“As we shared last month, Beyond Meat is executing a full force pivot to a sustainable growth model, emphasizing the achievement of cash flow-positive operations within the second half of 2023. This transition is designed to fortify our business in the near-term as record inflation continues to pose a challenge for our brand and category, positioning Beyond Meat to endure and advance toward our long-term objective of being a major protein provider within the $1.4 trillion meat industry," said Beyond Meat CEO Ethan Brown.
Net revenues decreased 22.5% to $82.5m in the third quarter of 2022 compared to $106.4m in the year-ago period driven by a 12.8% decrease in total pounds sold and an approximately 11.2% decrease in net revenue per pound attributable to price reductions in the US.
All markets and channels were negatively impacted by a combination of weaker-than-expected demand in the category and certain customer and distributor changes, such as reductions in targeted inventory levels, among other factors, said Beyond Meat.
In the US retail channel, net revenues decreased 11.8% compared to the year-ago period.
US foodservice channel net revenues increased 5.6% compared to the year-ago period primarily driven by a 32.2% increase in pounds sold, partially offset by lower net revenue per pound.
Growth path forward
To dig itself out of its negative financial state and stabilize the business, Brown outlined an aggressive series of actions focused on lean value streams and a significant reduction to operating expenses.
“Though this quarter’s results are disappointing, with a sharp decline in revenues and associated knock-on effects across the income statement including gross margin driven by a challenging macro environment, we are implementing aggressive measures with urgency to positively impact our near-term operations," said Brown.
"Our path forward comprises three key actions: significant reduction of our operating expenses; intensified focus on cash flow accretive inventory management activities; and sales and marketing programs that are tightly focused on opportunities and segments that strike the right balance between near-term growth and our most valuable long-term opportunities.”
On the company's Q3 2022 earnings call, Brown said the company would focus on a narrower set of strategic partners in retail and foodservice and rationalizing its production and co-packing network in response to decreased volume demand.
The company is also testing a pricing reduction that puts it closer to price parity with its animal protein equivalent to gain new points of distribution and introduce new consumers to the Beyond Meat brand.
Beyond Burger 4.0, increased focus on frozen
While having faced weakened demand for its products, Brown is committed to the idea of restoring growth in the struggling refrigerated meat alternative category through targeted marketing, strategic pricing, and production renovation, including its fourth iteration of its Beyond Burger.
The company's updated version of the Beyond Burger (release date not disclosed) puts it another step closer to its 'North Star' of being indistinguishable from animal protein, said Brown.
Beyond Meat is also dialing into the frozen aisle where sales of plant-based meat alternatives have been growing in the high-single digits (+9% in July 2022 vs. July 2021*) compared to double-digit declines in refrigerated meat alternatives (-14.6% in July 2022 vs. July 2021).
"Though we have long emphasized the refrigerated meat taste next to animal meats as one of the long-term engines of significant growth, we do not discount the importance of the frozen aisle in grocery," said Brown.
As a result, Beyond Meat is prioritizing expanding distribution of its frozen chicken tenders and Beyond Steak (both launched this year), which are currently available at more than 5,000 Kroger and Walmart stores nationwide.
"Frozen plant-based chicken is the largest single subcategory in all of plant-based meats and continues to grow at a double-digit pace," said Brown.
"Though these activities do not result in immediate sustained revenues, they represent very important seeds that we are planting for future growth."
Interested in meat alternatives?
- Ethan Brown, founder and CEO, Beyond Meat
- Dr Lisa Dyson, founder and CEO, Air Protein
- Dr Tyler Huggins, co-founder, Meati Foods
- Abena Foli, head of regulatory affairs, Orbillion Bio
- Dr Elliot Swartz, lead scientist, cultivated meat, The Good Food Institute