Plant-based meat producer, Beyond Meat, is hitting the reset button on its failing business, and it involves implementing some changes consumers may not like. The company is planning to enforce a price hike on some of its products to help offset the “loss of volume” it faced mainly due to low sales in the U.S., according to a recent earnings call.
“We are implementing changes to our U.S. trade and pricing programs, effective in early Q2, said Beyond Meat CEO Ethan Brown. “Though varied across channels and product lines, we expect the overall impact of these pricing changes to meaningfully impact margin across the balance of the year.”
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In Beyond Meat’s fourth-quarter earnings report for 2023, the company saw its net revenues decline by 7.8% year-over-year. In the U.S. specifically, net revenues for its retail channel decreased by 22.6% during the fourth quarter compared to the same time period the year before, and for its foodservice channel, where the meat is sold in restaurants, net revenues decreased 25.9%.
Volume decline reflects weak category demand
The company mainly attributes the revenue decline in the U.S. to a 6.8% decrease in the volume of products that were sold during the quarter which it blames on “weak category demand.”
Beyond Meat also faced a net loss of $155.1 million during the fourth quarter, which is a significant increase from the $66.9 million net loss it faced during the same quarter in 2022.
Even though Beyond Meat didn’t indicate how high it will hike its prices, during the earnings call, Beyond Meat Chief Financial Officer Lubi Kutua claims that the upcoming price changes will “offset or more than offset” the anticipated decline in sales it may face as a result of the price increases.
“I think it's fair to say that the price increases are a significant factor that play into the gross margin expansion that we are targeting for next year,” said Kutua.
Beyond Meat also pointed fingers at the pharmaceutical industry for driving consumers away from purchasing plant-based meat due to “misinformation” about the ingredients inside of the meat and the impact it has on health.
Beyond Meat
“Specifically, the current climate of misinformation and efforts by incumbents, including sadly, pharmaceutical interests, to poison the plant-based meat well push us to accelerate gains in the health profile of our product platforms,” said Brown during the earnings call.
Nutritionists skeptical about health benefit
Some nutritionists have been skeptical about plant-based meat as it began to climb in popularity a few years ago. In 2019, Frank Hu, a professor at the Harvard T.H. Chan School of Public Health, told The Harvard Gazette that some plant-based products may contain a plethora of “unhealthy ingredients.”
“Some of those products, even though they contain high amounts of plant-based protein, may also contain unhealthy ingredients, such as high amounts of sodium or unhealthy fats,” said Hu. “Being plant-based doesn’t necessarily mean it’s healthier.”
Overall, Beyond Meat had a tough year in 2023 as it only earned $343.4 million in net revenue which is an 18% decrease compared to what it bought in for 2022.
The decline in demand for plant-based meat follows a trend across the entire plant-based meat substitutes market where it saw retail sales decline in 2023 by 3.6% year-on-year in the U.S., according to a recent report from market research company Mintel. The report indicates that the decline may be the result of consumers choosing more “affordable dietary choices” as a result of a tight economy.
The losses in the plant-based meat market has some companies rethinking their strategy on how they produce the meat. Some start-ups are even considering including animal fat into plant-based meat in an effort to make it taste better and hopefully attract more consumers to purchase the products.
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