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🍔 Is fake meat a fad?

Published about 1 year ago • 3 min read

Welcome to Nonrival, the newsletter where readers make predictions.

How it works

  1. On Sundays, read the newsletter and make a forecast by clicking a link below.
  2. On Wednesdays, see what other readers predicted and how your forecast compares.
  3. Over time, you’ll get scores based on how accurate your forecasts are.

In this issue

  • Forecast: Will Beyond Meat keep shrinking?

Thanks for forecasting. Send feedback to newsletter@nonrival.pub.


Is fake meat a fad?

The plant-based meat industry is struggling, according to a cover story in Bloomberg BusinessWeek which goes so far as to call the sector “a flop.” The gist is that Beyond Meat and Impossible Foods talked a big game about changing the world but sales are down along with stock prices, and analysts are starting to wonder if non-vegetarians will ever become customers.

This week’s email will be short and sweet, drawing mostly from the BusinessWeek piece. And the forecast is about Beyond Meat, because unlike Impossible it’s a public company:

Forecast: How likely is it that Beyond Meat reports at least $85 million in revenue for Q1 2023?

~10% chance​ ​​​​

​​​~30% chance​ ​​​​

​​​~50% chance​ ​​​

​​​​~70% chance​ ​​​​

​​​~90% chance​​​​


Indicators


Background

The quotes below are all from the Bloomberg piece unless otherwise noted.

Sales of plant-based meat are down:

“Supermarket sales of refrigerated plant-based meat plummeted 14% by volume for the 52 weeks ended Dec. 4, according to retail data company IRI. Orders of plant-based burgers at restaurants and other food-service outlets for the 12 months ended in November were down 9% from three years earlier, according to market researcher NPD Group. Beyond lost sales in almost every channel last quarter.”

Beyond has also had to lay people off:

“Over the past year it laid off more than 20% of its workforce, lost more than half of its C-suite and halted projects including vegan hot dogs and the next alt-protein frontier of cell-cultured meat, according to people with knowledge of the matter.”

Those fast-food partnerships have fizzled:

“None of the biggest fast-food chains that had announced partnerships with Beyond—KFC, Pizza Hut and, most important, McDonald’s—have put a single permanent item on their US menus.”

Inflation has made consumers more cost conscious:

“Plant meat still costs more than the real thing, and with inflation pushing up prices across the supermarket, many grocery shoppers have swapped the expensive imitation for chicken or, in some cases, beans and lentils.”

And fewer consumers consider plant-based meat healthy than once did:

“In 2020 half of Americans thought faux meats were healthy; now 38% think so, a recent report from Citi Global Insights shows.

(In all likelihood they’re better for you than eating red meat, but they’re not health food.)

Against this backdrop, Beyond needs to cut costs to survive. From a Food Institute piece in November 2022:

“The company finished Q3 with $390 million in cash. It burned $350 million during the first three quarters of the year. Brown promised positive operating cash flow by the second half of the year — but that in turn will require lower marketing spend and likely fewer products, which in turn will hit revenue. Indeed, while Beyond stock is down, the real danger is highlighted by Beyond Meat’s bonds. Those bonds — with a face value of $1.15 billion — trade at 25 cents on the dollar. That price implies a substantial risk — at least 65%, and probably higher — of bankruptcy in the next four years. It also blocks one potential escape route: a sale of the company to a deep-pocketed buyer that can manage losses. But no acquirer wants to make those bondholders whole, particularly when the odds are that Beyond Meat’s assets will be available via a Chapter 11 filing in the not-too-distant future.”

Unlike Beyond, Impossible Foods is still growing:

“Impossible has spun up new products such as animal-shaped faux chicken nuggets and blitzed supermarkets, leading to more than 50% retail sales growth in the US in 2022.”

Can Beyond get back on track and start to grow its revenue again?


The fine print

Just want to make a quick forecast? Click a link at the top of the email and you're done! Your forecast will be recorded.

Or, click a link and finish the survey. You can make your forecast more precise and guess what other readers will say.

Deadline: Make a forecast by 9am ET Tues. Feb. 7.

Resolution criteria: The question will resolve based on Beyond Meat's Q1 financial data, reported in April 2023.

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