Disappointing sales, rising purchase prices and, since the summer of last year, also a sharply reduced appetite among investors: Beyond Meat is having a hard time on the stock exchange. And with the looming recession in many markets, the near future does not look very good for the American producer of meat substitutes. The price for a share of Beyond Meat is at an all-time low at about $15. The share price has fallen more than 75 percent this year, and is now more than 90 percent lower compared to its high so far (234.90 dollars in July 2019).
That while the Beyond Meat stock market story had started so beautifully. When the Los Angeles-based company went public in early May 2019, the world looked different. The market for meat substitutes grew rapidly. Plant-based burgers, minced meat and sausages: many consumers were curious about all those new meatless better-for-the-planet products that suddenly hit the shelves. And were also willing to pull the wallet. Investors, including actor Leonardo DiCaprio and Microsoft founder Bill Gates, also lined up. With the money from the IPO, major competitor Impossible Foods from Silicon Valley had to be put at a distance. Because Beyond Meat does not use any genetically modified ingredients, this gave it a head start: unlike Impossible, it received permission to sell its products on the European market. It was supposed to help Beyond Meat (annual sales of $465 million) to finally become profitable.
But the demand for meat substitutes has come to a screeching halt under the pressure of historically high inflation. In addition, the decreased purchasing power makes meat products more attractive for the ‘flexitarian’, who sometimes leaves the meat alone. According to CEO Ethan Brown, the average selling price of ground beef is $4.90 per pound, compared to $8.35 per pound for Beyond Meat’s plant-based ground beef. “A very difficult proposition,” said Brown himself.
In addition, competition has increased as major food companies such as Nestlé, Cargill, Kellogg and Unilever (with subsidiary De Vegetarische Slager) offer plant-based products, as well as supermarkets, whose vegan private label products are generally cheaper.
Beyond Meat is also not finished with that high inflation for the time being. The price for groceries in its largest market, the US, rose 12 percent year-on-year in August. It led to lower revenue expectations at Beyond Meat, which announced its first major cutback in October. About 200 jobs – a fifth of the workforce – will be cut before the end of the year.
Together with the UK, Ireland and the Scandinavian countries, the Netherlands is one of the largest European markets for meat substitutes. Dutch retail turnover rose from 105 million euros in 2017 to 225 million euros last year. This year, that turnover is heading for around 220 million euros, expects food economist Thijs Geijer of ING. “You may come to a point of saturation, because the initial demand has been met and at the same time there is little new supply of meat substitutes,” says Geijer. He also points to inflation, which makes premium products less attractive.
The long term remains for Beyond Meat, with Morningstar analyst Rebecca Scheuneman seeing several reasons for optimism. She sees interest in meat substitutes returning, especially in Europe, partly due to the collaboration with McDonald’s, which makes the meatless ‘McPlant’ with Beyond Meat.
Beyond Meat will present its third quarter figures on Wednesday.
A version of this article also appeared in the newspaper of November 7, 2022