US plant-based burger business Beyond Meat has suggested its “singular focus” on its product range will allow it to outpace the increasing number of competitors in the market for meat alternatives.
The California business – which makes the Beyond Burger – has just released its first set of quarterly results since its initial public offering (IPO) in May, which raised US$252.5m.
In a call with analysts after Beyond Meat’s results for the first quarter – which revealed net revenues of $40.2m – founder and chief executive officer Ethan Brown was asked how it will take on competitors with “very deep pockets”, which have seen the potential of launching plant-based, meat-substitute products.
Brown said: “We have a singular focus and we had that focus for a decade. I have no distraction with an incumbent business and no concerns about offsetting my existing supply chain. I’m benignly focused on driving this business forward through innovation.”
The Beyond Meat boss added: “I think [Beyond Meat] is very hard to replicate at an authentic level. We’ve also made a right choice on ingredients. As you look at some of the competitive entrants into the field most recently, you’ve seen, I think, some missteps that allowed us to continue to lead markets whether in Europe or here in the United States. This is hard to do.”
Beyond Meat recently signed a manufacturing agreement with Zandbergen in the Netherlands, the first of its kind on this side of the Atlantic. It hopes the deal will speed up delivery of its products to customers in Europe.
Brown said in the call to analysts that the company has now “secured limited distribution” for its products in South Africa, Chile, Australia and South Korea.
Beyond Meat’s first-quarter revenues of $40.2m, compared to $12.8m a year earlier. Investment in R&D and SG&A led the company to post a first-quarter loss from operations of $5.3m, compared to $5.6m. Beyond Meat made a first-quarter net loss of $6.6m, against $5.7m in the first quarter of 2018.
The business gave guidance for net revenues and “adjusted EBITDA” for 2019. Beyond Meat forecast net revenues will “exceed” $210m, which it said would be “an increase of greater than 140%” compared to 2018. The company said it expects to be “approximately break-even” at an adjusted EBITDA level.
Alexia Howard, an analyst covering Beyond Meat for US investment bank Sanford Bernstein, said the company’s guidance was “above expectations” on sales “faster-than-anticipated” on adjusted EBITDA.
In a note to clients, Howard said: “Management believes that the top-line guidance could be conservative as it does not include the onboarding of new customers until they are post-trial. The preliminary repeat rate is also encouraging in the 40-50% range. The company also expects adjusted EBITDA to approximately breakeven for the full year after incorporating planned increases in marketing spend, which is ahead of expectations with consensus expecting an adjusted EBITDA loss of $13m.
“Over the long term, Beyond Meat continues to expect to achieve gross margin in the mid-30%’s and adjusted EBITDA margin in the mid-teens.”