Why Beyond Meat May Be In Financial Trouble
Correction 8/12/22: An earlier version of this story stated that Michele Simon is the director of the Plant Based Foods Association; she is its former executive director.
As any longtime vegetarian might tell you, veggie burgers have been around for a long time. And while that may be true, most vegetarians — and meat eaters — would agree that these burgers didn't come close to tasting like the real thing until plant-based products like Beyond Meat.
CEO Ethan Brown founded Beyond Meat in 2009 (per The New York Times), and since then, interest has skyrocketed, mainly due to what experts like Plant Based Foods Association former executive director Michele Simon see as a move toward healthier diets. "It's a combination of increased consumer interest in healthier eating in general, and then combined with innovation and an explosion of more great-tasting meat alternatives for consumers to choose from," Simon told Vox in 2019.
And while the appetite for Beyond Meat is strong among vegans and vegetarians, its push to go mainstream appears to have hit a snag. The company has just reported losses thanks to the combined impacts of inflation, economic uncertainty, and shoppers seeking cheaper proteins, per CNBC.
The search for cheap protein hurt Beyond Meat's bottom line
Part of the challenge that Beyond Meat has encountered involves cost. Because inflation has driven food prices to 40-year highs, consumers have less money to spend (via CNN), and as CNBC points out, Beyond's products are much more expensive than their traditional meat counterparts. The Beet reported in February that a pound of beef can cost $3.95, while a pound of Beyond Meat costs $7.79. And though the Good Food Institute projects vegan meat alternatives to be cheaper than animal meat by 2023, it hasn't happened yet. Another reason could involve interest. While McDonald's McPlant burger has taken off in the United Kingdom, and is being tested in Australia, testing in the United States has ended and the item was quietly taken off menus.
During a second-quarter earnings call, Beyond Meat announced a 1.6% drop in year-over-year net revenue and decision to cut its workforce by 4% (per CNBC and GlobeNewswire). The company is now forecasting $470 million to $520 million in revenue this year, down from $560 million to $620 million (via CNBC).
Still, Beyond Meat continues to believe in its core product and the segment it occupies, as people who want to go vegetarian move toward a plant-based diet. "I said many times that I believe the rise of plant-based meats to a prominent role in the global diet is inevitable," CEO Ethan Brown said during the earnings call (per Motley Fool).