After the hype, the reality check? Meat substitute manufacturer Beyond Meat is unable to reverse the downward spiral in its results, reporting a larger than expected loss for the third quarter in a row. The reason: the absence of a recovery in the catering industry combined with stagnating growth in retail.
Loss per share twice as high as expected
The setback is significant. In the first quarter of 2021, Beyond Meat reported a loss per share of 42 dollar cents (35 euro cents). That is more than double the average analyst expectation of 19 dollar cents or 16 euro cents per share. The revenue figure of 108.2 million dollars (89.7 million euros) was also below the average analyst expectation of 113.7 million dollars (94.3 million euros).
The situation is so unpredictable that Beyond Meat is not venturing into forecasting for the rest of the year. The company is still pointing an accusing finger at the corona crisis. CEO Ethan Brown tries to keep up the spirits by talking about a "slow thaw" among customers in the catering and food service sectors in the US.
Global expansion is costly
But while that key segment sees no post-covid recovery yet, the other engine of growth - retail sales - has stalled. This is all particularly inconvenient as the company is investing heavily in building its position as a global market leader in meat substitutes. The construction of new production sites, including in China and the Netherlands, costs a lot of money. That immediately explains the substantial loss figures.
Brown was willing to venture a sales forecast for the current, second quarter. The target is a turnover of 135 to 150 million dollars, which would mean a growth rate of 19 to 32 percent. By comparison, CNBC gathered a consensus among Wall Street analysts of sales of 142.8 million dollar. In concrete terms, that means Beyond Meat can afford few slips.
Impossible Foods does not steal customers with price cuts
The only bright spot in the whole story: for the time being, major competitor Impossible Foods does not seem to be succeeding in hurting Beyond Meat with its strategy of price cuts. This should be clear from an analysis performed by Beyond Meat itself.
Impossible Foods is trying to get to beef price parity as quickly as possible with this strategy in order to break the market wide open. "While they’re doing a really good job building the category and bringing people into the category, they’re not sourcing a lot of our consumers,” the Beyond Meat CEO remarked.