How would you like your burger? Plant-based, cultivated in a vat or swapped out for a salad?
Beyond Meat was hoping to entice carbon-conscious carnivores with the first option, creating a massive new market in the process. That has spectacularly failed to occur. As a result, even after Friday’s bump in the stock on the back of better than feared fourth-quarter results, the fake-steak provider is trading some 90 per cent below 2019 highs.
Beyond Meat is having to adjust to a whole new reality. It started life as a tech-style disrupter, with a mission to upend the $1.2tn meat industry. Its concept — vegetarian “meat” for the meat eater — looked plausible enough.
After all, many steak lovers have an environmental conscience. Cows and other livestock contribute about 14 per cent of global emissions. If a plant-based alternative could be engineered to taste the same, what is not to like?
Plenty, if Beyond Meat’s dwindling revenues are anything to go by. They fell about a fifth in the fourth quarter, compared to the previous year. It had to cut prices, meaning revenues per pound fell from $5.5 in 2021 to $4.9 in 2022. And the cost of goods sold rose from $4.1 to $5.2.
That has made mincemeat of the company’s growth strategy, and left it on a mission to cut costs, halt the cash burn, and find its feet as a niche consumer brand instead. Encouragingly, Beyond Meat expects to turn cash flow positive in the second half of 2023. That is important for a company which has $1.2bn of debt on its balance sheet and some $322mn of cash.
Even assuming Beyond Meat stabilises its business, the basic premise of the company has changed. Taste, cost, plain old conservatism: whatever the reason, its chances of disrupting the meat industry now look low. That is going to warrant a small consumer brand valuation, rather than a tech growth multiple. And the carbon-conscious carnivore might end up with a salad after all.