Meaty Competition: Beyond Meat Sees Drop in Share Prices​


By Robyn Ma​

The Story

Last week, shares of plant-based protein producer Beyond Meat fell 6% amidst increasingly tough competition from other plant-based food manufacturers, and “weak restaurant sales” in Covid-19 (Financial Times). Despite an increase in revenue by 11.4% to $108.2 million, this was still far beneath the $112.6 million forecasted by Wall Street analysts (US News). Beyond Meat also suffered a net loss of $27.3 million.

Due to decreased demand from restaurants amidst the global pandemic, food-service sales fell to 26% in the US, and 44% internationally, hurting Beyond Meat’s revenue stream (US News; Financial Times). At the start of its first quarter, Beyond Meat closed several deals with large restaurant chains, such as signing a three-year deal with McDonald’s to become the chain’s preferred supplier for plant-based meals (US News). However, low consumer demand for retail products as a result of Covid-19 has failed to provide any major benefits to Beyond Meat.

What it Means for Businesses and Law Firms

The plant-based market is heating up. Traditional meat producers are also looking for a cut in this growing industry. Recently, food industry giant Tyson Foods announced the launch of its own plant-based burgers (Nasdaq). With its deep pockets and extensive national distribution network, Tyson Foods poses a large threat to companies like Beyond Meat. In recognising trends and new markets to exploit, the food giant is hoping to reach more consumers than Beyond Meat. Other players are also looking to expand. For example, plant-based burger company Impossible Foods is preparing for a public listing, which could value the company at approximately $10 billion (Reuters).

Image Credit: Lori Butcher/Shutterstock.com

This reflects an increasing demand for plant-based protein products, fuelled by consumers’ increasing environmental and ethical concerns (Reuters). As consumers look for healthier alternatives, food companies are developing new products and entering new partnerships. In January, Beyond Meat launched a joint venture with PepsiCo to offer more nutritious, sustainably-made products to consumers (Financial Times). The market responded to this positively, with Beyond Meat’s shares jumping 26%. However, this may have been an overvaluation of the company, as shown with the current slump in its shares (Transition Earth).

There is also an ongoing price war between plant-based companies. The attempt to reach ‘price parity’ with meat products (where the price of plant-based proteins falls to the market price of real meat) has led to intense competition between these companies to cut costs (Financial Times). Beyond Meat is looking to achieve price parity with real meat by 2024, and its CEO Ethan Brown announced the company was planning to fully integrate its production facilities, to lower labour and logistics costs (Financial Times). These efforts have helped the average retail price for Beyond Meat’s products to fall from $12 to $9 per pound (Financial Times). According to consulting firm Kearney, plant-based proteins will eventually surpass price parity with real meat, and may achieve a 30-40% cheaper shelf price (Financial Times). This, however, will require further consolidation and investment in production systems.