Plant-based meats have become very popular -- at least with food companies looking for a piece of the growing market.
During the pandemic, legacy food companies—including Nestlé NSRGF, Smithfield Foods, and Cargill revealed plans to introduce their own meat-free patties. PepsiCo PEP also threw its hat in when it formed a joint venture with Beyond Meat BYND, at the beginning of 2021.
In late February, the Kraft Heinz Company (KHC) said it has partnered with Chilean start-up TheNotCompany (NotCo), which currently offers plant-based egg, milk, and meat products. The new venture will be co-branded as The Kraft Heinz Not Company and headquartered in Chicago, with the task of bringing its plant-based innovation to multiple Kraft Heinz product categories.
It's a very crowded space and that has led to issues when it comes to pricing.
Beyond Meat rival, Impossible Foods has been engaged in a price war with the alternate meat maker and cut its retail prices by 20% for grocery stores throughout the United States in February last year.
Image source: Shutterstock.
A Tough Market for Beyond Meat
Plant-based meat major Beyond Meat's stock is struggling Friday (Feb. 25) after its latest results show heightened competitive activity in the U.S. foodservice and retail landscape.
Beyond Meat posted wider-than-expected losses for the fourth quarter coupled with a 1.2% decline in revenue.
The El Segundo, Calif., company reported losses of $80.4 million, or $1.27 a share, for the three months ended December 31. Revenue dropped to $100.6 million from $101.9 million in the year-earlier quarter led by a 19.5% decline in sales from the U.S. retail segment.
"Like many, we saw challenges throughout 2021 including the fourth quarter," said Chief Executive Ethan Brown during the company's earnings call.
"During the case of 2021, we experienced intense increased competition during the period when the size of the prize did not expand," he added.
Growth Slows for Plant-Based Meat
Growth in the plant-based meat category decelerated meaningfully in the U.S. retail sector from 45% in 2020 to a negative 0.4% in 2021 and Beyond Meat attributed that to primarily pandemic-related activity that's indicative of an unstable period in the U.S. and global economy.
"We believe a number of factors contributed to this....These include a tough year-ago comparison as the onset of Covid in 2020 spurred unprecedented consumer stockpiling, which did not repeat in 2021," Brown explained.
Brown also talked about the rise in popularity of fast-food drive-throughs. "Consumer migration to fast food, particularly those with drive-through, where we were largely absent, and consumer trends around food choice, as well as a reduction in our ability to sample.
For 2022, Beyond Meat forecast revenues below estimates, predicting total sales of $560 million $620 million for 2022 compared with consensus estimates of $637 million.
The company is planning to resume robust in-store sampling programs for retail items this year.
And had plans to launch new products, delayed by labor and supply chain challenges caused by the pandemic, including its Beyond The Original Orange Chicken, McPlant, Beyond Fried Chicken and Beyond Italian Sausage Crumbles with Panda Express, McDonald's, KFC and Pizza Hut respectively.
The product are in various stages of market entry or expansion, Brown confirmed.
