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By Agroempresario.com
Beyond Meat has reported mixed results for the second quarter, with declining demand for plant-based meat continuing to weigh on sales. Despite this, the company achieved higher-than-expected revenues and demonstrated improved financial metrics. The company’s net losses decreased from $54.4 million in the first quarter to $34.5 million in the second quarter, while gross margins improved significantly due to aggressive cost-cutting measures.
“Our results this quarter showcase significant progress towards our 2024 objectives, marking a critical period in our journey towards sustainable operations and profitability,” said CEO Ethan Brown during the earnings call.
“Highlights include surpassing our Q2 revenue targets, reduced operating expenses, and achieving our highest quarterly gross margin since Q3 2021,” added Brown. He attributed some of the ongoing challenges to what he described as a “sustained misinformation campaign by traditional animal protein sectors,” which he believes has negatively impacted consumer perceptions of plant-based products.
“We were surprised by the lack of new information regarding liquidity strengthening efforts over the past six months,” noted TD Cowen, indicating that debt holders and investors are seeking assurances on the path to positive cash flow.
Brown highlighted ongoing efforts to enhance margins through reductions in headcount and inventory, as well as the exit from co-manufacturing contracts. The company has also increased prices in the US in conjunction with the launch of its ‘Beyond IV’ platform and new veggie-forward Beyond ‘sun’ sausages.
“We have reduced promotional trade discounts, which, coupled with price increases, led to a 6.1% rise in net revenue per pound compared to last year,” Brown said. He expressed optimism about further gross margin improvements due to pricing adjustments, reduced promotional spending, and cost of goods sold (COGS) enhancements.
CFO Lubi Kutua emphasized the goal of achieving positive cash flow as swiftly as possible, though he did not commit to a specific timeline. “We continue to work on strengthening our balance sheet,” he said.
Beyond Meat is engaging with bondholders to discuss balance-sheet restructuring, according to a recent Wall Street Journal report. The company had $158 million in cash and cash equivalents and $1.1 billion in debt as of June 29. Concerns remain about the potential need for future debt repayment, with some industry sources predicting a possible bankruptcy scenario if financial conditions do not improve.
In Europe, Beyond Meat is expanding its product offerings and entering new markets. New products like Beyond Steak, Beyond Smash, and Beyond Burger Jalapeno are launching in the Netherlands, while Beyond Steak is debuting in Belgian retail. The company is also focused on achieving refrigerated shelf-life requirements in Germany, a market Brown described as very promising for plant-based products.
Data from Circana, analyzed by 210 Analytics, indicates that US retail sales of meat alternatives fell by 10.7% to $1.1 billion in the year ending June 30, 2024. Volume sales also dropped by 13.3%. This contrasts with fresh and frozen meat sales, which experienced growth during the same period.
The Good Food Institute (GFI) reported that lapsed plant-based meat consumers often cite taste and price as reasons for discontinuation, though they remain open to repurchase if products improve. The key challenge for plant-based meat companies is to address consumer preferences for taste, protein content, and affordability compared to conventional meat options.
Summary: Beyond Meat faces ongoing demand challenges despite revenue surpassing expectations. The company is focused on margin improvement and market expansion amid restructuring efforts and increasing competition in the plant-based meat sector.
