Carnivorous COO, Non-Competitive Pricing and High Inflation Dampen Enthusiasm for Plant-Based Meat Producer
10/25/22 – – These are not the best of times for plant-based meat producer Beyond Meat. Not too long ago, the company’s stock (its successful 2019 IPO was heralded as proof that the real beef industry was doomed) and products were sizzling. But this week, even with the launch of a premium Beyond Steak offering, Beyond Meat’s shares continued to decline, bringing the company’s year-to-date loss in value to more than 80-percent.
The recent bad news started in September with an altercation between Beyond Meat’s Chief Operating Officer Doug Ramsey and another fan at a University of Arkansas football game. Ramsey, displaying a nasty temper but no preference for plant-based protein, allegedly tried to bite off the other gentleman’s nose. He was arrested and charged with “terroristic threatening” and third-degree battery. Soon after, Beyond Meat confirmed Ramsey’s departure in a SEC filing.
This unappetizing event was followed just days later by an announcement that the company would be laying off 19-percent of its workforce. That’s about 200 employees worldwide. This was on top of a 4-percent cut made in August. Here’s how the company explained the latest trimming:
“This decision was based on cost-reduction initiatives intended to reduce operating expenses, sharpen the company’s focus on a set of key growth priorities, and target cash flow positive operations within the second half of 2023.”
Beyond Meat’s founder and CEO Ethan Brown has blamed cost and inflation for disappointing sales. Plant-based meats in general are significantly more expensive than the real alternative. Beyond Beef’s answer to ground beef sells for approximately $8.35 a pound. You can buy mother nature’s USDA ground beef for about $4.90. That’s not an attractive value proposition for consumers trying to stretch their grocery dollars in a high-inflation environment that shows no signs of improving. And a recent greenqueen.com article reported deeper problems:
“Experts at Deloitte say it’s not just inflation that’s got consumers pinching closed their pocketbooks when it comes to purchasing plant-based meat. A survey conducted by the organization over the summer found declining beliefs that plant-based meat is healthier and better for the environment than conventional meat. Those have historically been two of the leading reasons consumers shift to plant-based products.”
Ramsey’s unfortunate Hannibal Lecter moment and the ravages of non-competitive pricing and high inflation can be considered short-term, correctable problems. But, if consumers are beginning to doubt fake meat’s nutritional and environmental benefits — aggressively promoted by mainstream media — Beyond Meat and its investors are facing crises of supersized proportions. We also may be seeing why Impossible Foods, a competitor in the plant-based meat space that recently cut 6-percent of its workforce, continues to delay its highly anticipated public offering.
How did enthusiasm for this new food category get so over cooked?
I believe cheerleading journalists, predisposed to hate everything about the meat industry, including all those herds of flatulence-spewing cattle, have promoted unproven plant-based meats without a critical eye or interest in consumer preference. Who isn’t for saving the planet while reducing cholesterol? But it’s hard not to be concerned and turned off by the ingredients listed on the label of a four-ounce Beyond Meet burger patty, which read more like the elements in a science experiment than something anyone would want to eat. Here’s the delicious list:
Pea protein isolate . . . Expeller pressed canola oil . . . Refined coconut oil . . . Yeast extract . . . Maltodextrin . . . Natural flavors . . . Gum Arabic . . . Sunflower oil . . . Salt . . . Succinic Acid . . . Acetic Acid . . . Non-GMO Modified Food Starch . . . Cellulose from Bamboo . . . Methylcellulose . . . Potato Starch . . . Beet juice extract . . . Ascorbic Acid . . . Annatto Extract . . . Citrus fruit extract . . . and Vegetable Glycerin
There’s only one ingredient in a four-ounce lean-beef patty: 100% Beef.
I’m not suggesting there isn’t a place for plant-based meat alternatives in a vegan diet, grocery carts and fast food menus (Impossible Foods has teamed with Burger King to offer the Impossible Whopper). “I Can’t Believe It’s Not Butter” is still in business and nobody knows what the hell that is. But the heightened scrutiny brought on by market conditions and the misbehavior of a key executive is turning down the temperature of an overheated stock and product category.
My crisis response advice: Beyond Meat’s management would be well served to navigate these troubled waters with a lot less climate and health hyperbole — no matter how encouraging the press may be — and show a bit more respect for America’s $79-billion beef cattle industry. Get back to work on improving the taste and growing the competitiveness of your offerings and respectfully communicating, not overstating, the benefits of consuming plant-based meats. The American consumer will listen and respond to a more balanced conversation.
And make sure your next COO has better anger-management skills.
UPDATE: 11/8/22 – – The Wall Street Journal today reported that Impossible Foods has hired a chief marketing officer and creative director. It’s a new position for the company. Leslie Sims, leaving her job as U.S. creative officer at Deloitte Digital, told the Journal: “We’re really going for not being the best plant-based meat – – we’re going for being the best meat.” The Journal reports: “Sales volumes of refrigerated alternative-meat in the U.S. at multi-outlet retailers saw a drop of 11.9% in the 52 weeks ended Oct. 9, according to market-research firm IRI.”
UPDATE: 11/22/22 – – The Wall Street Journal today reported on the continuing problems at Beyond Meat: “Beyond Meat’s Very real Problems: Slumping Sausages, Mounting Losses.” https://www.wsj.com/articles/beyond-meat-ethan-brown-stock-layoffs-sausages-11668963839?mod=itp_wsj&mod=djemITP_h