Meatless meat burgers by Beyond Meat Inc

I’m proud carnivore but meatless plant based burger patties caught my attention. I’ve never thought that it’s possible to make product which feels like meat but actually plant based. Company well marketed from emotional side “save the planet with our plant based protein” but their financial data not that inspiring.

All financial data in this article from S-1 (30 of April,2019), filed with United States Securities and Exchange Commission. In this article no third party published financial information is used.

Beyond Meat is fast growing company. Established in 2009 and based in United States. Company’s product portfolio includes wide variety of plant based meat alternatives (beef, pork, poultry). Company’s products appeal to broad range if customers (carnivorous, vegetarian, vegan, etc). Plant based food developed by food scientists to replicate meat fibers and nutritional composition.

Company’s products marketed to non-vegetarian as new & healthy alternative. According to Fitch Solutions Macro Research data, global meat market estimated $1.4 trillion. Beyond Meat growth strategy:

  1. More points of distribution.
  2. Wider availability in restaurants.
  3. International distribution: European Union, Australia, Hong Kong, Middle East, New Zealand, South Korea, United Kingdom, etc.
  4. Investment in infrastructure and manufacturing capabilities.
  5. Development and launch of new plant based products.
  6. Creation of social awareness through different communication channels.

Beyond Meat IPO involve risks:

  1. Company has history of losses and may not achieve or sustain profitability. Each year since inception company experienced net losses.
  2. Qualified employees: 383 full-time employees and 104 contractors.
  3. Insufficient manufacturing capacity to meet customers demand.
  4. High cost of international expansion and operational risks related to it.
  5. Demand fluctuations on new Beyond Meat products and possible increase of marketing expenses. Cost of celebrity endorsement.
  6. Disruption in distribution channels.
  7. Higher than expected expenditure cost and cost-effective acquisition of new customers as well as distributors.
  8. Raw materials availability and price. One of main ingredient is pea protein, manufacturing of which stays beyond control of the company. Packaging cost.
  9. High cost of new technology development and innovative manufacturing facilities.
  10. Disruption in functioning of two main manufacturing facilities.
  11. Cold chain transportation cost.
  12. Company own domestic and international trademarks and other proprietary rights that are essential for business.
  13. Possible technical fails and cyber attacks.
  14. Company operates in highly competitive market where animal based products prevails.
  15. Variations in market estimations may negatively impacted company’s growth.
  16. Company may need additional financing to achieve business growth target.
  17. Company’s insurance cost and conditions.
  18. Damages to company reputation.
  19. Changes in existing law and regulations, taxation, food safety norms, ecology norms, changes in the law of foreign countries where products distributed.
Beyond Meat never declared or paid dividends on capital stock and will not pay dividends in foreseeable future. This done to retain all earnings in company for future expenditure.

Company’s financial data presented in screenshot from S-1 filing with United States Securities and Exchange Commission.

In 2018 net revenue was $70 million which is drastically higher that 2017 net revenue $32 million. Research and development cost almost $10 million. In 2018 selling, general and administrative expenses cost company $34 million.

In 2018 Beyond Meat net loss of $29 million which is lower than 2017 net loss of $30 million. This numbers show significant improvement in sales but company’s total operating losses increased.

Beyond Meat is not profitable company but after 2019 IPO it has all chances to achieve and sustain profitability.

Company do not own real estate where headquarter, research center, manufacturing units located. All properties on lease agreement.

As company is not profitable it’s quite surprising to see that President and CEO (Ethan Brown) in 2018 received total salary of $298750 and option awards of $145000. In 2018 total compensation for CEO almost $1 million considering that company made losses in every year since inception.

Beyond Meat IPO was successful. Share priced $25, opening price $46, all time high price $96. Last year Beyond meat declared $30 million loss with $88 million revenue but their market valuation near $5 billion. Beyond Meat is not the only plant based meat look like company but first one to go public.

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