Beyond Meat prepares to launch Beyond Burger 3.0, plans rollout in CVS, confirms it 'co-created' McDonald's new McPlant patty

By Elaine Watson contact

- Last updated on GMT

'Beyond Meat and McDonald's co-created the plant-based patty which will be available as part of their McPlant platform,' says the company
'Beyond Meat and McDonald's co-created the plant-based patty which will be available as part of their McPlant platform,' says the company

Related tags: Beyond meat, plant-based meat

A weak performance in foodservice and slower than-expected growth at retail combined to deliver a modest 2.7% increase in Q3 revenues to $94.4m at Beyond Meat, a figure “lower than we expected,” CEO Ethan Brown told analysts Monday. However, he insisted that the plant-based brand's "long-term value proposition" remained compelling.

Asked to comment on McDonald’s plans to launch a McPlant’ range​ - which the QSR giant said today could extend to burgers, chicken-substitutes and breakfast sandwiches - Brown said Beyond Meat was “working very closely"​ with McDonald's "on a number of matters​,” but said people would “have to continue to be patient”​ when it came to the finer details of the launch.

That said, the company was forced to issue a statement to reporters Monday morning clarifying that “Beyond Meat and McDonald's co-created the plant-based patty which will be available as part of their McPlant platform​,” after McDonald’s decision not to name* its partners prompted a sharp drop in Beyond Meat’s share price based on investors’ [false] assumption that the fast food chain had given Beyond Meat the cold shoulder.

“As I watched that unfold today,"​ said Brown, "I was reminded of the Mark Twain quote that reports of my death had been greatly exaggerated.”

But, he added: "We have developed a very long-term relationship with them ​[McDonald's]."

'Beyond Meat and McDonald's co-created the plant-based patty, which will be available as part of their McPlant platform'

As for Beyond Meat's Q3 results overall, they “reflect a quarter where for the first time since the pandemic began, we experienced the full brunt and unpredictability of COVID-19," ​explained Brown.

“Unlike the second quarter, where record retail buying and freezer-loading by consumers offset the deterioration of our foodservice business as COVID-19 stay-at-home and related measures set in, the long tail of retail stockpiling by consumers, coupled with continued challenges across the majority of our foodservice customers, led to Q3 results that were lower than we expected."

At this stage, it’s not possible to provide accurate guidance for the full year, said Brown, after the company posted a net loss of $19.3m compared with a net profit of $4.1m a year ago. (The losses were driven by increased operating expenses such as investments in headcount, marketing, international expansion, and R&D). 

“Given the uncertainty regarding the ultimate duration, magnitude and effects of the COVID-19 pandemic, management remains unable to predict the continuing impact of COVID-19 on its business for the balance of the year with reasonable certainty.”

"Despite challenging macroeconomic conditions and highly variable buying patterns, more households are buying our products, they’re buying them more frequently. On average, they’re spending more per household on our products over time." 

Ethan Brown, CEO, Beyond Meat

'Beyond Burger 3.0'

On the plus side, however, Beyond Meat continues to see strong growth in household penetration, buyer rates, purchase frequency and repeat rates, ​said Brown, who said his team "continues to make great progress on our next iteration of the Beyond Burger," ​although he did not say how the latest version differs from the current formulation.

“Our brand’s sales growth continues to outpace the category; and during the quarter we saw our year-over-year velocities rise even as we grew distribution."

'As of January 2021, the Beyond Burger will be available at 7,000 CVS locations nationwide'

Beyond Meat - which launched a direct-to-consumer e-commerce site​ in late August - has also secured listings in the drug channel for early next year, he said: "As of January 2021, the Beyond Burger will be available at 7,000 CVS pharmacy locations nationwide and Beyond Meatballs will be available at 5,000 CVS pharmacy locations across the country.

"CVS has now become a place where people are picking up some household grocery goods, so we want to be there."

As for the foodservice market, he added, the fundamental value proposition offered by Beyond Meat is clear, COVID-19-related disruption notwithstanding.

"It’s important not to interpret this near-term pandemic-induced drop in activity as a weakening in our long-term value proposition in this critically important space, we certainly do not. And despite the potential for another round of sustained stay-at-home orders, we are seeing strong signs that certain large QSRs are planning for menu additions."

In Q3, Beyond Meat’s US retail sales rose 40.5% to $62.1m while foodservice sales fell -11.1% to $16.3m.

Beyond Burger trialed in 210 KFC locations in six Chinese cities  

As for international expansion plans at Beyond Meat, which now sells products in more than 80 countries outside the US, "work is well underway​" to get ready for production trials in its first factory in China by the end of this year, he said. A second facility - which will be "one of the largest dedicated plant-based meat factories in the world"​ - is also in the works.

"We are proud to continue our partnership with Yum China, which recently conducted a new test with the Beyond Burger across 210 KFC locations in six major Chinese cities for a three-week trial."  

In June, Beyond Meat acquired another facility in the Netherlands to support EU extrusion operations. The site – which will work in tandem with its Zandbergen co-manufacturing facility – should become operational by the end of the year and will allow for end-to-end production of Beyond Meat products in the EU, he added.

In a note to investors, Bernstein said: "In retail, it appears that Impossible's entry into the market and subsequent deeper discounting is putting pressure on Beyond's pricing and market share in the fresh patty category, which may persist for some time... On a more positive note, we could see a fairly sharp recovery in European foodservice sales once the pandemic is resolved.

"A key question was what the company's role in the McDonald's McPlant platform might look like, but although management confirmed... that they are still involved and commented on the call that their relationship with McDonald's remains strong, they were unable to describe the specific role they are likely to play going forward – we would hope for more clarity around this in the not too distant future."

McPlant platform suggests McDonald's sees 'real and sustained demand' for plant-based meat, claims GFI

McDonald's McPlant range could hit the market as early as next year, said the QSR giant in a blog post​ Monday: "Markets can adopt the McPlant when they’re ready and we expect some to test the burger next year."

McDonald’s global launch of a plant-based burger is the clearest signal yet that plant-based meat will be the future of meat​,” claimed The Good Food Institute foodservice & supply chain manager Zak Weston. 

“When McDonald's does something, they do it deliberately and at a massive scale. For a chain of their size to launch a new plant-based item leveraging their iconic ‘Mc’ branding, it means they see real and sustained demand and they have an assured supply chain."

*In a blog post​, McDonald's described its new McPlant burger as "a delicious plant-based burger crafted for McDonald’s, by McDonald’s​."

Plant-based meat in kroger3

US retail sales of fresh plant-based meat were up 126% year on year in the 30 weeks to September 26, 2020, while fully cooked plant-based meat sales (mostly frozen products) were up 38.5% year on year, according to new data from Nielsen shared with FoodNavigator-USA.

However, regular fresh conventional meat sales were also up 28% year-on-year over the same period, which is significant given the relative size and maturity of this market by comparison.

Beyond Breakfast Sausage
Beyond Meat recently acquired a plant in Pennsylvania run by one of its former co-packers, enabling it to produce some finished goods in-house

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