One day, Laura Maguire tried a chilli so delicious, she had to get the recipe. A key ingredient? Plant-based ground beef.
Maguire, a MRI technologist and self-described “wannabe vegetarian” started trying other products to reduce her meat consumption. She began buying Beyond Meat patties, then, a guy she was dating introduced her to the brand’s bratwurst. She even made the chili for her meat loving family, though to her father, fake meat is “sacrilegious.”
“It’s good to know there’s actual edible and not awful options,” said Maguire. “I’ve definitely cut back on the amount of meat I eat and at least that’s a start.”
The 11-year-old Beyond Meat brand used to only be available in a handful of restaurants. However, as lockdowns sweep the country, Beyond is shifting priorities, focusing on home-cooks like Maguire who are stockpiling at the supermarket. The stakes are high. If the new products don’t continue to connect with consumers, Beyond has not only sunk millions into a failing strategy, it has uncovered a crack in its core business philosophy: that its products are for vegetarians and meat-eaters alike.
In 2020, Beyond Meat debuted a slew of new products in grocery stores, including sausage patties, sausage links, and meatballs. The brand also introduced The Cookout Classic, a cheaper alternative to the company’s $2.84 per patty marquee product, The Beyond Burger, with slightly less protein.
The new products are Beyond Meat’s latest play to expand its consumer base. Beyond Meat initially launched with an ambitious vision to appeal to meat eaters, rather than vegetarians or vegans. The expanded product portfolio provides a wider variety of entry points for die-hard meat-eaters, like Mr. Maguire, who are perfectly content with their angus burgers.
“It’s more shots on a goal,” said Donald McLee, an analyst at Berenberg Capital Markets. “It expands the opportunities to provide products to a customer. Maybe someone won’t want to try a meatball, or ground beef, but a sausage is a smaller hurdle to clear.”
Some with plant-based diets are also turned off by the patty’s believable meaty taste and beet juice that mimics a bloody burger. The latest products also offer a new way for vegetarians and vegans who crave a good sausage imitation to buy from Beyond Meat without cannibalizing the brand’s original beef imitation products, according to Bobby Burleson, managing director at Canaccord Genuity.
The covid-19 pandemic has spurred consumers to reevaluate their dietary choices. About a quarter of Americans said they’re eating more protein from plant sources since the outbreak hit, according to an April study from The International Food Information Council Foundation. To add to the health kick, as of July, there were more than 16,000 covid-19 cases across 239 meat and poultry processing facilities. The outbreaks pulled back the curtain on meat production, raising skepticism about the processes and causing consumers to reconsider mock meat.
Wall Street expects the company to end the year with revenues of $419 million, a 41% increase. U.S. retail sales rose 41% during the first nine-months of 2020 to $62 million and the Beyond Breakfast Sausage alone led to a 16% increase in the second quarter.
The expanded product portfolio is also a competitive differentiator. Impossible Foods, Beyond Meat’s main plant-based rival, has taken a much less aggressive approach to product releases. It only carries sausage patties, ground beef, and ground pork. It debuted a sausage patty made from plants at the end of June, lagging Beyond’s March sausage reveal by several months.
Supermarket workers have witnessed the catalyzed movement towards plant-based products as shoppers rush to freezer pack in anticipation of the next lockdown. John Tusset Jr., a delivery pickup lead at Krogers in Oakland County, Michigan, says Beyond Meat is easily the number one seller of meat-analogue products at his store, which also carries Gardein, Impossible, Lightlife, and MorningStar.
“None of it sits for long,” said Tusset about Beyond Meat’s products. “There’s almost always nothing in the back. All of it sells. They can’t keep that stuff on the shelves.”
However, the expansions have come at a cost. The company sunk $20.5 million into research and development in 2020, 40 percent more than in 2019. Beyond Meat has also yet to turn a profit; net loss is expected to increase 131 percent in 2020 to exceed $62 million.
The stumbles didn’t discourage Beyond Meat CEO and founder Ethan Brown, who remains focused on creating new products for consumers.
“We know they want to have the Beyond option at different eating occasions throughout the day,” Brown said on an earnings call, adding that while BYND has a “foot in the door” at supermarkets, there’s opportunity to proliferate up to 30 new products in stores.
Beyond Meat did not respond for comment for this story.
Shares of Beyond Meat increased 88 percent year to date compared to the S&P 500’s 13 percent, indicating sustained investor optimism.
The company is hedging its bets by not abandoning its initial food-service strategy of partnering with restaurants. Though sales of its food-service segment shrank by 11% in the third quarter, Beyond Meat is continuing to pursue partnerships to help pandemic-proof the business, and has already brought new products into the mix; this fall, Pizza Hut launched Beyond Meat sausage toppings in U.S. stores.
Innovation is at the forefront of growth, and Beyond is already looking to the new year. In November, the brand announced two healthier versions of The Beyond Burger that will contain less saturated fat and hit shelves in early 2021.