Plant-based food company Beyond Meat has experienced a grim fiscal second quarter, reporting a net loss of US$53.5 million, compared to the previous year’s net loss of $97.1 million.
Ethan Brown, CEO of Beyond Meat, acknowledged this period as “the most difficult” for the company, attributing the results to multiple factors, including waning demand and health-related perceptions associated with the plant-based meat category.
Year-on-year sales have notably declined by 30.5 per cent, totalling $102 million, contributing to the significant net loss.
Despite this, the alt-meat giant reported a gross profit of $2.2 million in the second quarter, a significant improvement versus the previous year, which reported a $6.2 million loss, and a negative gross margin of 4.2 per cent – which it attributes to lower materials costs, inventory reserves, and logistics costs per pound.
The results, however, were partially offset by high manufacturing costs and lower net revenue per pound, representing a decline from the previous quarter’s gross margin of 6.7 per cent.
“Diminishing appetite” for plant-based meat
A recent survey revealed that 1400 of consumers in the US, only 20 per cent followed a reduced-meat diet this year, with inflation causing people to try fewer new foods like alt-meat. Participants cited taste (48 per cent), nutrition (35 per cent), cost (34 per cent), texture (24 per cent), and processing (21 per cent) as the most important considerations with alt-meat
“Beyond Meat’s priority, aside from driving efficiencies and continuing to improve its products, is regaining control of the narrative and addressing the “ambiguity and confusion” around the health benefits of plant-based meat,” Brown told AgFunderNews.
“There is a considerable gap between the strong health credentials of our products and a broader counter-narrative that is now afoot, and this gap appears to have widened.”
According to the Food Marketing Institute, between 2020 and 2022, the proportion of US consumers who believe that plant-based meats are healthy plummeted from 50 to 38 per cent.
“If you look at Beyond Steak,” said Brown, “it’s delicious. You have such high levels of protein and a gram of saturated fat… Those things matter when the consumer is willing to come in. But if there’s a cloud over the sector, those things matter less. So our number one goal is to lift that cloud.
“[We have] clear nutritional advantages including no cholesterol, lower levels of saturated fats, the absence of antibiotics, hormones, and other veterinary drugs, the absence of carcinogenic compounds such as heterocyclic amines and the absence of precursors to TMAO, a compound that researchers have associated with heart disease and certain cancers.”
Beyond Meat said its operating environment continues to be affected by uncertainty, including “softer” demand in the category, high inflation, rising interests, and the likelihood of recession, all of which could have unforeseen impacts on its results.
As of June 2023, Beyond Meat branded products were available at approximately 190,000 retail and food service outlets in more than 75 countries worldwide.
The glass-half-full
Allen Zelden – Australian-based co-founder of vegan seafood brand Boldly Foods, and PlantForm, the private label arm of a global plant-based manufacturing operation – says while the Beyond Meat figures may alarm some in the industry, the growth trajectory will resume.
“Many would like to believe that if Beyond Meat sneezes, the industry catches a cold, and that sentiment is certainly true of current market conditions, both here in Australia and abroad,” he told Inside FMCG.
He said that during the past few years, the plant-based foods sector globally has known only one direction – up – but that trend has recently changed with Circana data showing US purchases of plant-based meat alternatives falling 12.6 per cent to $106.8 million in the five weeks to July 2 and unit sales down by 19.8 per cent year-on-year.
“In this difficult economic climate, it’s important to recognise that businesses across the board are being challenged, with refrigerated and frozen meat sales also down as per the same Circana data.”
Tyson Foods, the largest US producer of processed chicken, beef, pork and protein-based products recently reported a quarterly net loss of US$417 million – a wide swing from net income of $720 million in the year-ago quarter.
“With the plant-based foods sector experiencing diminishing revenues and manufacturing woes, many companies are now being forced to cut costs, lay off staff and pivot strategically given the lack of investment appetite, only exacerbated by the likes of Beyond’s financial results,” said Zelden.
“But regardless of these ‘momentary’ market setbacks or market corrections, green is now mainstream with the proliferation of plant-based foods across our grocery aisles and menus still very much in their infancy.”
He said that once the industry is able to overcome the “hype of agenda-fuelled ‘record-breaking’ headlines” and companies are able to narrow the disparity between capital invested and revenue, the sector will undoubtedly return to its growth trajectory. But there needs to be further consolidation within the industry and a greater emphasis on consumer engagement, he concluded.
Further reading: Plant-based foods are at a tipping point: here’s why
