Beyond Meat founder and CEO Ethan Brown, no stranger to negative commentary surrounding his business in recent quarters, sought to strike an upbeat tone last week – but there’s no question the US plant-based meat business continues to face some significant questions about its prospects.

Speaking to investors on Wednesday (8 May) when Beyond Meat reported its financial results for the first quarter, Brown described 2024 as a “pivotal year” for a business that is a long way from being one of the hot stocks on Wall Street since it listed five years ago.

The heady days of 2019 have given way to a more downbeat mood about the real outlook for plant-based meat. Demand for alt-meat products has eased in a number of markets, not least in the US and the UK, two countries seen as being at the forefront of the development of the sector in recent years. The pressures facing suppliers can be seen in the number of businesses that have gone to the wall on both sides of the Atlantic, or the deals that have seen distressed assets bought out of administration.

Beyond Meat published another quarter of declining sales on Wednesday. Revenues were down 18% year on year, with volumes 16% lower than in the first quarter of 2023.

The fall in revenues was roughly in line with the expectations of Wall Street, which perhaps is not saying much but is better than coming in even lower than investors were anticipating.

However, among the equity analysts covering Beyond Meat, there were concerns the company’s gross margins were below expectations, while there are also question marks over whether the company can hit its sales forecast for 2024 as a whole.

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“The midpoint of sales guidance implies a hockey-stick recovery to mid-teens growth in the second half of the year (vs. -16% in H1), fuelled by higher pricing, reduced trade discounts, and increased marketing touting the health and wellness benefits of its brands,” TD Cowen’s Robert Moskow wrote in a note to clients after Beyond Meat published its results.

In a bullish presentation to analysts after the results were filed, Brown said he was confident the company’s latest iteration of Beyond Meat’s signature burger product, launched recently but still to be fully rolled out, can help to improve its fortunes. A marketing campaign will accentuate what Beyond Meat sees as the product’s health credentials.

“One of the biggest challenges our brand has faced is orchestrated misinformation regarding our product lines,” Brown said. “We believe through the nutritionists, institutions, and dietitians standing behind Beyond IV, that we offer consumers a delicious yet powerful choice that can help them and their loved ones live healthier lives. The 2024 marketing campaign, which we are rolling out imminently, will bring this message to life.”

He added: “It goes to market with a host of important validations. These include becoming the first plant-based meat brand to be recognised by the American Diabetes Association’s evidence-based nutritional guidelines for Better Choices for Life programme [and] being featured in a collection of heart-healthy recipes certified by the American Heart Association’s Heart-Check programme.”

One of the early drivers of the plant-based meat category in the second half of the 2010s was consumer interest in health. Amid some negative headlines about the purported links between meat consumption and serious illness, interest grew among meat eaters in at least trying out some of the plant-based alternatives.
However, the alt-meat category has seen demand come under pressure in part because of some concerns about how processed and how healthy their products really are.

The fact Brown and Beyond Meat have been prepared to roll up their sleeves and look again at their product recipes is to be welcomed but, that said, there are two other factors that have weighed on demand to an even greater degree: taste and price.

“The health and wellness marketing sounds dubious to us given that most consumers cite taste as the leading barrier to adopting the category rather than health,” Moskow said.

Others on Wall Street remained concerned Beyond Meat’s recent efforts on price could remain an obstacle to getting more consumers to test out the company’s products – and encouraging those that have trialled them to return to the shelf.

In February, Beyond Meat pointed to list price increases as a potential boost to its top line and margins.

Brown said on Wednesday changes had been introduced “following a thorough analysis regarding elasticities in our frozen and fresh product offerings” but he told analysts that pricing initiatives did not come into effect until April and May so would not have impacted results in the first quarter.

But there are signs that cash-conscious consumers on both sides of the Atlantic are looking for cheaper options, Beyond Meat acknowledged.

CFO Lubi Kutua said: “Net revenues in our US retail and foodservice channels decreased by 16% and 16.2%, respectively, primarily due to a decrease in the volume of products sold and reflecting continued macro-economic and category-specific headwinds.”

He added: “With regard to the UK, recessionary pressures appear to be dampening demand, both in our retail and foodservice channels, although we believe this to be a transitory effect.”

Mizuho Securities analyst John Baumgartner said it was “applaudable” the company had launched its new recipe, dubbed internally as Beyond 4.0.

However, he cautioned the move “may be insufficient to inflect sales”, adding: “Upgrades can soften one area of consumer reluctance (health concerns) but taste is subjective and higher prices are unlikely to encourage those put off by relative value. We await consumers' response but believe the breadth of usage occasions may remain too narrow to spur larger repeat sales.”