In a recent announcement that caught industry watchers off guard, Beyond Meat, the famed plant-based meat company, revealed a significant workforce reduction. The company has decided to let go of 19% of its non-production employees, amounting to a staggering 65 personnel. This move follows a third quarter that didn’t meet their expectations, painting a vivid picture of the challenges even market leaders face.
The implications of such a move are significant, as Beyond Meat hasn’t merely stopped at staff reduction. There’s talk of exiting certain product lines, a potential restructuring of its operations in China, price revisions, and a shift in manufacturing strategies. But what led to this moment?
Ethan Brown, the company’s President and CEO, succinctly stated, “We anticipated a modest return to growth in the third quarter of 2023 that did not occur.” While the stock market reacted positively, with shares jumping by 20% in afternoon trading, underlying issues are clear. The U.S. market, which has been a strong player for plant-based meat sales, saw a drastic decline. Data from Circana, a respected market research firm, indicated a 21.5% drop in sales of fresh meat alternatives like sausage and burgers. The frozen segment, including tenders and nuggets, experienced a 6% decline.
But why has the plant-based meat trend cooled off? According to Brown, high inflation rates have played their part, pushing consumers to revert to traditional animal meats, which often come with a more affordable price tag. Additionally, there’s been a growing sentiment that plant-based meats are heavily processed and possibly not as healthy as once perceived. Such views have been amplified by advertising campaigns from rival food companies, further challenging Beyond Meat’s position.
Ahead of its third-quarter earnings release scheduled for Nov. 8, Beyond Meat has projected a revenue of $75 million for the July-September duration. To put this in perspective, it’s an 8.5% dip compared to the same period in the previous year. They’ve further revised their full-year net revenue expectations to fall between $330 million to $340 million, a sharp contrast to Wall Street’s anticipated $365 million as polled by FactSet.
While this might seem like a sudden shift, it’s not Beyond Meat’s first tryst with workforce reduction. Just last year, approximately 240 employees faced layoffs in multiple phases, pointing towards mounting pressures from inflation and fierce market competition.
However, it’s not all grim. As the U.S. market presents challenges, Europe seems to be warming up to Beyond Meat. The company’s products, including their burgers and chicken nuggets, have found a place on McDonald’s menus across Europe. While McDonald’s has run tests with Beyond Meat’s offerings in the U.S., they are yet to become a permanent feature.
The Workers Union says…
“One thing is certain, the plant-based meat industry is undergoing rapid change, and market leaders like Beyond Meat are having to adapt swiftly.”