Beyond Meat Q2 Sales Quadruple, But Replacing Meat? That’s A Different Story – Forbes

A Carl's Jr. Famous Star Beyond Meat burger. — A Carl’s Jr. Famous Star Beyond Meat burger.

Photo Illustration by Justin Sullivan/Getty Images

In another sign of the continued demand for plant-based meat, the newly publicly traded Beyond Meat on Monday reported that its fiscal second-quarter sales almost quadrupled and raised its outlook for the year. But when it comes to its mission of having its “revolutionary” product replace animal protein consumption? That likely won’t happen anytime soon.

Beyond Meat said Monday that sales in the quarter that ended June 29 jumped 287% to a better-than-expected $67.3 million. It raised its full-year revenue outlook by $30 million, to top $240 million, as it has recently added to its customer list the parent of Dunkin’ Donuts, following others including the coffee chain Tim Hortons and the fast-food joint Carl’s Jr.

Its sales to supermarkets, including Amazon’s Whole Foods, surged, too, led by demand for fresh refrigerated products versus frozen items both in the U.S. and internationally.

Gross margin, or the percentage of sales left after removing the cost of goods sold and a measure of profit, widened to 33.8%, from 15%. (Beyond Meat’s stock slumped 13% in after-hours trading, however, after the company said it would sell another 3.25 million shares in a secondary offering, mostly by selling stockholders.)

Beyond Meat is “well positioned for long-term growth,” Seth Goldman, the company’s executive chairman, said on a conference call late Monday, adding that the El Segundo, California-based company had added new suppliers and production facilities to ease concerns it won’t have enough supplies to meet growing demand. “We made meaningful investments to build a revolutionary business.”

Demise of traditional meat? Not even close

Revolutionary it may be, but the long growth runway that is likely still ahead for Beyond Meat and its rivals including Impossible Foods may face a limit.

While U.S. sales of packaged plant-based meat alternatives jumped 10.3%, to $895 million, traditional meat rose 2.3%, to top $90 billion, in the year through May 25, according to data from market research firm Nielsen, which tracks actual in-store sales. Its study echoed findings that meat eaters are the main buyers of plant-based meat; only 5% of U.S. households are vegan or vegetarian.

Some 98% of plant-based meat buyers also buy meat, and they actually spend more on meat than the average meat buyer, $486 vs. $478 a year, Nielsen data shows. While about 22% of U.S. households are buying meat substitutes, up 1.6 percentage points from last year, only 27% of meat-alternative buyers shop for them five or more times a year.

Even though the buzz surrounding Beyond Meat and Impossible Foods, both of which are seeking to challenge the conventional definition of meat, has helped to fuel a bigger-than-ever appetite for meat alternatives of all kinds, other studies suggest consumers are not buying them to entirely replace animal proteins.

Dining Alliance, the largest U.S. group buyer for restaurants and purchases on behalf of 18,000 indie restaurants with up to ten locations each, found in a recent study of a $7.5 billion foodservice buying pool that meat-alternative purchases from indie restaurants almost quadrupled last year, following a 22% increase in 2017.

Despite the jumps in demand, meat substitutes still represent less than 0.1% of all protein ordered by indie restaurants and other food services, the study shows.

Consumers want more options on their plates, and plant-based meat gives restaurants a premium feel that they hope will help drive customer visits, but it won’t replace meat, Christina Donahue, president of Dining Alliance, told me recently.

Read: Beyond Meat, other plant-based alternatives still have long growth runway

Premium it is. The average price restaurants have paid for a case of meat alternatives has gone up 29%, to $80, in the past two years, faster growth than in other categories, Dining Alliance’s study showed.

Nielsen data also showed that at supermarkets, plant-based meat cost 10 cents per gram, more than double the 4 cents for beef and 2 cents for chicken, pork and turkey.

“With new innovations, health and wellness and social considerations, plant-based foods will continue to shine and grow,” Nielsen said in the study. “But meat is formidable and resilient. … Plant-based alternatives will not be the demise of traditional meat.”

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