A vintage Burger King ad once asked, “Where’s the beef?” In Q2, millions replied, “Who cares?” as they drove a near tripling of plant-based Beyond Meat product sales year over year.
For the second quarter ended June 27, Beyond Meat reported a net sales increase of 69 percent to $113 million, with sales in the U.S. skyrocketing 194 percent. Most of that was thanks to a fast pivot away from shuttered restaurants — which have been the primary buyers of meatless products — and toward the grocery channel, with new consumer-pricing strategies.
“Most notable in this regard was the retail introduction of our Cookout Classic value pack, which significantly reduced the price of our burgers from nearly two times that of conventional beef patties to an approximate 20 percent premium, on a per pound basis,” Beyond Meat President and CEO Ethan Brown said. “Though the Cookout Classic only reached stores in the last two weeks of the second quarter, it accounted for 16 points of the year-over-year volume growth in our U.S. retail business.”
“If you look at some of the trends, that was the right thing to do, because the consumer continues to look for our products irrespective of whether they’re shopping in food service or in retail,” Brown said, as quoted by CNBC. “We had a household penetration rate that increased 40 percent between January and June.”
Target and Walmart are among chains now carrying the brand. But despite the grocery surge, Beyond Meat reported an overall $10.2 million loss for the quarter vs. a $33.7 million gross profit a year ago.
The company added in a statement that “given the uncertainty regarding the ultimate duration, magnitude and effects of the COVID-19 pandemic, management remains unable to predict the continuing impact of COVID-19 on its business for the balance of the year with reasonable certainty. As such, the company’s 2020 outlook, previously provided on Feb. 27, 2020, remains suspended until further notice.”
The Future Of Burgers
Just over a year ago, Beyond Meat sought to raise $184 million on an offering of 8.75 million shares. That initial public offering went better than expected. IPO shares that sold for $25 were hovering around $136 after Q2 financials were announced this week.
Competitor Impossible Foods has delayed its IPO for now, but the meatless category and its growing slate of players are unquestionably catching on with consumers — and investors.
Impossible Foods’ big break came via Burger King and its summer 2019 introduction of the meatless Impossible Whopper. And though the chain lowered prices in January after sales of the plant-based burger began to slide, trendlines on meatless foods are favorable.
In May, Impossible Foods Chief Financial Officer David Lee told PYMNTS CEO Karen Webster, “I’m quite optimistic about how capitalism can fuel innovation on a level playing field to serve the customer better. And that’s why I’m so excited about broadly food, but particularly Impossible Foods because this innovation is coming faster and faster and it is exciting to be a part of it.”
Hold on to that enthusiasm, because with proof of concept comes the gold rush. Will there be mad competition to make meatless fortunes? With beef prices high and younger consumers gravitating to sustainable food products, the sector appears set to sizzle.
“Don Lee Farms, a family run California-based food company, has seen its bleeding veggie burgers sell out at mass-market vendors like Costco, Walmart, Whole Foods, Wegmans and Stop & Shop nationwide. Since the product launched in the market in February of 2018, more than a million burgers sold within 60 days, making it the fastest growing product in its category,” PYMNTS reported last year.