Investors devour Beyond Meat as sales surge

Daniel Fowler
June 9, 2019

In the first quarter of 2019, Beyond Meat's net sales jumped 215% to $40.2 million, driven by increased sales of the Beyond Burger and greater demand from new and existing customers.

'We're being very conservative.

The company reported a net loss US$6.6 million, wider than the loss of US$5.7 million a year earlier.

Adjusted for stock-based compensation costs and other items, the company lost 14 cents per share. The company is forecasting full-year revenue of more than $210 million, ahead of Wall Street's $205 million estimate. Some grocers, such as The Fresh Market Inc, which operates some 160 stores across 22 states, place Beyond Meat in the freezer with other veggie burgers or even the dairy section as they evaluate sales and decide on a long-term placement strategy.

Ten-year-old Beyond Meat burst into the spotlight last month with its successful IPO. The market for meat alternatives could reach approximately US$140 billion and take 10 per cent of the US$1.4 trillion meat market, according to research from Barclays.

Shares of the plant-based meat substitutes firm founded in 2009 by Ethan Brown soared to as high as 23 percent in after-hours trading Thursday before settling down 18 percent at $117.49.

In addition, investors may also expect updates on the company's potential partnership with McDonald's, said Jefferies analyst Kevin Grundy.

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'It is very, very hard to build products with the level of ingredient integrity that we have, ' Brown said.

The report also shed light on Beyond Meat's growth plans in both retail and restaurant establishments. Euromonitor estimates the market for plant-based meat substitutes was $1.44 billion past year and will grow to $2.50 billion by 2023.

Impossible recently raised $300 million in funding to boost production, bringing its total to more than $775 million in five funding rounds since it was started by Stanford University biochemistry professor Patrick Brown eight years ago. Technomic is a sister company of Restaurant Business. But the bulk of that growth came from sales to restaurants, which increased almost 500% in the quarter thanks to deals with chains such as Carl's Jr. and Del Taco. One-third of specialty food shoppers have said they were buying a plant-based food and beverage, so more companies are bound to invest in this space. Early on, Beyond Meat focused much of its expansion on getting its products into popular grocery store chains such as Safeway, Whole Foods, Kroger and Wegmans.

'It's nothing that would break our system, ' he said.

Burger King is rolling out a Whopper made with Impossible Foods' plant-based burger to its 7,200 USA stores this year, after it saw robust demand in a test market.

That growth has competition, however, including Impossible Foods, which has inked deals with Burger King for its Impossible Burger, and other fast food giants.

"We're at a point where plant-based meats have become a segment of their own, and by the end of the year we'll have a section exclusively dedicated to these products inside the meat department", said Beretta. The company has requested that its product be housed with real meat, not in the vegan or vegetarian aisle.

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