Beyond Meat hit by declining consumer sales and changing tastes

Beyond Meat's products are often more expensive than the meat they’re made to imitate

Questions have surged about the products’ taste, texture and health benefits.

Shares in Beyond Meat plunged after the US plant-based meat company backed away from a key financial target and cut its sales outlook, sparking fresh doubts among investors and analysts.

The company’s cash reserves are dwindling as consumer interest in plant-based meat wanes. Management is revamping the business to reflect the new reality while slashing spending to achieve sustainable footing. 

The company and its plant-based peers are struggling with declining sales — the products are often more expensive than the meat they’re made to imitate and many shoppers haven’t returned to them after an initial wave of curiosity. Questions have surged about the products’ taste, texture and health benefits.

The stock fell as much 22% in US trading in the latest session, the most since November 2020. The shares had gained 24% this year. Beyond Meat had announced on Monday that it’s unlikely to meet its goal of becoming cash-flow positive in the second half of 2023. 

The company also trimmed its 2023 revenue outlook to a range of $360m to $380m (€347m), down from a previous range of as much as $415m. Second-quarter revenue missed Wall Street’s estimates and cash reserves slipped for a ninth consecutive quarter.

“The guidance cut is disappointing, especially considering the decent start to the year,” said Arun Sundaram, an analyst at CFRA. “We’re now back to talking about cash burn and the need to raise capital, as it is now highly unlikely that the company will be cash-flow positive anytime this year. Something needs to change to prevent this ship from sinking,” the analyst said. 

Chief executive Ethan Brown said Beyond Meat expects modest sales growth in the third and fourth quarters from a year earlier. 

In a call with analysts, he said that recent heat waves reinforce the need to reduce greenhouse gases, adding that broad consumption of plant-based meat is inevitable. He recognised it’s an uphill battle, however. 

“What we initially thought was going to be a quicker pace to mainstream adoption has proven to be slower,” he said. Mr Brown also said the company’s long-term plans should remain in place in spite of its struggles. 

Credit Suisse analyst Robert Moskow asked on the conference call if a “shrinking-to-win” strategy might be appropriate, with a target of being a business that generates $250 million to $350 million in annual sales. Mr Brown said he disagreed “rigorously with that future". 

Bloomberg