Picture source @Visual China
Text | US stock Research Society
With the wave of consumption upgrading, since the beginning of 2019, a wave of consumption upgrading of " artificial meat " has gradually struck people's dining tables. Artificial meat has gradually been recognized and welcomed by manufacturers and consumers for its series of economic characteristics such as low calories, low carbon emissions, and high protein conversion efficiency.
The first artificial meat stock in the United States in 2019, Beyond Meat logged in Nasdaq , not only rose 163% on the first day of listing, but also received recognition from a number of celebrity investors such as Bill Gates , McDonald's former CEO, Twitter co-founder, etc.
However, behind the bustling industry, the artificial meat star stock Beyond Meat failed to continue to excite capital, and its performance losses continued to amplify, and the stock price fell by 34.96% to its highest point. On May 7, Beijing time, Beyond Meat released its new quarterly financial report.
As the impact of the epidemic gradually fades, can Beyond Meat, once the darling of capital, regain capital love? From the latest financial report released by Beyond Meat, we can find out one or two.
The outbreak of the epidemic dragged down the weak performance recovery
In this quarter, Beyond Meat achieved revenue of US$108.2 million, a year-on-year increase of 11.42%. The revenue growth for three consecutive quarters is weak, which is far from the performance growth rate that has grown twice before the outbreak of the epidemic. According to the company, the main reason for weak performance is that the impact of the epidemic has caused weak consumption, but the company still reaps double-digit growth.
However, the capital market did not buy it with a year-on-year growth of only 11.42%. After the financial report was released, Beyond Meat's stock price closed down 6.96% after the session.
As a food manufacturer from California, Beyond Meat's business mainly originated in the United States, of which 74.48% of its revenue comes from the United States and 25.5% come from abroad. If we look at the source of the channel, 74.9% of its revenue comes from the C-end retail, and the other 25.09% comes from the supply chain business of B-end catering services. Based on regional and channel sources, retail business in the United States contributes most of its revenue, and the revenue scale of international businesses accounts for a relatively small proportion. ,
However, since last year, due to the impact of the epidemic on travel activities and economic impact, the entire meat consumption market has continued to be in a downturn and demand has weakened. According to the Bloomberg News website, according to the data from United Nations , the global per capita meat consumption will decrease by nearly 3% in 2020, the lowest level since 2011. At the same time, analysts around the world predict that not only per capita consumption will decline, but the total consumption in their regions will also decline. It is predicted that per capita meat consumption in the United States will not return to pre-epidemic levels until at least 2025.
, coupled with the epidemic in the United States, has not been fundamentally controlled, which has caused the growth of the domestic market in the United States to be weak, and the demand for retail terminals has never been able to recover to the prosperity and growth before the epidemic.
In order to cope with the growth pressure of not improving in the short term, Beyond Meat is counting on the international market, especially the Chinese market.
The artificial meat industry in the Chinese market is in its infancy. Except for several startups that have just obtained financing and foreign food giants have just made arrangements, no giant in the industry has defended the mountain to gain a leading brand and share.
US Stock Research Institute believes that it is wise for Beyond Meat to focus part of its development on the Chinese market. There is and only China in the world that has such a huge and highly consumer-powered market. Moreover, around the world, China is absolutely leading the way in the prevention and control of the epidemic. Therefore, the impact of COVID-19 on meat consumption can be almost ignored. In China, you can hardly see who will not eat meat because of the epidemic.
However, no matter how broad the market space and the good competitive situation are, the international market is still embarrassed, helping the company restart growth and turn losses into profits. The consumer education problem of the small proportion of international business revenue and the trendy category are all issues that the company needs to solve before making profits.
losses continue to expand, marketing expenses have risen, and on the one hand, revenue performance growth has recovered weakly. On the other hand, the company's investment in business has not converged due to the epidemic at all. Beyond Meat, which is under pressure on both the revenue and the cost side, is still hard to say that it is profitable. Beyond Meat's net profit lost US$27.26 million this quarter, a year-on-year decrease of -183%. Net profit suffered losses for four consecutive quarters, and the net loss amount hit a record high. Beyond Meat, which has weak growth and amplified net loss, did not reverse the decline since the first three quarters.
"Innovation is an important differentiation for us. We would rather not put money on marketing, but on product research and development." According to Chief Growth Officer Chuck Mutter, company spent hundreds of millions of dollars on various research , which is almost 70% of its current revenue.
is different from Beyond Meat. The focus of R&D is on reducing product prices to promote consumer acceptance. The old rival Impossible Foods is betting on making meat more like meat in terms of taste and appearance, aiming to win competition with animal meat. The two leaders in the artificial meat industry, which are in the introduction period, have not formed a consistent technical path, but it is obvious that Beyond Meat has taken the lead in listing and expansion. In terms of the cost structure of
, Beyond Meat's marketing expenses account for more than 30% for four consecutive quarters, and the proportion of R&D expenses accounted for about 8% for three consecutive quarters. The two items of marketing and R&D expenses alone accounted for 51.72% of the company's total revenue. With such high costs and expenses, it is no wonder that Beyond Meat has suffered losses for four consecutive quarters.
At present, the entire artificial meat track is still in the introduction period of the industry, with broad growth space and a gradual increase in growth rate. However, problems such as low consumer acceptance, product taste needs to be improved, and cost higher than traditional meat still hinder the growth of the new category of artificial meat. The leading Beyond Meat chose to increase investment in R&D and marketing at this time to solve the above problems. In addition, Beyond Meat's biggest rival, Impossible Foods, reportedly will be launched through SPAC within 12 months. The dual pressure of consumer demand and competition has accelerated Beyond Meat's expansion.
US Stock Research Society believes that losses caused by excessive marketing and R&D expenses during the introduction period are strategically tolerant, and at the same time, they are also necessary. Conquering cities and increasing R&D in the blue ocean without strong opponents and maintaining technological advantages will help leading companies maintain their first-mover advantage and consolidate their industry status.
However, investors' tolerance for losses has a time limit after all. The market can tolerate temporary losses and strategic losses due to business expansion, but cannot tolerate delayed profitable losses. When profits are still the ultimate question that Beyond Meat can't get rid of.
B-end C-end dual-wheel drive, when will Beyond Meat turn losses into profits?
Faced with the dilemma of weak growth and continuous losses, Beyond Meat chose the strategy of moving forward at the same time between the B-end and the C-end. The B-end business segment uses the huge user base owned by catering giants to quickly reach users at low cost and promote consumers' acceptance of artificial meat products. In the C-end business, it chooses to settle in large supermarkets and stores to directly complete brand communication, user interaction and other business operations with users, forming a moat for the company's business from the perspective of brand stickiness. In terms of
B-side business, Beyond Meat has reached a global supply agreement with catering giants such as Yum , McDonald's , Walmart , Starbucks , Starbucks . However, even if the cooperation with the giants has achieved considerable results, due to the small proportion of revenue of the B-side business, it is not yet seen that it has a decisive impact on the company's overall performance. Therefore, B-side business cannot become the key to Beyond Meat's restart of growth and turning losses into profits. In terms of
C-end business, Beyond Meat continues to deepen cooperation with various retail terminals and expand channel coverage. On April 8, Beyond Meat announced that it had reached cooperation with several chain grocery stores in the United States, which is expected to cover 5,000 storefronts in the United States, including retailers such as Kroger (KR.US), Target (TGT.US), and Giant Foods.
Beyond Meat focuses its strategy on the Chinese market.As the world's most promising consumer market and the best country to control the epidemic, China naturally has become the first choice for Beyond Meat's business territory expansion. In terms of C-end business, Beyond Meat started entering the Chinese market through 50 Hema Fresh stores in Shanghai as early as July last year. Immediately in April this year, the company announced that its first Chinese factory was completed in Shanghai, producing and selling plant-based products specifically for the Chinese market.
Its founder and CEO Ethan Brown said bluntly that China is expected to become one of its most important markets in the world, will become a production and R&D center, and will also be a major market in the future. China is one of the largest meat product markets in the world, and it also has huge market potential in artificial meat products. No matter what happens, it must be active in the Chinese market.
US Stock Research Institute believes that the entire international business accounts for a small proportion of revenue in Beyond Meat, and in the short term, Beyond Meat has just entered the Chinese market. It is not realistic to grow to the same scale as the US market in the short term. Therefore, even if the Chinese market space is large and growing rapidly, it is almost impossible to drive the performance of the entire Beyond Meat through the Chinese market in the short term to complete a turnover. The potential of the Chinese market needs to be realized in the long run. It will take some time for artificial meat to be accepted by Chinese consumers as an emerging consumer category, and the channel penetration of the B-end and C-end also needs to be steadily implemented.
In the short term, the key to Beyond Meat restarting growth and turning losses into profits lies in the quality of the US C-end retail business. At the moment when the impact of the epidemic continues to ferment, Beyond Meat can do not only wait for the negative impact of the epidemic to dissipate, but also control the growth rate of expenses, and at the same time increase investment in the Chinese market, gradually optimize the regional structure of revenue, so that Beyond Meat can grow and make profits without any mistakes.
