Speaking on the firm’s Q4 earnings call Thursday, CEO Ethan Brown referenced a recent wave of "industry-funded" ads from The Center for Consumer Freedom attacking plant-based burgers as 'ultra-processed' products hiding scary unpronounceable ingredients.*
While rival Impossible Foods recently turned the tables on Berman with a witty riposte to its latest ad (which implied there's something sinister about plant-based meats because they contain ingredients 10-year olds can't spell), Beyond Meat could do more to demystify its products to shoppers, said Brown.
“We neither seek nor want an adversarial relationship with animal protein providers. We have great passion and respect for agricultural communities.”
However, “Because of the confusion that can result from industry funded campaigns targeting plant-based meats, you will see our brand raise the profile of our ingredients and our process. We are proud of both and believe that far from being a liability, our ingredients and our process represent important strengths.
“In the coming months, and for the balance of 2020, you will see us tell our story on ingredients and process with content across digital and print media helping consumers have the information they need to make informed purchasing decisions.”
Beyond Meat will proactively talk about its “efforts to be a leader in the plant-based meat sector on health,” and continue to research new plant-based ingredients that deliver health benefits, he said.
It will join the Partnership for a Healthier America, which is committed to increasing healthy choices in the food supply, and create an “advisory board of leading experts in health and medicine to ensure that we have access to the latest thinking and peer reviewed research on health, nutrition and ingredients.”
Are plant-based burgers healthier?
While the 4oz Beyond Burger has similar levels of protein (20g) and saturated fat (6g) and a lot more sodium (390mg) than a McDonald’s 4oz quarter pounder (19g, 7g, and 55mg respectively); the Beyond Sausage has more protein and iron, 44% less saturated fat, 50% less total fat and 37% less sodium than a leading pork sausage patty, claims the company.
However, focusing on grams of saturated fat or sodium ignores other aspects of meat composition and production that may impact health, argued Brown in the Q3 earnings call:
"For example, our products are free of many other elements in animal protein that are subjects of medical study and debate for their role in inflammation and potential carcinogenic and cardiovascular risk. Nor do they contain what the USDA refers to as residual contaminants that can be present in certain but by no means all commercial meats."
INTERNATIONAL: Beyond Meat is in 13,000 outlets in chains including Albert Heijn, Metro, and Tesco,
RETAIL (US and Canada): Beyond Meat is in 28,000 outlets, recently expanding into Costco nationwide.
FOODSERVICE (US and Canada): Beyond Meat is in 36,000 outlets and is the largest – and fastest-growing – plant-based meat brand in US foodservice, recently expanding to 9,000+ Dunkin’ stores; Denny’s outlets nationwide, Starbucks Canada nationwide, selected McDonald’s stores in Canada, and just under 70 KFC locations in Charlotte and Nashville.
FY 2019: Net revenues +239% to $297.9m; forecasting $490-510m in 2020
Beyond Meat posted a 239% increase in net revenues to $297.9m in 2019 and a net loss of -$12.4m (vs -$29.9m in 2018), with margins improving due to volume increases, production efficiencies, and a greater contribution from higher margin fresh products.
Net revenues in the retail business rose 185.2% to $144.8m, while net revenues in foodservice surged 312% to $153.1m.
For the full year 2020, Beyond Meat is predicting net revenues in the range of $490-510m, said Brown, a forecast analysts at Bernstein said was "conservative, as the company only included confirmed contracts in its forecast while excluding potential opportunities such as partnerships with KFC and McDonald's, and international expansion into China."
“We were proud of the strong results from the one day test in a KFC in Atlanta, Georgia in August. But we remain focused on introducing a more fibrous architecture of the product to better capture the muscle structure of a chicken breast.
“We believe that the latest launch of Beyond Fried Chicken [in just under 70 KFC outlets in Charlotte and Nashville], which now exhibits more muscle structure, and the process taken to get there, reflects this commitment to superior results.”
Ethan Brown, CEO, Beyond Meat
"2019 was a remarkable year. It’s amazing to think that a little more than two years ago, the Beyond Burger was in just 5,000 grocery stores, but today is carried in almost all of the major US chains.
"Similarly, two years ago the Beyond Burger was in a few hundred restaurant and foodservice locations, and today you can find our products in thousands of foodservice outlets around the world, including some of the largest and most recognizable QSR chains in North America.
"At this time last year, we were excited to have Beyond Meat achieve 2018 annual net revenues of $88m, which is less than our net revenue for Q4 of 2019 alone. I’ve certainly never seen anything like this in my 20 plus years in the food business."
Bernstein: 'Europe presents an attractive market opportunity for Beyond Meat'
Regarding Seth Goldman's decision to step down as executive chairman (he'll take a step back from the day-to-day operations of the business, but will remain as chairman of the board), the Bernstein analysts said: "This will likely be perceived negatively by investors, especially given Mr. Goldman's industry experience as the former CEO of Honest Tea."
They added: "From a capacity perspective, Beyond Meat is partnering with a Dutch co-manufacturer in Europe and expects to have production facilities in Asia by year-end, assuming that the coronavirus outbreak does not prove to be a major disruption.
"We believe that Europe presents an attractive market opportunity for Beyond Meat, especially as its closest competitor Impossible Foods uses genetically engineered ingredients which are banned by many European countries. Meanwhile, the company also finds China an attractive market to take advantage of the protein supply shortage created by the African Swine Fever."
“We continue to focus on Asia with the goal of producing in the region before the end of 2020… We believe that the pork price in Asia provides an unprecedented opening to introduce new production models for meat.” Ethan Brown, CEO, Beyond Meat
Legal spat with Don Lee Farms
In its latest SEC filing – which summarizes developments in its legal spat with former co-manufacturer Don Lee Farms – Beyond Meat said it intended to “vigorously defend itself and its current and former employees against the claims.”
“The Company believes it was justified in terminating the supply agreement with Don Lee Farms, that it did not misappropriate their alleged trade secrets, that the Company is not liable for the fraud or negligent misrepresentation ....”
However, it noted that should Don Lee prevail, Beyond Meat could be on the hook for damages “including but not limited to contract damages reasonably calculated at what the company would have paid Don Lee Farms to produce its products through 2019, the end of the contract term.”
It also noted that should it prevail, “Don Lee Farms could also claim some ownership in the intellectual property associated with the production of certain of the Company’s products or in the products themselves, and thus claim a stake in the value the Company has derived and will derive from the use of that intellectual property after the Company terminated its supply agreement with Don Lee Farms.”
*The Center for Consumer Freedom was founded by Richard Berman, who critics say has perfected the art of setting up nonprofits to advance corporate interests. He is best known for his work - backed by the tobacco industry - to fight bans on smoking in bars and restaurants.
Asked about the nature of its corporate donors, CFF managing director Will Coggin told FoodNavigator-USA last October: “Our food industry funding is farm to fork and has included meat producers.” (On its website, the CFF says it is funded by “restaurants, food companies and thousands of individual consumers,” but notes that “Many of the companies and individuals who support the Center financially have indicated that they want anonymity as contributors.” )
Coggin added: “In response to those who feel we are just fear-mongering with chemical names, our goal is merely to raise awareness for consumers that what they are eating isn’t ground-up plants and isn’t any healthier than real meat… If there’s any fear-mongering, it’s the fake meat companies that are hoping to exploit concerns about personal health.”