Beyond Meat has added to the furore over the slowing growth of plant-based sales across the US by reducing its forecast by as much as $95 million and slashing hundreds of jobs.
The maker from California of the Beyond product line has cut its sales forecast in a second consecutive time during the current fiscal year, in advance of the third quarter results on November 9, this is the most recent in a series of disappointing announcements in the category of alternative meat.
The Nasdaq listed Beyond Meat said today (14 October) it has eliminated 200 positions, with its the president and CEO Ethan Brown citing “current economic conditions” to justify the layoffs.
Third quarter sales are anticipated to fall by 23% over the previous year’s total of $82 million. For fiscal 2022 in all, revenues is likely to be 9-14% less after Beyond Meat cut its forecasted sales to $400-425 million.
When the firm disclosed a different, unspecified number of job cuts from its over 1,000 employees across the globe the forecast was $470-520m that’s a decrease from the previous forecast of $560-620m.
Brown stated: “We continue to make strong progress against the levers of mainstream adoption – taste, health and price – and are steadfastly advancing key strategic partnerships. The global climate crisis underway dictates greater, not less, urgency in the adoption of all solutions of which ours is among the most immediate and powerful.”
He continued: “We believe our decision to reduce personnel and expenses throughout the company, including our leadership group, reflects an appropriate right-sizing of our organisation given current economic conditions. We remain confident in our ability to deliver on the long-term growth and impact expected from our global brand.”
The week before, the the privately owned Impossible Foods, confirmed that “fewer than 50” staff were fired in a restructuring exercise under the new chief executive Peter McGuinness. However Impossible Foods’ Impossible Burger maker was more positive about its own prospects for growth.
“Contrary to reports about the performance of the plant-based meat category and a number of companies within it, we’re seeing hyper-growth, with over 60% year-over-year sales growth in retail alone,” Impossible Foods said in a statement that confirmed the job cuts.
In the larger US alternative protein market, employees are also set to be on the chopping block in Planterra Foods’ Denver factory as JBS is one of the Brazilian real meat producer that operates the plant-based company has announced that it will pull the end of the venture two years after its launch.
The sense of slowing growth in categories has extended into Canada as well – with demand-related warnings coming from Maple Leaf Foods and The Very Good Food Company being put to auction but the US is still the center of the spotlight.
Nick Cooney, a managing partner at the alternative-protein investment firm in the United States, Lever VC, remains conservative about the future growth prospects.
Talking to Just Food last month for an article Spectre concerns raised about the fragility of meats made from plants as Very Good Food goes on the market Cooney claimed that category growth was “steady” for many years within the range of 10-15%, despite more positive reports.
He noted that growth increased in 2019-20, mostly due to Beyond Meat and Impossible Foods and some other anomalies during the outbreak: “I think that gave some folks the incorrect assumption that the sector is going to grow at 70% per year for the next seven, eight years.”
Brown in turn, said that he blamed “changes” in customers’ levels of inventory, as well as “postponed or cancelled promotions” for the sluggish sales forecast.
The CEO said: “While the company continues to analyze the factors that led to recent performance, the company is of the opinion that it’s been negatively impacted by the continuing softness of the meat-based plant-based category in general particularly in the refrigerated segment as well as by the effects of competition.
“Inflation is believed to be an underlying factor exerting pressure on the category as consumers trade down into cheaper forms of protein, including animal meat.”
Beyond Meat has been plagued by losses to its bottom line, and the business was subject to further scrutiny in September, when CEO Douglas Ramsey was suspended following an incident at an US football match. This morning, Beyond Meat confirmed he was leaving the business. At the same time, Bernie Adock as the chief supply chain officer resigned to explore other opportunities.
In the first quarter of 2 July Beyond Burger’s Beyond Burger maker’s sales dropped 0.4 percent to $256.5m in the second quarter, with revenue falling 1.6 percent. Net losses increased to $97.1m during the quarter, up from $19.7m and brought the first-half loss to $197.5m against a negative figure of $46.9m one year ago.
While Beyond Meat’s price ended 4.1 percent more on Nasdaq exchange yesterday, the price has fallen by around 77% in the past year, to $14.78.
Beyond Meat headed up today’s statement by stating that the business was “making a strategic shift in pursuit of a more sustainable growth model that emphasises the achievement of cash-flow-positive operations”.
Brown stated: “While we believe the current headwinds facing our business and category – including record inflation – are transient, our mission, brand, and long-term opportunity endure. To manage through the current environment and realise the opportunity ahead, we are significantly reducing expenses and sharpening our focus on a set of key growth priorities.”
Just Food analysis Sept. 2022 Spectre the issue of animal-based fragility in plant foods when Very Good Food goes on the market
Just Food analysis December 2021: Is the US meat production based on plant sources facing an an inflection point or a short-term bump?
