Beyond Meat contends with weakened demand

Beyond Meat, the maker of plant-based meat substitutes that “bleed”, faced a quarter of dropping sales as demand weakens in the face of the cost of living crisis.

Why the vegan situation matters

Veganism isn’t necessarily less popular, but it appears that Beyond Meat’s situation is something of a marketing problem as many consumers around the world trade down to cheaper animal meat, while others are concerned about the processing.

The company told investors it is going to be much more aggressive in how it markets the health benefits, while also dipping into price promotions designed to bring more people into the category. Still, the struggles of the most recognisable brand in the category suggests that it faces some deeper headwinds.

What's going on

Beyond Meat reported its Q2 2023 results this week, a quarter in which it faced “softer demand in the plant-based meat category, high inflation, rising interest rates, and ongoing concerns about the likelihood of a recession,” according to the company’s release. The inflationary reality echoes a worst-case worry noted in last year’s successful Q2 results.

Net revenues, profitability, and full-year forecasts were all down on expectation as the company looked ahead to a tough environment: the US showed particularly weak demand as retail sales in the country declined 38.5% year on year.

Going deeper

• Outside of secular economic headwinds that have either caused consumers to trade down to animal protein or to forego meat altogether, the company faces a perception of “ambiguity about health”, CEO Ethan Brown told investors.
• “There is a considerable gap between the strong health potentials of our products and a broader counter narrative that is now afoot, and this gap appears to have widened,” Brown continued.
• “[A]s was the case during the ascent of plant-based milk, this change in perception is not without encouragement from interest groups, who have succeeded in seeding doubt and fear around the ingredients and process used to create our and other plant-based meats.”

Sourced from Beyond Meat, Seeking Alpha, WARC