Beyond Meat’s Price Approaches That of Real Beef
Beyond Burger only costs 20% more than the real thing. Less than two years ago, the company set a target to undercut the price of meat within five years. It is well on its way.
JON QUAST: When Beyond Meat reported earnings for the second quarter of 2020, most investors focused solely on the headline numbers. Net revenue was up 69% year over year to $113 million… These numbers are all important, but investors might have overlooked an equally crucial metric for Beyond Meat. The company’s price per pound continues to fall, and was down to $5.69 in Q2. Lowering prices might seem counterintuitive. After all, normally we want companies to raise the price of their products and services, since this leads to higher revenue. But lowering its price per pound is central to Beyond Meat’s strategy of attracting carnivorous consumers…
CEO Ethan Brown said, “Early research indicates that 70% of Beyond Burger consumers are meat-eaters seeking to incorporate more plant-based foods into their diet.” Beyond Meat doesn’t expect to convert meat-eaters into full-time vegetarians. It merely hopes they’ll purchase plant-based meats some of the time. Since most people eat meat, capturing even a small percentage of spending can have big implications. But to do that, the company has to remove the sticking points preventing adoption.
One such sticking point is the price of plant-based meat substitutes. But this problem is consistently shrinking… In Q2, Beyond Meat’s price per pound fell 3% year over year to $5.69. The small percentage decrease doesn’t look very impressive, but it was hurt by sales mix. In general, its price per pound is lower for food-service sales than retail. And because of the coronavirus, retail sales made up a far larger portion of sales than in times past. Therefore, under normal circumstances, the price per pound would have been better…
Something else happened in Q2. The U.S. Department of Agriculture’s average retail price for beef patties went up because of the coronavirus. Therefore, Beyond Meat’s Beyond Burger only cost 20% more than the real thing. In time, it’s reasonable to expect beef prices to go back down. But it’s still worth recognizing just how close the company got to closing the price gap for consumers… Less than two years ago, the company set a target to undercut the price of meat within five years. As you can see, it’s well on its way. SOURCE…
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