns and said the company needs to increase its margins after the previous price cut destroyed them, without doing anything to improve sales.
While Brown's goal has been to achieve price parity with animal meat, he said Beyond customers, health-conscious and concerned about environmental issues surrounding the beef industry, have been found to be “price insensitive.”
The fundamental challenge for Beyond, he said, is to change the broader perception that its products are not good for your health.
“Once that narrative became complicated for people because of misinformation or whatever, it became more difficult to grow the business. We have addressed it thoroughly in this product,” she said.
