What is Beyond Meat's competitive advantage? (2024)

What is Beyond Meat's competitive advantage?

Beyond Meat has established some competitive advantages through its focus on innovation, smart merchandising and social marketing campaigns. However, the underlying long-term risks involve supply chain fragility, fierce competition, and disruptive innovation.

Answer: Beyond Meat's competitive advantage is its branding strategy. It has an incredibly loyal customer base and enjoys a lot of brand recognition in the plant-based meat category. Its focus on R&D to improve the nutritional content of its products also gives it a competitive advantage.

But Beyond's strategy was. Rather than confining themselves to the niche vegetarian audience, Beyond targeted the much larger market of meat-eaters. Vox wrote in a 2019 article, that Beyond's strategy was to “ensure that their product has the flavour, macronutrient balance, and cooking experience of meat.”

Focus Strategy- Beyond Meat's strategy was to focus on creating “meat” that isn't actually meat, but tastes just like the real thing to replace meat in people's diets. This is rather than Beyond Meat actually creating a meat brand that is real meat.

By paying attention to all the details of a real burger — the taste, texture, smell, feel, and consistency — Beyond Meat has been able to break into a target audience that had yet to be cracked: “mainstream consumers interested in healthier forms of meat”.

One framework shows that based on fast changes in market and technological evolutions, Beyond Meat is unlikely to sustain its first mover advantage. The second framework analysis using first mover advantage as proxy for competitive advantage comes to the same conclusion.

The company now has a sustainable competitive advantage because they have partnerships deals to produce their signature product for specific buyers. These close relationships give Impossible Foods an easily deliverable and defendable product with exclusive buyer deals.

The brand's own research shows that 70 percent of the Beyond Burger's buyers are meat-eaters. According to recent research by The NPD Group, 86 percent of consumers who purchase vegan products are omnivores.

Beyond Meat Plant-Based Meat Market Share

The plant-based meat industry had an estimated value of $4.3 billion in 2020. That gives Beyond Meat a market share of approximately 9.4%.

Why is Beyond Meat share price down?

Softening demand, higher input costs, the COVID-19 pandemic and supply chain issues have been chipping away at sales for the last nine months. The largest drag on Beyond's earnings in the most recent quarter, Brown said on the earnings call, came from the launch of Beyond Meat Jerky.

Impossible Foods is possibly the closest and most comparable competitor to Beyond Meat. The company announced another round of funding shortly after the IPO of Beyond Meat, raising $300 million.

Another key marketing vehicle for the company is its partnerships with big brands like McDonald's, KFC and Pizza Hut. If you think about the first time you heard about Beyond Meat it very well many have been when the product launched at a large fast food chain.

Producing Beyond Burgers uses 99 percent less water, 93 percent less land, creates 90 percent fewer greenhouse gas emissions and requires 46 percent less energy than producing beef burgers, according to a September report commissioned by Beyond Meat.

After revenue surged 239% in 2019, analysts expected growth to slow to 61% in 2020 (Beyond Meat actually reported just 36.6% growth) and 17% by 2025. The company is already reporting numbers well below that 2025 threshold, suggesting Beyond Meat's success is ebbing much faster than analysts expected.

Competitive advantage refers to factors that allow a company to produce goods or services better or more cheaply than its rivals.

Ethan Brown is the founder of Beyond Meat and has served as our President and Chief Executive Officer and as a member of our board of directors since our inception in 2009.

But unfortunately, according to WSJ, plant-based burger production is pricier than beef, because the meatless alternatives are made on a smaller scale, while animal agriculture subsidies ensure animal products remain affordable to consumers.

Looking ahead, Beyond has lowered its annual revenue forecast for 2022. Brown reassured stakeholders that the company will recover its growth trajectory in the 10 months ahead.

How is Beyond Meat manufactured?

Using heating, cooling, and pressure, we create the fibrous texture of meat from plant-based proteins. Then, we mix in fats, minerals, fruit and vegetable-based colors, natural flavors, and carbohydrates to replicate the appearance, juiciness, and flavor of meat.

Consuming plant-based foods is much more than just a trend for Millennials and younger generations. Millennials and Gen Z make up 30 and 32 percent of the population, respectively, creating enormous market potential for plant-based foods.

By shifting from animal-based meat to plant-based protein, we can positively impact four growing global issues: human health, climate change, constraints on natural resources and animal welfare.

Upon licensing Hsieh and Huff's technology, Beyond Meat launched its first product, Beyond Chicken Strips (originally called "Chicken-Free Strips"), in Whole Foods location in 2012 and expanded nationally in 2013.

Beyond Meat's Business Model

Beyond Meat has two revenue channels, retail and foodservice, both in the U.S and internationally. At the start of 2020, both these channels accounted for roughly 50% of revenue — 52% and 48% respectively.

Bottom line: BYND stock is not a buy right now. Beyond Meat is failing to generate sustained traction from fundamental catalysts and still needs to prove itself.

Plant-based meat market. A sizable and rapidly-growing category, the plant-based meat market is worth $1.4 billion. The category increased by more than $430 million in sales from 2019 to 2020.

Beyond Meat has been around longer than Impossible Foods; it was started in 2009 by Ethan Brown, who still remains the CEO. The company's core mission is to lessen humans' reliance on livestock and opt for better, more sustainable options—which is where their products come into play.

“Compared to a meat-based burger, Beyond and Impossible contain roughly the same amount of saturated fat and more sodium,” she says, both of which, when over-consumed, can increase the risk of heart disease and stroke.

Is beyond meat a Buy Sell or Hold?

Beyond Meat has received a consensus rating of Hold. The company's average rating score is 1.63, and is based on no buy ratings, 10 hold ratings, and 6 sell ratings.

“Therefore, we are steadily executing against our vision of being tomorrow's global protein company by scaling products and infrastructure.” Nearly 40% of shares outstanding in Beyond Meat are shorted by investors betting against the stock price increasing.

Nutritional Value

Also, Beyond Meat contains fiber, but real meat does not contain fiber. However, the plant-based meat substitutes have relatively higher sodium content and they are a good source of folate and iron than ground beef. But some researchers say they also contain less protein, zinc and vitamin B12.

“The most popular plant-based alternatives, Beyond [Meat] and Impossible Burgers, produce about 90 percent fewer greenhouse gas emissions in comparison with beef,” she says. “They reduce land use by at least 93 percent and water use by 87 percent to 99 percent. They also generate no manure pollution.”

According to Pathmatics, Beyond has earned 8m impressions YTD through Instagram ads (82%) and Facebook ads (18%) - all of which were placed site direct. It has spent ~$54.5k on digital display ads YTD, a 40% decrease from $76.2k spent during the same period 2020.

Impossible is a gluten-free burger made largely of soy protein concentrate, coconut oil and sunflower oil, along with genetically engineered heme that gives it its meat-like quality. Beyond Burger, on the other hand, is mostly built on pea protein, expeller pressed canola oil, coconut oil, and seasonings.

Both Beyond Meat and Impossible Foods produce vegetarian substitutes to ground meat using plant-based ingredients. The main difference between the two is the heme – an essential molecule that makes meat taste like meat. While Impossible Foods use heme, Beyond Meat doesn't use it.

The popularity of plant-based meat products from companies such as Beyond Meat and Impossible Foods has skyrocketed in recent years, aided by availability everywhere from supermarkets to Burger King and Starbucks.

What are the key issues confronting Beyond Meat's top management team in 2020?

Though retail sales for plant-based meat grew by 45 percent in 2020, on average, Neilson data demonstrates that plant-based meat on a per-pound basis is currently twice as expensive as conventional beef, three times as expensive as pork, and four times as expensive as chicken.

Closest Competitor: Impossible Foods

Impossible Foods is possibly the closest and most comparable competitor to Beyond Meat. The company announced another round of funding shortly after the IPO of Beyond Meat, raising $300 million. It is now backed by investors such as Khosla Ventures, Google Ventures, and Bill Gates.

After revenue surged 239% in 2019, analysts expected growth to slow to 61% in 2020 (Beyond Meat actually reported just 36.6% growth) and 17% by 2025. The company is already reporting numbers well below that 2025 threshold, suggesting Beyond Meat's success is ebbing much faster than analysts expected.

Nutritional Value

Also, Beyond Meat contains fiber, but real meat does not contain fiber. However, the plant-based meat substitutes have relatively higher sodium content and they are a good source of folate and iron than ground beef. But some researchers say they also contain less protein, zinc and vitamin B12.

By shifting from animal-based meat to plant-based protein, we can positively impact four growing global issues: human health, climate change, constraints on natural resources and animal welfare.

Softening demand, higher input costs, the COVID-19 pandemic and supply chain issues have been chipping away at sales for the last nine months. The largest drag on Beyond's earnings in the most recent quarter, Brown said on the earnings call, came from the launch of Beyond Meat Jerky.