Beyond Meat [NASDAQ: BYND] is an American company that manufactures plant-based meat substitutes. The products are designed to resemble animal products in taste, texture, color, and smell. Founded in 2009 by Ethan Brown, the company continues to grow rapidly and boasts investors including Bill Gates, Kleiner Perkins, Obvious Corporation, and Humane Society of the United States.
Beyond Meat is competing in a market that includes animal meat, substitutes, and processed meats. Their products are sold in over 119,000 retail stores and food outlets in about 80 different countries. As of September 7, 2021, the company had a market cap of $7.29 billion and approximately $0.063 billion shares outstanding for the quarter ending June 30, 2021.
For the second quarter of 2021, Beyond Meat recorded revenues amounting to $149.4 million, which increased 31.8 percent from the previous year’s second quarter. The company also reported assets amounting to $1.467 billion, representing a 183.13 percent increase Y/Y.
Beyond Meat Business Strategy
Beyond Meat is one of the fastest-growing companies in the food industry today. Its goal is to provide consumers with delicious and nutritious, plant-based meats to reduce the environmental impact of animal agriculture. As a result, they plan to expand their market share in the 1.4 trillion meat industry through their existing and new products.
In a bid to capture this broad industry, the company focuses on three main consumer bases of new-age vegetarians, flexitarians, and meat lovers. With pork, beef, and poultry at the top of the meat industry, Beyond Meat is looking at a big market space by focusing on these three consumer types. Their current best-selling product, the Beast Burger, is aimed at flexitarians and meat lovers with its bleeding nature and lookalike taste.
With innovation and R&D at the core of the company’s business, Beyond Meat is looking into new ways to create more products that resemble meat as closely as possible. The company invests heavily in R&D and facilities, allowing them to create products that compete with Meat in flavor and texture.
The company also actively acquires smaller players in the meat replacement industry to expand its product line, brand base, and consumer reach. In an attempt to scale up, reduce costs, and test new opportunities, Beyond Meat acquired its Pennsylvania co-packer for $14.5 million.
Beyond Meat SWOT Analysis
Top Talent in R&D
Beyond Meat is blessed with a large and highly acclaimed R&D team comprising scientists, engineers, researchers, and chefs. Their expertise and knowledge are unparalleled. The R&D team has the invaluable ability to create products that look, feel, taste, and smell like animal meat while still maintaining all of the qualities of plant-based proteins. Because they can do this faster than major players in the meat industry, Beyond Meat can develop more innovative meat replacement products.
Strong Relationships with Retailers
The Company has invested heavily in building close relationships with retailers, which is key to their continued growth. Through this relationship, Beyond Meat can offer premium products at lower costs and develop exclusive deals.
Brand Mission aligned with Consumer Trends
While the rest of the meat industry has been reluctant to move towards cleaner and more sustainable products, Beyond Meat is changing that. Its mission and vision can better meet the growing demand for healthier and more humanely sourced food options. The company also heavily invests in brand and product awareness, including issues connected with animal protein, health, climate change, and food security.
Extensive product portfolio
Beyond Meat has the advantage of having multiple products, including Beyond Beef Crumbles, Beyond Chicken Strips, Beast Burger, and Beyond Sausages. This allows them to have a wider reach and compete against all major players in the meat industry. Customers have the opportunity to differentiate their diets and buy healthy products without having to pay a premium. Even with the abundance of meat replacement products on the market, Beyond Meat still stands out with its product quality and offerings.
Civil Law Suit:
In 2019, Beyond Meat entered a civil brawl with Don Lee Farms, a former business partner. This happened after Beyond Meat opted to change suppliers and allegedly shared details about the manufacturing process. Don Lee accused Beyond Meat of breach of contract and trade secrets. Further, there were concerns about the food safety protocols that the alleged breach could have compromised. Such lawsuits are the last thing a growing company needs, especially when it is still in its infancy stages.
Lack of Animal-free Feedstock:
Beyond Meat heavily relies on soy and pea protein, an unsustainable choice for the company. These crops are often produced at a high environmental cost to native habitats. The company’s biggest challenge is to find a sustainable and scalable plant-based solution.
Penetration into the digital market
Beyond Meat has invested heavily in digital media to create an online presence for its products. The company’s website is a valuable source of information about Beyond Meat products’ nutritional content and health benefits. It also allows customers to find local retailers and recipes they can use with their existing meals. The company can leverage these initiatives to increase its market share.
The meat industry is built around traditional farming techniques, which are wasteful and unsustainable. Beyond Meat has an opportunity to study alternative technologies like cellular agriculture to create more environmentally friendly products. However, this would likely bring about additional regulatory considerations that could tie up resources and delay future efforts.
Huge Backlash on Fake Meat
Despite the abundance of meat replacement products on the market, not all consumers will easily switch to healthy and humane meal replacements. Some people see these fake meats as purposely misleading and unacceptable substitutes for natural animal protein. The company faces a challenge in convincing its target customers to buy its products at a reasonable price point.
Change in Consumer Preferences
Beyond Meat is in a highly saturated market with several rivals. While this industry has plenty of room for growth, tastes and preferences can change as time goes by. The company must always stay on its toes to remain relevant to the changing consumer landscape.
Beyond Meat Competitor Analysis
Beyond Meat competes with other meat-substitute brands for a share in the growing vegan market. It is important to note that while Beyond Meat may be trailblazing through its product development, competitors are also making concerted efforts to validate their products and succeed in this industry. The following will provide a detailed analysis of Beyond Meat’s major domestic and international competitors.
1. Impossible Foods
Impossible Foods Inc. is an American company that develops plant-based meat products. Based in Redwood City, California, the company is a venture capital-backed business founded in 2011.
Over time, the company received over $1.3 billion in subsequent investments from prominent venture capital companies like Google Ventures and Bill Gates’s fund. Combined with the company’s expertise in cellular agriculture, Impossible Foods has become one of the biggest competitors to Beyond Meat.
Although the company isn’t publicly traded yet, Impossible Foods has already achieved a significant market valuation. A 2021 Reuters report indicates that the company is preparing for a public listing that could potentially value $10 billion.
Its main competitive advantage over Beyond Meat is its focus on selling its plant-based meat products in high-end restaurants rather than supermarkets. Its website lists several fine dining establishments serving their products, including Momofuku Nishi in New York and Jardinière in San Francisco.
Cargill is an American conglomerate that works primarily in the food and agricultural industry. It is headquartered in Minnetonka, Minnesota, and it is owned by investors rather than being publicly traded. Founded in 1865 by William Wallace Cargill, it is now the largest privately held corporation in the US.
In 2020, Cargill launched PlantEver, its first plant-based protein product. The new product is a soy-based meat alternative used to replace animal proteins in cooking and food prep. It started selling in China with plant-based chicken nuggets and beef patties on top of its PlantEver product portfolio.
Through a partnership with PURIS foods, Cargill can produce and sell pea protein and is regarded as one of the largest pea protein producers in North America. It supplies the raw material to other food manufacturing companies, including Beyond Meat. This gives it a competitive advantage over other brands because PURIS can produce the raw materials at better prices than Beyond Meat pays.
Most importantly, since Cargill is a privately held company, it does not have to report its financial results every quarter like Beyond Meat. This makes it easier for Cargill to plan long-term initiatives like product development without worrying about short-term profits.
Kellogg (NYSE: K) is a major multinational food manufacturing company that produces, markets, and sells cereal and convenience food products. Founded in 1906 by Will Keith Kellogg, the company quickly grew into a massive corporation with well-known brands, including Pop-Tarts, Eggo waffles, and Nutrigrain bars.
In 2019, Kellogg entered the plant-based meat category by launching its new meat alternative, Incogmeato, through Kellogg’s MorningStar Farms subsidiary.
The product contains pea protein and replaces animal meat in popular dishes such as tacos, fajitas, and Philly cheesesteaks.
Kellogg’s revenues for the quarter ending June 30, 2021, amounted to $3.555 billion, representing a 2.6 percent increase Y/Y with a gross profit of $1.224 billion. With such strong financials, Beyond Meat is likely to be a target of potential acquisition soon.
Nestle (SIX: NESN) is a transnational food and drink company based in Switzerland. It is the largest food and beverage company globally, measured by revenues and market capitalization, with 84.34 billion Swiss Francs yearly revenue in 2020.
Nestle entered the plant-based meat category with its first product in China. To penetrate the Asian market, it is set to open a new facility in Malaysia. Nestle states that the new Malaysian production unit can produce up to 8000 tonnes of plant-based proteins annually, enough to supply key markets in Asia.
Nestle also acquired Sweet Earth, a plant-based foods company, in 2017 to expand its portfolio. It plans to develop plant-based foods for different regions, including North America and Europe, and sell them under existing Nestle brands.
Beyond Meat’s main competitive advantage over Nestle is its branding strategy. Nestle has not yet realized the full potential of its Sweet Earth subsidiary, and it needs to develop its branding more effectively if it wants to compete with Beyond Meat.
5. Hormel Foods
Hormel Foods (NYSE: HRL) is a multinational packaged foods company based in Minnesota, US. Founded by George A. Hormel in 1891, it is best known for its canned meats, including Spam and Dinty Moore beef stew. It acquired Applegate Farms, a producer of organic and natural meat products, in 2015 to expand its portfolio.
Hormel is already marketing plant-based alternatives under the Happy Little Plants brand on select retail stores and online. According to Hormel, the Happy Little Plants products are free of antibiotics and hormones and contain reduced sodium and fat content.
Beyond Meat’s competitive advantage over Hormel Foods concentrates on convenience food products like ready-to-cook meal ideas. Fresh/frozen meat alternatives largely dominate the plant-based meat category, so Beyond Meat has the opportunity to expand its market share by introducing more convenient products.
For the quarter ending July 31, 2021, Hormel recorded revenues amounting to $2.864 billion, representing a 20.25 percent increase compared to the same period last year. The company reported a gross profit of $0.423 million and has a market cap of $22.907 billion.
How Beyond Meat Stands out Against Its Competitors
The main competitive advantage Beyond Meat has over its competitors is the company’s branding strategy. Beyond Meat has established itself as a leader in the plant-based meat category with an incredibly loyal customer base which is extremely difficult for competitors to crack.
The company also focuses on combating stereotypes that plant-based proteins are not equally nutritious as Meat by adding pea protein isolate to its burger patties. In addition, it is the only plant-based meat company with a seasoned executive team from private equity backgrounds who have successfully led large corporations in past careers.
Beyond Meat uses its extensive partner network to leverage its position in the market. It has partnered with large retailers, including Costco, Safeway, Kroger, and Whole Foods, to increase its brand visibility. The company also works with many restaurant chains, such as Carl’s Jr., Del Taco, TGI Fridays, and A&W Canada.
With such an extensive partner network, Beyond Meat has an opportunity to expand its product line with different types of meat alternatives, such as Sea Food and Fish. In addition, the company has the potential to broaden the appeal of plant-based proteins from health-conscious consumers to regular meat lovers by introducing more convenience products like ready-to-cook meal ideas.
Beyond Meat Competitor Analysis (FAQs)
Question: Who is Beyond Meat’s biggest competitor?
Answer: Impossible Foods is Beyond Meat’s biggest competitor due to the similarities in product offerings, target market, and branding strategies. However, Beyond Meat competes with other big players such as Nestle, Hormel Foods, Cargill, and Kellogg.
Question: Who should Beyond Meat target?
Answer: Beyond Meat should target both (1) health-conscious consumers who are looking for an alternative to traditional meats and (2) regular meat lovers who are seeking more convenient meat alternatives, and (3) vegans/vegetarians.
Question: Does Beyond Meat have a competitive advantage?
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.
Beyond Meat has proven to be a successful competitor in the plant-based meat category, mainly due to its branding strategy and focus on combating stereotypes. The company also uses its extensive partner network of retailers and restaurants for marketing purposes, giving it an advantage over competitors like Nestle or Hormel Foods. Beyond Meat, competitors don’t have such extensive reach into retail markets or restaurant chains. While the plant-based meat industry is still in its infancy, Beyond Meat has already established itself as an industry leader with great potential to grow.
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