Beyond Meat earnings
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Despite achieving the strong margin in Q1, Beyond Meat expects gross margin to be sequentially down in Q2 as the near-term headwinds associated with volume deleveraging and repackaging costs to affect Q2. When an analyst asked about the potential impact on the revenue from Q1 to Q2, CFO Mark Nelson said, “We’ll probably stay away from giving guidance.” The company expects the foodservice channel to be impacted more in Q2 compared with Q1.
China
Beyond Meat, which partnered with Starbucks in China, plans to establish its production footprint in Asia before the end of 2020. During the Q1 earnings call, CEO Ethan Brown said Beyond Meat’s partner Starbucks had done a good job in China. He added, “We aren’t taking it lightly. We’re going to be investing a lot over there.” In China, Beyond Meat didn’t experience much disruption because of the pandemic, but the start was delayed a bit.
Marketing
Beyond Meat has curtailed its spending on content creation and marketing spend due to the current global health crisis. Once the recovery is in full swing, the company plans to spend more on content creation and marketing to reach out to more people. Ethan Brown pointed out in the call that Beyond Meat will try all the possible ways to sell its products to customers and online will play a big role in that.
Market opportunity
In its annual filing Beyond Meat stated that according to data from Fitch Solutions Macro Research, the meat industry is the largest category in food and in 2017 generated estimated sales across retail and foodservice channels of approximately $270 billion in the United States and approximately $1.4 trillion globally.
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According to Zion Market Research, the global plant-based meat market is expected to grow to $21 billion in 2025 with a compound annual growth rate of 8.6%. The study says that the Asia Pacific region is expected to hold a lion’s share of the global plant-based meat market in the future, as more people in China and India have stared preferring plant-based meat substitutes.
Despite the headwinds created by COVID-19 pandemic, it is estimated that the plant-based protein market will evolve continuously and the issues related to the environment, health and animal welfare are expected to benefit Beyond Meat, the only pure-play public company in this space, in the near-term.