Categories Consumer, Earnings

Growing alternative meat-eating lifestyle expected to add taste to Beyond Meat

Beyond Meat suspends fiscal 2020 outlook until further notice

After the Coronavirus pandemic, which is believed to be originated from a live-animal market in Wuhan, China, the number of people who have started to eat vegan food has been increasing. And this has created an opportunity for plant-based meat producers to develop their business all over the world. Alternative meat producers believe that their products address concerns related to human health, climate change, resource conservation and animal welfare.

Beyond Meat (BYND) Q1 2020 Financials

Beyond Meat earnings

Vegan company Beyond Meat (NASDAQ: BYND), which went public in May 2019, reported its first quarter 2020 results on Tuesday that outpaced the market’s targets. Surprisingly, the company swung to a profit in the quarter with a 141% jump in revenue. Even though the company expects to benefit from its retail channel, the uncertainty related to the global health crisis is expected to affect the foodservice channel and negatively impact the company in the short term. As a result, Beyond Meat joined the other companies in the food and beverage industry who withdrew their previously provided FY20 outlook in their earnings announcements.

Also Read:  Beyond Meat’s stock gets slammed as speculations on its future continue

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.

Also Read:  Beyond Meat (BYND) beats Q4 revenue expectations; misses on earnings

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.

Most Popular

Major earnings conferences to watch this week

After registering a slow recovery in the first half of the week, the markets pared these gains on Thursday and Friday. The weakness witnessed in the latter half of the

Illumina (ILMN) is uniquely placed to offer long-term returns. Here’s why

Illumina, Inc. (NASDAQ: ILMN), a pioneer in genome sequencing technology, has strived to strengthen its unique position in the healthcare sector through strategic partnerships and technological innovation. Its performance so

The COVID-19 pandemic gave these companies an unexpected opportunity

The COVID-19 pandemic raged through the first half of this year and continues to impact the world without signs of abating. Amid this health crisis, several companies reported strong results

Top