Some of Beyond Meat’s excuses for its stock troubles are laughable

After Beyond Meat posted third-quarter earnings so dismal that one Jeffries analyst called it “the quarter that likely broke the camel’s back,” the company had some theories to account for its recent shortfall. They are much harder to believe than the authenticity of Beyond’s meat.

Just before the start of the pandemic, Beyond was enjoying a stunning growth rate of 253% as its offerings landed in fast-food chains like Subway and McDonald’s. Heading into winter 2021, though, the company has just had its third consecutive quarterly shortfall, with losses widening ever further. Even on the optimistic side of Q3 revenue forecasts—which would be $110 million—Beyond Meat came in far below its estimated sales of $131.6 million, and actual revenue could be as low as $85 million. The gap in Q1, on the other hand, was a relatively minuscule $5 million. This downward trajectory has analysts speculating about the limits of the company’s long-term growth.

In an earnings conference call, Beyond Meat president and CEO Ethan Brown offered an alternate explanation for the company’s recent troubles. After drawing some perfectly reasonable conclusions about the high volatility of the post-delta food-shopping environment, he lands on six main reasons for the Q3 shortfall. They are as follows:

  1. Consumers reported few or less frequent trips to the store.
  2. Consumers reported being less open to trialing new products.
  3. Consumers reported less interest in healthy options.
  4. Reduced scope of our sampling programs as the delta variant spread limited new consumer exposure to our brand and category.
  5. Labor issues created complexity and possibly impacted demand from retailers, due to delayed shelf resets and less frequent restocking.
  6. With increased competition over the past two years, we’re seeing, as expected, some impact on our market share.

Brown goes on to cite supply-chain issues, and dismisses the sixth point above, claiming that “on a product mix neutral basis, it does not reveal competition to be a significant attributor to the aforementioned deceleration.”

While labor shortages and supply-chain issues are credible factors in Beyond Meat’s underperformance, it’s difficult to take the remainder of its stated reasons seriously. Let’s look at them one by one:

  • First of all, whether consumers are taking fewer trips to the store or not, sales at all food and beverage stores edged up 0.7% in September 2021, meaning people are buying as much food as ever.
  • Also, are consumers really more averse to trying out new products during the pandemic—a time when novelty is the leading weapon against culinary monotony?
  • As for any reported creeping aversion to health food, Beyond Meat burgers aren’t exactly quinoa. They have essentially the same amount of calories and saturated fat as regular meat, with part of their appeal stemming from the fact that they don’t taste like health food.
  • Finally, there’s the idea that profits fell, in part, because potential new customers didn’t get a chance to taste samples while shopping at Kroger. It’s certainly possible; just unlikely to the extent that the absence of a sampling program directly led to millions in unmade purchases.

Despite having some questionable explanations for its current stock position, Beyond remains an innovative company with a high-quality product. The harsh reality, though, is that even without the pandemic and its attendant challenges, the company’s stratospheric growth rate likely never would have been sustainable. The sooner its leaders accept as much, the easier it will be to chart a course to post-pandemic profitability.


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