Beyond Meat faces ongoing demand challenges as losses widen

USA – Beyond Meat has reported a deeper loss than expected and has revised its annual revenue forecast downward, causing its shares to drop 6% in after-hours trading.

The company has been struggling as consumers turn away from its plant-based offerings, opting instead for fresh, lower-cost animal meat products. 

This shift has significantly affected sales, pushing Beyond Meat to cut 6% of its workforce in an effort to control expenses.

In addition to job cuts, the company has also decided to cease operations in China. 

This move aligns with broader industry trends, as plant-based meat brands scale back due to weakening demand.

The sector has faced multiple challenges, including high prices relative to traditional meat and skepticism over the ingredients used in alternative products. 

Consumers have also raised concerns about the taste and texture of plant-based options, which has hindered their appeal.

A report by Circana last September indicated that sales of meat substitutes fell 9% in 2023 to US$1.1 billion. 

This marked the third consecutive year of declining sales, with plant-based alternatives continuously losing market share in the meat industry since 2020. 

The data also showed that more consumers are leaving the category than new ones are entering, while those who remain are purchasing less.

Efforts to Adapt

Beyond Meat has been making various adjustments to counter declining sales and financial strain. 

The company has gone through multiple rounds of layoffs, raised capital, and increased product prices due to rising ingredient costs.

It has also modified the formula of its plant-based burgers, refined its product lineup, and withdrawn certain items, including its plant-based beef jerky, which was developed in collaboration with PepsiCo. 

Additionally, it has shifted its focus to specific markets and sales channels where it sees better potential for growth.

Despite these efforts, revenue in 2024 has declined by 4.9% to US$326.5 million. 

The company expects this year’s revenue to range between US$320 million and US$335 million.

However, some improvements have been noted. In the fourth quarter, revenue increased by 4% to US$76.7 million, driven by higher revenue per pound even as sales volume declined.

It was the second consecutive quarter of year-over-year revenue growth. 

Gross margins also improved, and losses were reduced from US$160.8 million to US$37.8 million for the same period.

Despite these signs of stabilization, analysts remain skeptical about Beyond Meat’s outlook.

John Baumgartner from Mizuho noted that weak sales could necessitate further downsizing, while the company’s cash burn rate remains a concern.

Peter Saleh of BTIG highlighted the company’s difficulties in converting restaurant trials into permanent menu items. 

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