Can Beyond Meat Compete With Real Meat? (NASDAQ: BYND)

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What is Beyond Meat?

Beyond Meat researches and manufactures plant-based meats such as burgers, sausage, ground beef, and chicken. At its core, Beyond Meat aims to create a solution for four major issues attributed to livestock production:

  • Human health
  • Climate change
  • Natural resource constraints
  • Animal welfare

What does Beyond Meat do?

Beyond Meat has three plant-based products that aims to replicate animal0based meat across:

  • Beef
  • Poultry
  • Pork

Their flagship product is the Beyond Burger, the world's first plant-based burger, as well as other products like the Beyond Sausage, Beyond Beef, Beyond Italian Sausage, chicken tenders, meatballs and so forth.

In FY20, the company sold over 72m pounds of their products and generated USD $406m in revenue. They’ve been growing incredibly quickly - between FY16-FY20 their topline grew at a CAGR of 126% indicating the demand for their plant-based products. While the company is still unprofitable, they’ve shown the ability to improve their margins and reduce the cost of their R&D, indicators of future profitability.

How do they replicate the experience of animal-based meats?

Source: Beyond Meat


Animal-based meats are made from several key compounds:

  • Amino acids - these form the basis of a protein
  • Lipids - fats and hormones
  • Carbohydrates - tiny amounts of glycogen
  • Trace minerals
  • Water

Beyond Meat extracts compounds from beans to recreate a protein that imitates the structure of meat. They use a combination of heat, cooling and pressure to weave their protein to micmic the weave of a protein.

Who are their competitors?

Beyond Meat competes in an incredibly competitive and saturated market - the food industry. The company competes for the right to be on the supermarket shelf and on your dinner plate.

While they play in the plant-based protein segment of the industry, there are a range of substitutes they compete against:

  • Traditional meat producers - this includes primary meat producers such as JBS, Cargill, Inghams and even local farmers (farms and meat producers)
  • Incumbent players investing in alternative proteins - Traditional players such as Kelloggs, Nestle and ConAgra Foods are investing in plant-based and other alternative proteins
  • Emerging plant-based meats producers - New entrants to the market, these are companies making plant-based proteins such as Impossible Foods, Vow, Fable and V2Food
  • Other plant-based competitors - And finally, as they compete for a spot on your dinner plate, they compete against your traditional plant-based diets: Fruits, vegetables and legumes

How are they going to win?

In order for Beyond Meat to win against this highly competitive and saturated market, they need to do three key things:

  • Educate the market and become the ‘go-to’ brand - Less than 20% of Australians identify as ‘meat reducers’, indicating the limited market size for Beyond Meat. In order to win, they need to educate and grow their market size on both the benefits of plant-based proteins and why they should be the choice for dinner plates
  • Scale efficiently - Beyond Meat is a food manufacturing company and every growing manufacturing company needs to learn how to scale their business for profitable growth. While they’ve shown they can decrease costs, as the market becomes more competitive, they’ll need to manage costs while reducing their price (while also acquiring new customers). This is a tough ask!
  • Leverage partnerships with restaurants and franchises - Beyond Meat has a number of partnerships with companies such as Dunkin Donuts and BurgerFi in the US. They should continue to invest in these partnerships to increase their market penetration and footprint as it serves as both a valuable revenue and marketing channel
  • Source: Business Green


What is the future of Beyond Meat?

Plant-based proteins are undeniably the future of food. The global challenge to address food security and preserve land and water resources due to climate change, population growth is fuelling the food revolution and Beyond Meat could be the winner that emerges.

However, the challenge for Beyond Meat will be whether they can scale efficiently in an industry that is both highly competitive and incredibly localised. There are major food producers in every country (localised for a particular country) and in order for Beyond Meat to win, they’ll need to efficiently manufacture their products in these countries and build the right relationships with the right partners.

As they compete for the right to be on the supermarket shelf and your dinner plate, it’s no doubt an exciting company to watch!

So are you hungry for a Beyond Meat burger? Here’s the best places in Australia and the US that you can get a burger!

🎙️ Want to hear more about Beyond Meat and why we think it’s positioned to capture future growth? You can find the latest episode of Fresh Capital right here!

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