The high cost of plant-based meat, coupled with inflation, has been impacting consumer behavior.
Shares of Beyond Meat experienced a 5.9% drop on Thursday, following a downgrade by Mizuho analyst John Baumgartner. The downgrade was attributed to a decline in sales and earnings expectations through 2024, causing the company to underperform compared to the S&P 500. Similar plant-based firms, including Oatly and SunOpta, have also seen substantial losses.
The high cost of plant-based meat, coupled with inflation, has been impacting consumer behavior. A significant portion of consumers, notably those from the Gen Z and Millennial demographics, have shown reluctance to repurchase Beyond Meat products after their initial trial. This trend has contributed to stagnant sales at fast-food restaurants.
InvestingPro Data reveals that Beyond Meat's revenue for the second quarter of 2023 stood at 356.82M USD, marking a decline of 23.03% from the last year. The company's stock price has also taken a hit over the last six months, with a total return of -39.78%, according to InvestingPro. These metrics align with the InvestingPro Tips that suggest Beyond Meat operates with a significant debt burden and is quickly burning through cash, making it a challenging time for the company.
In response to these market conditions, the projected 10-year outlook for U.S. plant-based meat sales has been revised downwards. The new projection stands at $7.6 billion, a decrease from the previous estimate of $9.4 billion. This downward revision has resulted in reduced shelf space for Beyond Meat products at grocery stores.
Furthermore, the company's revenue forecast for 2023 indicates a year-over-year decrease ranging from 14% to 9%. In spite of these challenges, Beyond Meat has implemented cost management improvements, including a workforce reduction by 19% and a decrease in net loss.