Beyond Meat has emerged from a challenging period, reporting a notable 7.6% increase in net sales for the third quarter, reaching $81 million. This growth is attributed to strategic initiatives such as lowering trade discounts and implementing targeted price increases. Despite a year-over-year decline in volume of 7.1%, CEO Ethan Brown highlighted an upward trend in three of the company’s four sales channels, signaling a potential turnaround for the plant-based meat brand.
Brown’s assessment during a recent earnings call was optimistic. “We returned to growth, continued our gross margin expansion, and reduced operating expenses to our lowest level in four years,” he stated. The CEO projected full-year sales to fall between $320 million and $330 million, which is at the lower end of earlier forecasts. Notably, Beyond Meat executed a 22% increase in U.S. retail pricing, which resulted in only a 6.6% decline in volume—a trade-off Brown deemed “pretty good.” He emphasized that these price increases were carefully targeted, aiming to maintain a diverse customer base rather than narrowing focus to affluent consumers.
Despite this positive growth narrative, Beyond Meat still faces significant financial hurdles. The company reported a net loss of $26.6 million for the quarter, and as of September 28, its cash and cash equivalents stood at $134.9 million, juxtaposed against a staggering total outstanding debt of $1.1 billion. This debt largely stems from a convertible note offering exceeding $1 billion in March 2021, which coincided with the peak of the company’s sales. To bolster its liquidity, Beyond Meat plans to implement an “at the market” program to sell shares gradually, rather than in one lump sum, and aims for further balance sheet restructuring in 2025.
On the profitability front, Brown noted a significant reduction in net loss and adjusted EBITDA loss, both down by two-thirds compared to the same quarter the previous year. He expressed confidence in the company’s trajectory toward profitability, though he refrained from predicting a timeline. “I can’t say when, and don’t imply it’s going to be anytime soon. But that is where we’re headed,” he remarked.
The numbers for Q3 2024 reveal a mixed performance across different segments. U.S. retail revenues increased by 14.6% year-over-year to $35 million, while U.S. foodservice revenues rose by 15.5% to $14.5 million. International retail also showed promise, growing by 17% to $16.6 million, although international foodservice revenues fell by 17.2%. The company’s gross profit was reported at $14.3 million, leading to a gross profit margin of 17.7%, a significant improvement from -9.6% in the same period last year.
Looking ahead, Beyond Meat is optimistic about its product innovations, including the rollout of its ‘Beyond IV’ platform, which features health-conscious messaging and premium ingredients. Brown noted increases in product velocity at major retailers, particularly for their flagship burger products, as a positive sign of consumer acceptance. Internationally, Beyond Meat is particularly focused on Germany, a key market for plant-based products, where they have recently begun to meet shelf-life requirements for refrigerated offerings.
However, the company continues to grapple with consumer perceptions of plant-based meat as overly processed. Brown criticized attempts to label plant-based alternatives negatively, arguing that misconceptions about health benefits are the primary barriers to consumer acceptance. He pointed to recent comments from political figures that could further entrench negative views about alt meat, underscoring the need for the industry to combat misinformation.
In the broader context of the plant-based meat market, refrigerated alternatives have struggled, with sales declining significantly, while frozen products have shown signs of stabilization. As the market evolves, Beyond Meat’s ability to navigate these challenges and capitalize on growth opportunities will be crucial for its long-term success.