The second quarter proved challenging for Beyond Meat as consumers turned to less expensive animal proteins, causing sales to fall short of analysts’ estimates. The company cited the overall slowdown in the meat-free category and consumers’ economic constraints as reasons for the decline in sales.
In the first quarter, Beyond Meat had suggested that its cost-cutting program was leading the company in a positive direction. However, during a recent call with analysts, CEO Ethan Brown acknowledged that the challenges extended beyond Beyond Meat and were affecting the category as a whole.
Brown identified the lack of new consumers as the main issue for the category, rather than the characteristics of existing consumers. He emphasized the need to collectively address this problem in order to stimulate growth in the industry.
Furthermore, Brown acknowledged that Beyond Meat’s higher price point may hinder its performance in an environment where consumers are spending less on proteins. The US market, in particular, is experiencing slowing demand due to misconceptions about the category and the environmental benefits of plant-based alternatives.
While Beyond Meat is reviewing its pricing strategies to address demand issues, Brown advised against aggressive spending to reduce the price gap with conventional meat, as it would only result in trading among consumers without productive outcomes.
Aside from generating efficiencies, Beyond Meat’s priority is to address the ambiguity and confusion surrounding the health benefits of plant-based meat. Brown noted that in Europe, where consumers prioritize climate and environmental concerns, the market differs from the US, which is predominantly driven by health considerations.
Despite the challenges, Beyond Meat projects 2023 revenue between $360m and $380m, revising its previous expectation. In the second quarter, the company’s net revenue decreased by almost 31% year-on-year, falling short of analysts’ estimates. US net revenue declined by 40.1%, while international sales only experienced an 8.7% decrease.
The adjusted EBITDA for the quarter was a loss of $40.8m, compared to a loss of $68.8m in the same period last year.